SB418: Bill Text

27. Under current law, DETF may not be required by a court order, or by any other action or proceeding, to enforce or otherwise monitor the beneficiary designation specified in a qualified domestic relations order (QDRO). A QDRO is a judgment, decree, or order issued by a court pursuant to a domestic relations law of any state or territory of the United States, that meets certain requirements. This bill provides that DETF may not be required by a court order, or by any other action or proceeding, to enforce or otherwise monitor any beneficiary designation filed with DETF.

28. Under the WRS, if a participating employee dies before he or she would be eligible to receive an annuity his or her death benefit equals the sum of his or her additional contribution accumulations and twice his or her employee required contribution accumulations. For a participating employee who has purchased WRS service based on his or her other governmental employment, this bill reduces the amount of the death benefit by the amount that the employee paid for the additional WRS service.

This bill will be referred to the joint survey committee on retirement systems for a detailed analysis, which will be printed as an appendix to this bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB418, s. 1 Section 1. 40.02 (1) of the statutes is amended to read:

SB418,7,5 40.02 (1) "Accumulation" means the total employee required contributions or, employer required contributions or, additional contributions, or tax-deferred additional contributions as increased or decreased by application of investment earnings.

SB418, s. 2 Section 2. 40.02 (2) of the statutes is amended to read:

SB418,7,9 40.02 (2) "Additional contribution" means any after-tax contribution made by or on behalf of a participant to the retirement system other than employee and employer required contributions.

SB418, s. 3 Section 3. 40.02 (15) (c) (intro.) of the statutes is amended to read:

SB418,8,2 40.02 (15) (c) (intro.) Notwithstanding sub. (17) (intro.) and any other law, any Any person who is credited with 5, 10, 15, or 20 or more years of creditable service, not counting any previously granted creditable military service, may receive creditable military service at the time of retirement for not more than 1, 2, 3, or 4 years, respectively, of active service which that meets the standards under par. (a) 5., provided:

SB418, s. 4 Section 4. 40.02 (15) (c) 3. of the statutes is amended to read:

SB418,8,12 40.02 (15) (c) 3. Creditable military service under this paragraph shall be allocated at the time of retirement in proportion to the amount of the participant's creditable service for each of the types of creditable service set forth in s. 40.23 (2m) (e) on the date the participant attains 5, 10, 15, or 20 years of creditable service, except that, if a participant would receive a higher benefit, the creditable military service shall be allocated according to the amount of creditable service that is credited to the participant's account on the date on which the participant terminates participating employment and that is used to calculate a benefit under s. 40.23 (2m) (e), 40.63 (8) (a), or 40.73 (1) (c).

SB418, s. 5 Section 5. 40.02 (15) (c) 4. of the statutes is amended to read:

SB418,8,20 40.02 (15) (c) 4. This paragraph does not apply to any active service used for the purpose of establishing entitlement to, or the amount of, any benefit, other than a disability benefit, to be paid by any federal retirement program except OASDHI and the retired pay for nonregular military service program under 10 USC 1331 to 1337 12731 to 12738 or, if the participant makes an election under s. 40.30 (2), by any retirement system specified in s. 40.30 (2) other than the Wisconsin retirement system.

SB418, s. 6 Section 6. 40.02 (38) of the statutes is amended to read:

SB418,8,24 40.02 (38) "Immediate annuity" means an annuity, not including an annuity from additional contributions or tax-deferred additional contributions, which begins to accrue not later than 30 days after termination of employment.

SB418, s. 7 Section 7 . 40.02 (54v) of the statutes is created to read:

SB418,9,4 40.02 (54v) "Tax-deferred additional contribution" means any contribution made to the retirement system by a participating employee or an annuitant employed by an employer as a pre-tax deduction from earnings under section 403 (b) of the Internal Revenue Code.

