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February 2, 1972
Honorable Karl Herrmann
Olympia, Washington 98504 Cite as: AGLO 1972 No. 12 (not official)
This is written in response to your recent letter requesting our opinion on a question pertaining to contracts by state agencies or municipal corporations for tax deferred annuities under the provisions of § 1, chapter 264, Laws of 1971, 1st Ex. Sess.
Your question, as we understand it, is whether a state agency or municipality which determines to provide some form of tax deferred annuity program for its employees is required to enter into whatever number of separate contracts the various groups of its employees may desire.
In view of the present language of the statute in question, we can conceive of no basis for an affirmative answer to this question. The full text of § 1, chapter 264, Laws of 1971, 1st Ex. Sess., which originated as Senate Bill No. 659, reads as follows:
"Any department, division, or separate agency of the state government, and any county, municipality or other political subdivision of the state acting through its principal supervising official or governing body is authorized to enter into an agreement with any life insurance company, bank trustee, or custodian authorized to do business in the state of Washington to provide deferred annuities in lieu of a portion of salary or wages for all officials and employees of said public entities deemed to be eligible by the agency of the United States government having jurisdiction of the matter under the provisions under 26 [[Orig. Op. Page 2]] U.S.C., section 401 (a), as amended by Public Law 87-370, 75 Stat. 796 as now or hereafter amended. Such tax deferred annuity benefits shall be available to those employees who elect to participate in said agreement and who agree to take a reduction in salary in the equivalent amount of the contribution required to be made by the public entity for and on behalf of such employee. The funds derived from such reductions in salary shall be deposited and accounted for in an appropriately designated account maintained by the public employer of such employee and any official authorized to disburse such funds is empowered to remit these designated funds to the insurer, custodian or trustee in accordance with the salary reduction agreement between the public entity and the employee." (Emphasis supplied.)
This statute is quite comparable to an earlier enactment relating to school districts only ‑ now codified as RCW 28A.58.560 ‑ providing as follows:
"The board of directors of any school district, the Washington state teachers' retirement system, the superintendent of public instruction, and county and intermediate district superintendents are authorized to provide and pay for tax deferred annuities for their respective employees in lieu of a portion of salary or wages as authorized under the provisions of 26 U.S.C., section 403 (b), as amended by Public Law 87-370, 75 Stat. 796, as now or hereafter amended. The superintendent of public instruction and county and intermediate district superintendents, if eligible, may also be provided with such annuities."
In an opinion dated January 13, 1972, to State Representative Charles D. Kilbury, copy enclosed, we pointed out that this is enabling legislation only ‑ and that it does not require any particular course of action by an employer with regard to the coverage of its employees under a tax deferred annuity program. We would most certainly regard this conclusion as being equally applicable to the permissive provisions of § 1, chapter 264, Laws of 1971, 1st Ex. Sess., supra.
[[Orig. Op. Page 3]]
In addition, we would point out a rather apparent analogy between this legislation and an earlier enactment by our legislature authorizing state agencies and political subdivisions to provide medical insurance programs for their employees. See, RCW 41.04.180, which originated as § 1, chapter 75, Laws of 1963, and has since been amended on several occasions. In its original form, this enactment, like chapter 264, supra, was wholly permissive and made no reference to any particular number of contracts which would be required to be procured by an employer determining to utilize its provisions. See, AGO 65-66 No. 1, copy enclosed, which was written during the period that the original version of the statute was in effect.
However, following the issuance of this opinion, the legislature, by § 1, chapter 135, Laws of 1967, added the following proviso to this legislation:
". . . Provided, That any department, division or separate agency of state government, and any county, municipality or other political subdivision of the state acting through its principal supervising official or governing body shall provide the employees thereof a choice of policies or plans through contracts with not less than two regularly constituted insurance carriers or health care service contractors: . . ."
Thus, clearly, when the legislature has intended in the past to require an employer to provide his employees with more than one plan for insurance coverage, it has demonstrated that it knows full well how to express this intent ‑ and it may likewise now do so in the context of tax deferred annuities if it so desires. However, on the basis of the present text of chapter 264, supra, we do not believe that multiple tax deferred annuity contracts are required of any state agency or municipality exercising the authority granted to it by this 1971 enactment.1/
We trust that the foregoing will be of some assistance to you.
Very truly yours,
FOR THE ATTORNEY GENERAL
Philip H. Austin
Deputy Attorney General
*** FOOTNOTES ***
1/In fact, noting that the term "an agreement" is here used in the singular, it is at least arguable that unlike even the original version of RCW 41.04.180, this statute does not presently even permit multiple contracts by a single agency.