Washington DRS: COLA, Vesting, Buyback and Refund

Updated August 23, 2026. Quick answer: Washington Department of Retirement Systems (Washington DRS) — the COLA is automatic in Plans 2 and 3, but in PERS Plan 1 and TRS Plan 1 you have one only if you elected it when you applied to retire, in exchange for a lower starting pension. Whether it compounds is not stated, service credit can be purchased, and no DROP was found. Vesting takes 5 years in Plan 2; Plan 3 vests by any of three paths. The four decisions below are the ones that are hard to reverse.

Provisional. This page is published at medium confidence. The specific points that could not be confirmed are listed under What could not be verified below, and are named rather than smoothed over.

The verdicts

Those first two rows are separate questions and are routinely confused. Whether you get an increase at all is one thing; whether it compounds is another. A system can grant an increase automatically every year and still compute it against your original pension forever, which is a materially worse deal than it sounds.

The COLA

‘If you’re in Plan 2 or 3 and have been retired at least one year, you’ll receive a cost-of-living adjustment (COLA) automatically each July — no matter how many years you worked.’ Based on the CPI for the greater Seattle area, effective July 1 (first reflected in the July 31 benefit payment). Eligibility requires having been retired at least one year as of July 1. DRS’s page did not differentiate mechanics between Plan 2 and Plan 3, or between PERS and TRS. Separately, the optional Plan 3 TAP annuity (purchased with the member’s own DC funds) carries its own automatic 3% annual COLA, distinct from the DB-side COLA. Maximum 3% per year ‘for most DRS plans’ (qualifier present in source). Plan 1 is a different mechanism, and this is the part most summaries drop. DRS states that ‘Plan 1 members in PERS and TRS only have a COLA if they selected it during retirement’: PERS and TRS Plan 1 members have an optional COLA they request when applying to retire, choosing ‘to reduce their initial retirement income in exchange for an annual automatic cost of living adjustment’, limited to a maximum of 3% of the monthly benefit. It is elected once, at retirement. Separately, DRS grants qualifying PERS and TRS Plan 1 retirees an automatic annual adjusted minimum benefit where they have at least 25 years of service credit and have been retired at least 20 years, or at least 20 years of service credit and have been retired at least 25 years, and the pension is below a stated minimum — that is a separate provision from the optional COLA. Rates DRS publishes for most plans effective July 1, 2026, by retirement date: 0.00% for July 2, 2025 – July 1, 2026, 2.55% for January 1, 2025 – July 1, 2025, and 3.00% before January 1, 2025. PERS 1 and TRS 1 retirees separately receive a one-time, permanent 3 percent increase beginning July 2026 under legislation approved in 2026. Read at drs.wa.gov on August 23, 2026.

Buying service credit

A ‘service credit annuity’ — members can purchase between one and 60 months of service credit in whole months, using the same benefit formula as the regular pension. Military interruptive service — members can recover up to 5 years of interruptive military service credit (sometimes up to 10 years depending on circumstance), billed as the retirement contributions that would have been paid on normal salary during that period. DRS also references authorized-leave and out-of-state teaching credit purchase eligibility, but specific mechanics for those categories were not independently fetched — UNCONFIRMED in detail (existence only, not mechanics).

What it costs. Actuarial. RCW 41.40.034: ‘To purchase additional service credit under this section, a member shall pay the actuarial equivalent value of the resulting increase in the member’s benefit.’

Run your own numbers before deciding — some purchases never recover their cost, and the calculator shows which.

Taking a refund

Plan 1/2 (PERS and TRS, same language on both plan pages): separating from covered employment is the only circumstance where a member can withdraw contributions; withdrawal returns the member’s own contributions with interest. Plan 3: the DB side is entirely employer-funded (Plan 3 members don’t contribute to it), so there is nothing for the member to withdraw from the DB side; only the DC investment account (100% member-funded) is refundable/withdrawable, with options for one-time or regular payments, purchasing an annuity (e.g., the Plan 3 TAP annuity), or rolling contributions into another eligible employer plan. Plan 1/2: withdrawing contributions ‘cancels any rights and benefit you have accrued,’ and sets service credit years to 0. Employer contributions are never paid out to the member — the member simply forfeits the future DB pension those employer contributions would have funded. So a Plan 2 refund forfeits all accrued service credit, the future DB pension, and any employer-funded value — the member only gets back their own contributions plus interest. Plan 3: because Plan 3 members don’t contribute to the DB portion, withdrawing the DC account does NOT touch the employer-funded DB benefit the same way — however, a Plan 3 member who separates BEFORE vesting in the DB component forfeits the DB pension regardless of what they do with the DC account. A Plan 3 member who separates AFTER vesting keeps vested DB pension rights independent of whether/when they withdraw the DC account — this is the key Plan 2 vs Plan 3 asymmetry: Plan 3’s DC withdrawal does not forfeit an employer match because Plan 3’s DC account structurally has no employer contribution in it (employer money instead funds the separate 1% DB formula). Yes, for Plan 1/2 withdrawn contributions: a member may restore withdrawn service credit by repaying the total withdrawn contributions plus interest within 5 years of returning to work or before retiring, whichever comes first. After that deadline, the service may still be purchasable, but at a much higher cost (actuarial-equivalent purchase price under RCW 41.40.034).