SB418, s. 8 Section 8. 40.03 (2) (ig) of the statutes is amended to read:

SB418,9,9 40.03 (2) (ig) Shall promulgate, with the approval of the group insurance board, all rules required for the administration of the group health, long-term care, income continuation or, life insurance, and other insurance plans established under subchs. IV to VI this chapter.

SB418, s. 9 Section 9. 40.03 (6) (cm) of the statutes is created to read:

SB418,9,12 40.03 (6) (cm) Shall approve or reject all administrative rules proposed by the secretary under sub. (2) (ig).

SB418, s. 10 Section 10. 40.03 (6) (i) of the statutes is amended to read:

SB418,9,16 40.03 (6) (i) May Shall accept timely appeals of determinations made by the department affecting any right or benefit under any group insurance plan provided for under this chapter.

SB418, s. 11 Section 11 . 40.04 (4) (a) 1. of the statutes is amended to read:

SB418,9,22 40.04 (4) (a) 1. Credited with all employee contributions made under s. 40.05 (1), all employer additional contributions made under s. 40.05 (2) (g) 1., all additional contributions under s. 40.05 (2) (g) 2., all tax-deferred additional contributions under s. 40.05 (1) (a) 5m., and all contribution accumulations reestablished under s. 40.26 or 40.63 (10).

SB418, s. 12 Section 12. 40.04 (4) (a) 2. of the statutes is amended to read:

SB418,9,25 40.04 (4) (a) 2. Credited as of each December 31 with interest on the prior year's closing balance at the effective rate on all employee required contribution accumulations in the variable annuity division, on all employee required contributions in the fixed annuity division on December 31, 1984, on all employee required contributions in the fixed annuity division of participants who are not participating employees after December 31, 1984, and on all employee and employer additional contribution accumulations, and on all tax-deferred additional contribution accumulations and with interest on the prior year's closing balance at the assumed benefit rate on all employee required contribution accumulations in the fixed annuity division for participants who are participating employees after December 31, 1984, but who terminated covered employment before December 30, 1999.

SB418, s. 13 Section 13. 40.04 (7) (intro.) of the statutes is amended to read:

SB418,10,16 40.04 (7) (intro.) The reserves established under subs. (4), (5), and (6) shall be divided both individually and for the purposes of sub. (3) between a fixed annuity division and a variable annuity division. All required and , additional, and tax-deferred additional contributions shall be credited to the fixed annuity division except:

SB418, s. 14 Section 14. 40.04 (7) (a) (intro.) of the statutes is amended to read:

SB418,11,15 40.04 (7) (a) (intro.) As otherwise elected by a participant prior to April 30, 1980, or on or after January 1, 2001. Any participant who was a participant prior to April 30, 1980, and whose accounts on January 1, 1982, include credits segregated for a variable annuity shall have his or her required and , additional, and tax-deferred additional contributions made on or after January 1, 1982, credited to the variable annuity division in a manner consistent with the participant's election prior to April 30, 1980, unless prior to January 1, 1982, the participant terminated such election under s. 40.85, 1979 stats. Any participant who elects or has elected to have any of his or her credits segregated for a variable annuity on or after January 1, 2001, shall have 50% of his or her required and, additional, and tax-deferred additional contributions made on or after the date of election credited to the variable annuity division. The department shall by rule provide that any participant who elects or has elected variable participation prior to April 30, 1980, or on or after January 1, 2001, may elect to cancel that variable participation as to future contributions. The department's rules shall permit a participant who elects or has elected to cancel variable participation as to future contributions, or an annuitant, to elect to transfer previous variable contribution accumulations to the fixed annuity division. A transfer of variable contribution accumulations under this paragraph shall result in the participant receiving the accrued gain or loss from the participant's variable participation. A participant may specify that election to cancel participation in the variable annuity division is conditional. If the participant so specifies the election is effective on the first date on which it may take effect on which the participant:

SB418, s. 15 Section 15 . 40.04 (7) (c) of the statutes is amended to read:

SB418,11,22 40.04 (7) (c) Any participant whose required contributions are segregated in any portion to provide for a variable annuity may direct that any part or all of subsequent additional and tax-deferred additional contributions credited to the participant's account be segregated to provide for a variable annuity and may at any time by filing a form prescribed by the department change the portion being segregated for any future additional and tax-deferred additional contributions.

