Best Washington Pension Guide for Plan 3 Members: PERS 3, TRS 3, and SERS 3

If you're in PERS 3, TRS 3, or SERS 3, you have a hybrid pension that most retirement resources don't handle well. The defined benefit side follows a 1% formula instead of the 2% formula that Plan 2 members use, and the defined contribution side gives you a Voya-managed investment account with withdrawal options that range from systematic monthly payments to a TAP Annuity with a built-in 3% annual COLA. Most DRS handbooks cover each piece in isolation. What Plan 3 members need is a resource that puts both sides together in execution order.

The Washington DRS Retirement Guide covers PERS, TRS, and SERS Plans 1, 2, and 3 in a single document — including the Plan 3 DC distribution mechanics, the interaction between the DB pension and the DC account, and the sequencing decisions that Plan 2 members don't face.

Why Plan 3 Is Different

Plan 2 members have one retirement decision: when to retire and which benefit option to choose. The pension formula is 2% × service credit years × AFC, and the monthly check starts when DRS processes the application.

Plan 3 members have that decision plus several more:

• The DB formula is half as generous — 1% × service credit years × AFC instead of 2%. Your defined benefit pension is roughly half what a Plan 2 member with identical service and salary receives.
• The DC account is where the other half lives — contributions you selected (Option A through F) plus investment returns in your Voya account. The balance is yours, but how you withdraw it determines your monthly retirement income and tax exposure.
• Distribution timing interacts with the retirement application — some withdrawal options must be elected before or concurrent with your retirement date. Others can happen after.
• TAP Annuity has a $25,000 minimum and an automatic 3% annual COLA — it converts part of your DC balance into guaranteed monthly income that increases every year. But once elected, it's irrevocable.
• Required Minimum Distributions depend on your birth year — the applicable age is 70½ for people born before July 1, 1949; 72 for those born July 1, 1949–December 31, 1950; 73 for those born 1951–1959; and 75 for those born in 1960 or later. For an employer plan, distributions generally must start by April 1 of the year after the later of reaching the applicable age or retiring. Once RMD rules apply, the IRS requires annual distributions regardless of your other income.

The Five DC Distribution Options Explained

The DRS handbook lists these options. What it doesn't do is explain how to sequence them — whether to take a partial lump sum to bridge the income gap and then set up systematic withdrawals, or whether the TAP Annuity's 3% COLA makes it worth locking up $25,000+ versus keeping the flexibility of self-managed withdrawals.

Who This Is For

• PERS 3, TRS 3, or SERS 3 members within one to two years of retirement who need the DC distribution mechanics explained alongside the DB application
• Plan 3 members with significant Voya balances ($50,000+) who need to understand the TAP Annuity trade-off before an adviser pitches a rollover
• Teachers under TRS 3 who transferred from Plan 2 during the conversion windows in the late 1990s and have large legacy DC balances
• Members who want to understand the full hybrid picture — DB pension, DC withdrawals, PEBB enrollment, and benefit option election — in one sequence

Who This Is NOT For

• Plan 2 members whose retirement is purely defined benefit — the Plan 3 DC sections won't apply
• Members looking for investment advice on their Voya account allocation — the guide explains withdrawal mechanics, not investment selection
• Anyone who wants a recommendation on which DC distribution option to choose — the guide explains the trade-offs; the decision is yours
• Members primarily concerned with the DCP (Deferred Compensation Plan) — that's a separate voluntary savings program, though the guide covers how DCP and 403(b) trustee-to-trustee transfers work before retirement

The Rollover Question

Financial advisers offering "free pension reviews" to Washington public employees frequently target Plan 3 members. The review typically ends with a recommendation to roll the Voya DC balance into a managed IRA — generating ongoing advisory fees of 0.5%–1% of assets annually.

That rollover may or may not be the right move. But before making it, Plan 3 members should understand what they're giving up:

• The TAP Annuity's guaranteed fixed 3% annual increase — a feature to compare against a private annuity's terms
• Voya's available investment options and their fees — compare them with the costs and features of outside alternatives
• The ability to keep the DC account within the DRS system and manage withdrawals without an intermediary

The Washington DRS Retirement Guide explains these mechanics so you can evaluate the rollover pitch from a position of knowledge rather than uncertainty. It never recommends for or against a rollover — it lays out what each option does.

The Income Gap Problem

Plan 3 members feel the first-check delay more acutely than Plan 2 members. Your DB pension — the guaranteed monthly amount from the 1% formula — is typically half of what a Plan 2 member receives with identical service. DRS takes about 90 days to process the first pension payment after the employer submits final separation and payroll data, and employer delays can extend the wait. You're bridging that gap with less guaranteed income.

This is where the DC account's partial lump sum option becomes strategically important. Taking a one-time withdrawal to cover two to three months of expenses while waiting for the first DB check, then setting up systematic withdrawals or electing the TAP Annuity for the long-term income stream, is a common and reasonable approach. But it needs to be planned before the retirement date, not after — some elections have timing constraints.

Frequently Asked Questions

Can I take a TAP Annuity and systematic withdrawals at the same time?

Yes. You can convert part of your DC balance to a TAP Annuity ($25,000 minimum) and set up systematic withdrawals from the remainder. This gives you the guaranteed COLA income from the annuity and the flexibility of managed withdrawals from the rest.

What happens to my Plan 3 DC account if I die before retirement?

The DC account balance goes to your designated beneficiary. It's separate from the defined benefit pension's beneficiary designation — make sure both are current. The DB side has its own death benefit rules that depend on whether you had eligible survivors and your years of service.

Is the TAP Annuity the same as a private annuity?

No. The TAP Annuity is administered through the DRS system with a guaranteed 3% annual COLA. Private annuities purchased through an adviser have their own terms, fees, and COLA structures (if any). The mechanics and costs are different — compare the TAP Annuity's guaranteed terms against any private annuity proposal before rolling over.

Do Required Minimum Distributions apply to my Plan 3 DC account?

Yes. RMDs apply to tax-deferred retirement accounts, including your Plan 3 DC account. The applicable age is 70½ for people born before July 1, 1949; 72 for those born July 1, 1949–December 31, 1950; 73 for those born 1951–1959; and 75 for those born in 1960 or later. For an employer plan, distributions generally must start by April 1 of the year after the later of reaching the applicable age or retiring. If you've elected the TAP Annuity for the full balance, its payments count toward required distributions.

Should I roll my Plan 3 balance into an IRA?

That depends on your full financial picture — the Voya account's institutional fees, the TAP Annuity option, your tax bracket, and whether you want ongoing advisory management. The guide explains what the Plan 3 options offer so you can compare them against a rollover proposal. It doesn't recommend for or against rolling over.

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