This is the irreversible one. Refund versus leaving it in sets out the decision in the order it should be made.

DROP

Neither the DRS FAQ page, glossary, nor the PERS 2 or TRS 2 plan pages contain the terms 'DROP' or 'Deferred Retirement Option Plan' anywhere. Consistent with the general understanding that Washington DRS systems do not offer a DROP, but confirmed only by absence of the term across core reference pages checked, not by an explicit DRS denial statement. N/A N/A

This is an absence-of-evidence finding: it means a DROP does not appear in the materials reviewed, not that the system has published a denial. DROP is rarer than it appears — of the twelve systems checked for this guide, only one has an active programme.

Survivor options

PERS 2 (confirmed in detail): four options — Option 1/Single Life (highest monthly benefit, ends with member's death, no survivor); Option 2/100% Survivor (survivor receives the same monthly amount for life); Option 3/50% Survivor (survivor receives half for life); Option 4/66.67% Survivor (survivor receives two-thirds for life). TRS 2 references an equivalent survivor-options section and confirms only one survivor can be named and the choice 'is usually permanent,' but the four specific option labels/percentages were not independently re-quoted for TRS 2 — assumed identical to PERS 2 by DRS's standard structure (high-confidence-by-analogy, not separately verified line-by-line). Plan 3 (PERS 3 and TRS 3) layers two separate survivor decisions: the DB pension uses the same survivor-option mechanism as Plan 2; the DC investment account is handled completely separately (self-directed withdrawals, rollover, or the optional Plan 3 TAP annuity, which can choose a different survivor from the pension). Generally irrevocable once retirement begins. PERS 2: 'your survivor and benefit option become final once retirement begins, with only a few exceptions.' TRS 2/general DRS glossary: 'you can only name one survivor, and this choice is usually permanent.' For Plan 3 TAP annuities specifically: 'Once your annuity is set up, the income amount and terms cannot be changed or canceled,' though there is a pre-purchase window to change/cancel and a 15-day cancellation right after the transaction. The specific 'few exceptions' to DB-side irrevocability (e.g., divorce, survivor predeceasing the retiree) were referenced but not independently enumerated — UNCONFIRMED in detail.

What could not be verified

Core facts pulled directly from drs.wa.gov plan pages (PERS 2/3, TRS 2/3), the DRS plan-choice page, the DRS COLA page, and RCW 41.40.034 read in full text; other RCW section numbers referenced via a chapter index were NOT independently read in full and should be treated as leads only. Known gaps: (1) TRS 2's exact survivor-option percentages assumed identical to PERS 2, not independently re-quoted; (2) PERS 3's default DC contribution rate if unselected confirmed only for TRS 3, assumed for PERS 3; (3) service-credit-purchase categories beyond military service and the generic service-credit annuity (authorized leave, out-of-state/interlocal service) not fetched in full detail; (4) DROP absence based on term not appearing on the pages checked, not an exhaustive site-wide negative check; (5) the PERS employer-coverage list as extracted may be partial/truncated — state-agency coverage, while very likely true, was not itself present in the quoted text.

These gaps are stated because a plan-rule page that hides its own limits is worse than no page. Your member handbook is the authority, and where it and this page disagree, the handbook wins.

Sources

• https://www.drs.wa.gov/plan/pers2/
• https://www.drs.wa.gov/plan/pers3/
• https://www.drs.wa.gov/plan/trs2/
• https://www.drs.wa.gov/plan/trs3/
• https://www.drs.wa.gov/choice/
• https://www.drs.wa.gov/life/retired/cola/
• https://www.drs.wa.gov/sitemap/faq/
• https://www.drs.wa.gov/glossary/
• https://app.leg.wa.gov/rcw/default.aspx?cite=41.40.034

Read 2026-08-04.

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Related: buyback calculator · is buying service credit worth it · refund or leave it in · DROP explained.

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