SB418, s. 16 Section 16. 40.05 (1) (a) 5m. of the statutes is created to read:

SB418,12,10 40.05 (1) (a) 5m. Tax-deferred additional contributions may be made by any participating employee of, or an annuitant employed by, an employer that had at least one employee who made such contributions to the Wisconsin retirement system or its predecessor systems under s. 42.30 (3), 1979 stats., on or before May 17, 1982. The making of contributions under this subdivision shall be subject to any limitations imposed on contributions by the Internal Revenue Code, applicable regulations adopted under the Internal Revenue Code and rules of the department. The participating employee and the employer are solely responsible for determining the amount of contributions that may be made to the retirement system under this subdivision and monitoring the annual contributions for compliance with any limitations imposed on contributions by the Internal Revenue Code, applicable regulations adopted under the Internal Revenue Code and rules of the department.

SB418, s. 17 Section 17. 40.05 (1) (a) 6. of the statutes is amended to read:

SB418,12,21 40.05 (1) (a) 6. Under the rules promulgated under s. 40.03 (2) (r), additional contributions, other than the first $5,000 of contributions, or a beneficiary's prorated share thereof, that are attributable to a death benefit paid under s. 40.73, may be made to the fixed annuity division by any participant, or to the variable annuity division for any participant whose accounts include credits segregated for a variable annuity, by rollover contribution of a payment or distribution from a pension or annuity qualified under section 401 of the internal revenue code Internal Revenue Code, subject to any limitations imposed on contributions by the internal revenue code Internal Revenue Code, applicable regulations adopted under the internal revenue code Internal Revenue Code and rules of the department.

SB418, s. 18 Section 18. 40.05 (1) (a) 7. of the statutes is amended to read:

SB418,13,3 40.05 (1) (a) 7. Subject to any applicable limitations under the internal revenue code Internal Revenue Code, a participating employee may elect to use part or all of his or her accumulated after-tax additional contributions, including interest, made under subd. 5., other than contributions treated by the department as contributions to a tax sheltered annuity under section 403 (b) of the internal revenue code, to purchase creditable service under this chapter.

SB418, s. 19 Section 19. 40.05 (2) (g) 2. of the statutes is amended to read:

SB418,13,16 40.05 (2) (g) 2. Under the rules promulgated under s. 40.03 (2) (r), a participant may, as a payout option for the deferred compensation plan established under subch. VII s. 40.80, elect to have the entire balance in the participant's account under subch. VII s. 40.80 treated as an additional contribution to the fixed annuity division, subject to any limitations imposed on contributions by the internal revenue code Internal Revenue Code, applicable regulations adopted under the internal revenue code Internal Revenue Code and rules of the department. Additional contributions under this subdivision shall be available for all benefit purposes and shall be administered and invested on the same basis as employee additional contributions, except that ss. 40.24 (1) (f) and 40.25 (4) do not apply to additional contributions under this subdivision and s. 40.26 does not apply to an annuity received from additional contributions under this subdivision.

SB418, s. 20 Section 20. 40.06 (8) of the statutes is created to read:

SB418,13,22 40.06 (8) Any employer who employed teacher participants who were members of the state teachers retirement system shall pay the state all employer required contributions, plus interest at the effective rate on the accumulations, that would have been paid for the teacher participants under the state teachers retirement system.

SB418, s. 21 Section 21. 40.08 (1) of the statutes is amended to read:

SB418,14,11 40.08 (1) Exemptions. The benefits payable to, or other rights and interests of, any member, participant, alternate payee, beneficiary, or distributee personal representative of any estate under any of the benefit plans administered by the department, including insurance payments, shall be exempt from any tax levied by the state or any subdivision of the state and shall not be assignable, either in law or equity, or be subject to execution, levy, attachment, garnishment, or other legal process except as specifically provided in this section; except that, notwithstanding s. 40.01 (2), the department of revenue may attach benefit payments to satisfy delinquent tax obligations. The board and any member or agent thereof and the department and any employee or agent thereof are immune from civil liability for any act or omission while performing official duties relating to withholding any annuity payment under this subsection. The exemption from taxation under this section shall not apply with respect to any tax on income.

SB418, s. 22 Section 22. 40.08 (3) of the statutes is renumbered 40.08 (3) (a) and amended to read:

SB418,14,19 40.08 (3) (a) Any Subject to par. (b), any participant, alternate payee, beneficiary, or distributee personal representative of any estate may waive, absolutely and without right of reconsideration or recovery, the right to or the payment of all or any portion of any benefit payable or to become payable under this chapter. The waiver shall be effective on the first day of the 2nd month commencing after it is received by the department or on the date specified in the waiver if later.

SB418, s. 23 Section 23. 40.08 (3) (b) of the statutes is created to read:

SB418,14,24 40.08 (3) (b) No participant, alternate payee, beneficiary, or personal representative of any estate may conditionally or partially waive any portion of any benefit under this chapter if the implementation of the waiver, or monitoring of benefits under the waiver, would require special administration by the department.

SB418, s. 24 Section 24. 40.08 (4) of the statutes is repealed and recreated to read:

SB418,15,6 40.08 (4) Reimbursements of moneys paid as a result of misrepresentation, fraud, or error. (a) If the department has paid any money to a person or estate as a result of misrepresentation, fraud, or error, the department shall determine the amount of such payment and shall require that the person or estate reimburse the department for this amount, plus interest at the rate established by the department by rule.

SB418,15,15 (b) If the department determines that any money has been paid to a person or estate as a result of misrepresentation, fraud, or error, the department shall notify the person or the personal representative or special administrator of the person's estate by certified mail of this determination. The department shall send the notice to the last-known address of the person or the personal representative or special administrator of the person's estate. The notice shall inform the person of his or her right to a timely appeal. The notice must be sent within 7 years from the date that the department first acquires actual notice of the alleged misrepresentation, fraud, or error.

SB418,15,23 (c) The sending of the notice by the department under par. (b) shall constitute a lien against the person's separate account under s. 40.04 (4) (a) and any annuity, benefit, or obligation of the employee trust fund that is payable or will become payable to the person or the person's beneficiaries. This lien takes precedence over all other withholdings, liens, or encumbrances, whenever perfected, against the person's separate account under s. 40.04 (4) (a) and any annuity, benefit, or obligation of the employee trust fund that is payable or will become payable to the person or the person's beneficiaries.

SB418,15,25 (d) Subject to sub. (10), the department may do any of the following to provide for reimbursement of the amount or any portion of the amount due under par. (a):

SB418,16,2 1. Obtain voluntary repayment from the person or estate within a reasonable period, as determined by the department.

SB418,16,12 2. Foreclose on the lien against the person's separate account under s. 40.04 (4) (a) or any annuity, benefit, or obligation of the employee trust fund that is payable or will become payable to the person or the person's beneficiaries. In foreclosing on this lien, the department may retain the amount or portion of the amount out of any annuity, benefit, or obligation of the employee trust fund that is payable or will become payable to the person or the person's beneficiaries or may permanently reduce the person's annuity by the actuarial present value of the amount or portion of the amount that is due under par. (a). If the department forecloses on the lien, the department shall notify, by regular mail, the person or personal representative or special administrator of the person's estate of the foreclosure as soon as practical.

SB418,16,16 3. Request that an employer withhold the amount or any portion of the amount from any sum payable by the employer to any person or estate. If an employer receives such a request, the employer shall withhold and remit the amount to the department.

SB418,16,18 4. Bring a civil action against the person or estate for the amount or any portion of the amount that is not otherwise recovered by the department.

SB418,16,20 (e) Any amount that is reimbursed to the department under par. (d) shall be credited to the appropriate benefit plan accounts.

SB418, s. 25 Section 25. 40.08 (6) (e) of the statutes is repealed and recreated to read:

SB418,16,24 40.08 (6) (e) In accordance with rules promulgated by the department, and at a rate of interest established by rule, the department may credit interest on moneys refunded or credited under this subsection.

SB418, s. 26 Section 26. 40.08 (7) (a) of the statutes is amended to read:

SB418,17,10 40.08 (7) (a) Any overpayment or underpayment of a lump-sum payment under s. 40.25 or a death benefit which is less than 60% of the amount specified in s. 40.25 (1) (a) rounded to the next highest dollar amount, and any annuity payment error which is less than $2 per month may not be corrected but shall be credited or debited to the employer accumulation reserve or the appropriate insurance account. However, if the amount of unapplied additional contributions or tax-deferred additional contributions would increase an annuity payment by less than $2 but is more than 60% of the amount specified in s. 40.25 (1) (a) rounded to the next highest dollar amount, the unapplied additional contributions or tax-deferred additional contributions shall be paid to the annuitant as a lump sum.

SB418, s. 27 Section 27. 40.08 (7) (c) of the statutes is amended to read:

SB418,17,18 40.08 (7) (c) If In accordance with rules promulgated by the department, and at a rate of interest established by rule, if an annuity underpayment exceeding exceeds the limits in par. (a) has not been corrected for at least 12 months, the payment to the annuitant to correct the underpayment shall include 0.4% interest on the amount of the underpayment for each full month during the period beginning on the date on which the underpayment occurred and ending on the date on which the underpayment is corrected.

SB418, s. 28 Section 28. 40.08 (8) (a) 1. of the statutes is amended to read:

SB418,18,5 40.08 (8) (a) 1. Any potential primary beneficiary under s. 40.02 (8), other than an estate, who has not applied for any benefit payable under this chapter as a result of the death of the participant and whom the department cannot locate by reasonable efforts, as determined by the department by rule, within one year after the department learns of the death of the participant shall be presumed to have predeceased the participant and all other potential beneficiaries. Thereafter, if the department is unable to locate any resulting subsequent beneficiary within 6 months, all beneficiaries under s. 40.02 (8) (a) 1. and 2. shall be presumed to have predeceased the participant, and the department shall pay all benefits payable under this chapter as a result of the death of the participant to the participant's estate in a lump sum.

SB418, s. 29 Section 29. 40.08 (8) (a) 2. of the statutes is amended to read:

SB418,18,13 40.08 (8) (a) 2. If an estate that is determined by the department to be a beneficiary is closed prior to the payment of benefits payable under this chapter as a result of the death of the participant, and the estate is not reopened within 6 months after the department notifies the estate that a benefit is payable, the benefit shall be considered irrevocably abandoned and shall be transferred to the employer accumulation reserve, unless the estate was the designated beneficiary under s. 40.02 (8) (a) 1.

SB418, s. 30 Section 30. 40.08 (8) (a) 2m. of the statutes is amended to read:

SB418,18,23 40.08 (8) (a) 2m. If the estate was the designated beneficiary under s. 40.02 (8) (a) 1., and the estate is closed prior to the payment of benefits payable under this chapter as a result of death of the participant, and the estate is not reopened within 6 months after the department notifies the estate that a benefit is payable, the department shall pay the benefit to a beneficiary as determined under s. 40.02 (8) (a) 2. If the department is unable to locate any such beneficiary within 6 months, all such beneficiaries shall be presumed to have predeceased the participant , and the benefit shall be considered irrevocably abandoned and shall be transferred to the employer accumulation reserve.

SB418, s. 31 Section 31. 40.08 (8) (a) 3. of the statutes is amended to read:

SB418,19,10 40.08 (8) (a) 3. A participant, other than a participating employee or annuitant, whom the department cannot locate by reasonable efforts, with such efforts beginning by the end of the month in which the participant attains, or would have attained, the age of 65, shall be considered to have abandoned all benefits under the Wisconsin retirement system on the date on which the participant attains, or would have attained, the age of 70. The department shall close the participant's account and shall transfer the moneys in the account to the employer accumulation reserve. The department shall restore the participant's account and shall debit the employer accumulation reserve accordingly if the participant subsequently applies for retirement benefits under this chapter before attaining the age of 80.

SB418, s. 32 Section 32. 40.08 (8) (a) 4. of the statutes is amended to read:

SB418,19,22 40.08 (8) (a) 4. The former spouse of a participant who is an alternate payee and whom the department cannot locate by reasonable efforts, with such efforts beginning by the end of the month in which the participant attains, or would have attained, the age of 65, shall be considered to have abandoned all benefits under the Wisconsin retirement system on the date on which the participant attains, or would have attained, the age of 70. The department shall close the alternate payee's account and shall transfer the moneys in the account to the employer accumulation reserve. The department shall restore the alternate payee's account and shall debit the employer accumulation reserve accordingly if the alternate payee subsequently applies for retirement benefits under this chapter before the participant attains or would have attained the age of 80.

SB418, s. 33 Section 33. 40.08 (8) (b) of the statutes is amended to read:

SB418,20,3 40.08 (8) (b) All moneys or credits in an account for a person presumed to have died intestate, without heirs or beneficiary, or to be abandoned by the person under par. (a) shall be applied, at the end of the 5th calendar year in which notice is published under par. (c), to the employer accumulation reserve to reduce future funding requirements.

SB418, s. 34 Section 34. 40.08 (8) (c) of the statutes is amended to read:

SB418,20,12 40.08 (8) (c) The department shall publish a class 1 notice, under ch. 985, in the official state paper stating the names of persons presumed to have died intestate, without heirs or beneficiary, or whose accounts are presumed to be abandoned under par. (a), and the fact that a benefit will be paid, if applied for within the time limits under par. (a) (d) and if the participant, alternate payee or other person offers proof satisfactory to the department that the participant, alternate payee or other person is entitled to the benefit. Such proof shall include, but is not limited to, evidence that the participant died and that the person is the beneficiary under s. 40.02 (8).

SB418, s. 35 Section 35. 40.08 (8) (e) of the statutes is amended to read:

SB418,20,20 40.08 (8) (e) Notwithstanding any other provision of the statutes s. 40.02 (8), any account subject to this subsection may, at the discretion of the department, be settled by any heirs of a deceased participant or beneficiary making application, on a form approved by the department, certifying the names of any other persons not known by the applicants to be deceased and known by the applicants to have an equal or superior claim to the account and certifying that the applicants have no knowledge of the whereabouts of any of the persons so named.

SB418, s. 36 Section 36. 40.08 (10) of the statutes is renumbered 40.08 (10) (a) and amended to read:

SB418,21,6 40.08 (10) (a) Service credits granted and contribution, premium and benefit payments made under this chapter are not Except as provided in par. (b), the factors that are used to calculate a participant's retirement benefits are subject to correction unless correction is requested or made prior to the end of 7 full calendar for 7 years after the date of the alleged error or January 1, 1987, whichever is later that the department calculates the benefits, unless the alleged error is the result of fraud or unless another limitation is specifically provided by statute. This subsection does not prohibit correction of purely clerical errors in reporting or recording contributions, service and earnings law.

SB418, s. 37 Section 37. 40.08 (10) (b) of the statutes is created to read:

SB418,21,9 40.08 (10) (b) Contribution payments are subject to correction as provided in a decision under s. 40.06 (1) (e).

SB418, s. 38 Section 38. 40.08 (10) (c) of the statutes is created to read: