6. Currently, under the WRS, retirement benefits that are payable as the result
of the death of a WRS participant are not considered to be abandoned until at least
ten years have elapsed. The bill specifies when the potential beneficiary of a
deceased person, who was insured under the group life insurance program, is treated
as having abandoned any claim to the life insurance benefits.
7. For the purpose of benefit plans administered by DETF, the bill provides that
the definition of the federal "Internal Revenue Code" is delegated to the federal
government and not, as is current law, to enactments of the Wisconsin legislature.
8. Current law provides that for certain moneys owed under public employee
benefit plans, DETF may retain the moneys from payments due any person or estate
and may charge interest at the effective rate, which is essentially the most recent
annual investment return on moneys in the fixed annuity division of the employee
trust fund. This bill changes the rate at which interest can be charged to the assumed
rate, which is the projected actuarial rate that is needed to fund the benefits under
the WRS, unless DETF sets another rate by rule.
9. This bill specifies that the number of guaranteed death benefit payments
that are payable to a beneficiary of a participant in the WRS may not exceed the life
expectancy of the beneficiary.
10. Under current law, the Group Insurance Board is authorized to hear
appeals of determinations made by DETF affecting group insurance plans. This bill
requires the Group Insurance Board to hear such appeals.
11. The bill eliminates a requirement that a participant must submit a certified
copy of his or her most recent state or federal income tax return to the Wisconsin
Retirement Board for income verification purposes under the Duty Disability
program. Instead, the bill provides that the Wisconsin Retirement Board may
require a participant to authorize the Wisconsin Retirement Board to obtain a copy
of the participant's tax returns.
12. Currently, unfunded prior service liabilities under the WRS are funded over
a 40-year amortization period. This bill reduces the amortization period to 30 years
for all unfunded prior service liabilities incurred after the bill's effective date.
13. Currently, the Department of Revenue (DOR) may attach WRS benefits for
delinquent tax purposes. The bill clarifies that DOR may attach WRS annuity
payments, lump sum payments, and disability annuity payments.
14. Current law permits a participant, beneficiary, or distributee of an estate
to waive WRS benefits and provides that the waiver is effective on the first day of the
2nd month commencing after the waiver is received by DETF or on the date specified
in the waiver, if later. This bill provides that the waiver is effective 30 days after it
is received by DETF or on the date specified in the waiver, if earlier. The bill also
provides that the waiver may be cancelled by the participant, beneficiary, or
distributee in writing before the effective date.

Because this bill relates to public employee retirement or pensions, it may be
referred to the Joint Survey Committee on Retirement Systems for a report to be
printed as an appendix to the bill.
For further information see the state 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:
AB893, s. 1 1Section 1. 40.02 (8) (a) 2. of the statutes is amended to read:
AB893,4,162 40.02 (8) (a) 2. In the absence of a written designation of beneficiary, or if all
3designated beneficiaries so designated who survive the decedent die before filing
4with the department a beneficiary designation applicable to that death benefit or an
5application for any death benefit payable, the person determined in the following
6sequence: group 1, widow or widower surviving spouse; group 2, children if at least
7one child survives
of the deceased participant, employee or annuitant, in which event
8equal shares, with the share of any deceased child shall be payable to the surviving
9spouse
issue of the child or to the surviving children of the child if there is no spouse,
10or otherwise
or, if there is no surviving issue of a deceased child, to the other eligible
11children in this group or, if deceased, their issue; group 3, grandchild; group 4,
12parent, in equal shares if both survive; group 5 4, brother and sister in equal shares
13and the issue of any deceased brother or sister. The shares payable to the issue of
14a person shall be determined per stirpes
. No payment may be made to a person
15included in any group if there is a living person in any preceding group, and s. 854.04
16(6) shall not apply to a determination under this subsection
.
AB893, s. 2 17Section 2. 40.02 (8) (b) of the statutes is renumbered 40.02 (8) (b) (intro.) and
18amended to read:
AB893,4,1919 40.02 (8) (b) (intro.) "Beneficiary" does not include a any of the following:
AB893,5,9
11. A person who dies before filing with the department either a beneficiary
2designation applicable to that death benefit or an application for any death benefit
3payable to the person except as otherwise provided under group 2, under par. (a) 2.
4If a person dies after filing a beneficiary application but before the date on which the
5benefit check, share draft or other draft is issued or funds are otherwise transferred,
6any benefit payable shall be paid in accord with the written designation of
7beneficiary, if any, filed with the department in connection with the application or,
8if none, in accord with the last designation previously filed by the person, or
9otherwise to the person's estate.
AB893, s. 3 10Section 3. 40.02 (8) (b) 2. of the statutes is created to read:
AB893,5,1611 40.02 (8) (b) 2. For purposes of a group life insurance benefit plan under this
12chapter, and at the discretion of the department, an individual who is notified by the
13department or insurer that a benefit is payable to the individual because of the death
14of an insured person, who is provided with any necessary application form, and who
15does not then apply for the benefit within 12 months of the date of notification by the
16department that the benefit is payable to the individual.
AB893, s. 4 17Section 4. 40.02 (22) (e) of the statutes is amended to read:
AB893,5,2518 40.02 (22) (e) Except For an employee serving in a position covered under and
19meeting the requirements of 38 USC 4301, et. seq., except
for OASDHI purposes,
20means compensation deemed to have been paid for services deemed to have been
21rendered while serving in a position covered under, and meeting the requirements
22of, 38 USC 4301, et seq., at the employee's rate of pay prior to beginning such service

23determined as required under 38 USC 4318 (b) (3) and regulations adopted
24thereunder
, provided contributions and premiums on the deemed earnings
25compensation are paid as required under s. 40.05.
AB893, s. 5
1Section 5. 40.02 (39m) of the statutes is amended to read:
AB893,6,52 40.02 (39m) "Internal revenue code" means the federal internal revenue code
3under Title 26, USC, as defined for the current taxable year under s. 71.01 (6)
4amended, and applicable federal regulations adopted under the internal revenue
5code
by the federal department of the treasury, including temporary regulations.
AB893, s. 6 6Section 6. 40.03 (6) (i) of the statutes is amended to read:
AB893,6,97 40.03 (6) (i) May Shall accept timely appeals of determinations made by the
8department affecting any right or benefit under any group insurance plan provided
9for under this chapter.
AB893, s. 7 10Section 7. 40.05 (2) (b) of the statutes is amended to read:
AB893,6,2211 40.05 (2) (b) Contributions shall be made by each participating employer for
12unfunded prior service liability in a percentage of the earnings of each participating
13employee. A separate percentage rate shall be determined for the employee
14occupational categories under s. 40.23 (2m) as of the employer's effective date of
15participation. The rates shall be sufficient to amortize as a level percent of payroll
16over a period of 40 30 years from the later of that date or January 1, 1986, the
17unfunded prior service liability for the categories of employees of each employer
18determined under s. 40.05 (2) (b), 1981 stats., increased to reflect any creditable prior
19service granted on or after January 1, 1986, increased to reflect the effect of 1983
20Wisconsin Act 141
, increased at the end of each calendar year after January 1, 1986,
21by interest at the assumed rate on the unpaid balance at the end of the year and
22adjusted under pars. (bu), (bv) and (bw).
AB893, s. 8 23Section 8. 40.05 (2) (bu) of the statutes is amended to read:
AB893,7,524 40.05 (2) (bu) The employer contribution rate determined under par. (b) for
25each employer shall be adjusted, if necessary, to reflect the added prior service

1liability of paying additional joint and survivor death benefits to beneficiaries of
2participating employees as a result of 1997 Wisconsin Act 58 and that rate shall be
3sufficient to amortize the unfunded prior service liability of the employers over the
4remainder of the 40-year amortization period under par. (b) s. 40.05 (2) (b), 2005
5stats
.
AB893, s. 9 6Section 9. 40.05 (2) (bv) of the statutes is amended to read:
AB893,7,127 40.05 (2) (bv) The employer contribution rate determined under par. (b) for
8participating employees who served in the U.S. maritime service shall be adjusted
9to reflect the cost of granting creditable service under s. 40.02 (15) (a) 7. and that rate
10shall be sufficient to amortize the unfunded prior service liability of the employers
11over the remainder of the 40-year amortization period under par. (b) s. 40.05 (2) (b),
122005 stats
.
AB893, s. 10 13Section 10. 40.05 (2) (bw) of the statutes is amended to read:
AB893,7,1814 40.05 (2) (bw) The employer contribution rate determined under par. (b) for the
15University of Wisconsin System shall be adjusted to reflect the cost of granting
16creditable service under s. 40.285 (2) (e) and that rate shall be sufficient to amortize
17the unfunded prior service liability of the employers over the remainder of the
1840-year amortization period under par. (b) s. 40.05 (2) (b), 2005 stats.
AB893, s. 11 19Section 11. 40.05 (2) (bz) of the statutes is amended to read:
AB893,7,2520 40.05 (2) (bz) The employer contribution rate determined under par. (b) for the
21department of administration shall be adjusted to reflect the cost of granting
22creditable service under s. 40.02 (17) (gm) and that rate shall be sufficient to amortize
23the unfunded prior service liability of the department of administration over the
24remainder of the 40-year amortization period under par. (b) s. 40.05 (2) (b), 2005
25stats
.
AB893, s. 12
1Section 12. 40.08 (1) of the statutes is amended to read:
AB893,8,132 40.08 (1) Exemptions. The benefits payable to, or other rights and interests of,
3any member, beneficiary or distributee of any estate under any of the benefit plans
4administered by the department, including insurance payments, shall be exempt
5from any tax levied by the state or any subdivision of the state and shall not be
6assignable, either in law or equity, or be subject to execution, levy, attachment,
7garnishment or other legal process except as specifically provided in this section;
8except that, notwithstanding s. 40.01 (2), the department of revenue may attach
9benefit payments to satisfy delinquent tax obligations. The board and any member
10or agent thereof and the department and any employee or agent thereof are immune
11from civil liability for any act or omission while performing official duties relating to
12withholding any annuity payment under this subsection
. The exemption from
13taxation under this section shall not apply with respect to any tax on income.
AB893, s. 13 14Section 13. 40.08 (1r) of the statutes is created to read:
AB893,8,2115 40.08 (1r) Delinquent state tax obligations. Notwithstanding sub. (1) and s.
1640.01 (2), the department of revenue may attach any lump sum payment or monthly
17annuity paid under s. 40.23, 40.24, 40.25 (1) or (2), or 40.63 to satisfy delinquent tax
18obligations. The board and any member or agent thereof and the department and
19any employee or agent thereof are immune from civil liability for any act or omission
20while performing official duties relating to withholding any payment under this
21subsection.
AB893, s. 14 22Section 14. 40.08 (3) of the statutes is amended to read:
AB893,9,423 40.08 (3) Waivers. Any participant, beneficiary, or distributee of any estate
24may waive, absolutely and without right of reconsideration or recovery, the right to
25or the payment of all or any portion of any benefit payable or to become payable under

1this chapter. The waiver shall be effective on the first day of the 2nd month
2commencing
30 days after it is received by the department or on the date specified
3in the waiver, if later earlier. The waiver may be cancelled by the participant,
4beneficiary, or distributee in writing before the effective date
.
AB893, s. 15 5Section 15. 40.08 (4) of the statutes is amended to read:
AB893,9,206 40.08 (4) Retention of payments. Unless voluntarily repaid and except as
7limited by sub. (10), the department may retain out of any annuity or benefit an
8amount as the department in its discretion may determine, for the purpose of
9reimbursing the appropriate benefit plan accounts for a balance due under s. 40.25
10(5) or for any money paid, plus interest at the effective rate of the core annuity
11division
assumed rate, unless the department sets a different rate by rule, to any
12person or estate, through misrepresentation, fraud, or error. Upon the request of the
13department any employer shall withhold from any sum payable by the employer to
14any person or estate and remit to the department any amount, plus interest at the
15effective rate of the core annuity division assumed rate, unless the department sets
16a different rate by rule
, which the department paid to the person or estate through
17misrepresentation, fraud, or error. Any amount, plus interest at the effective rate
18assumed rate, unless the department sets a different rate by rule, not recovered by
19the department from the employer may be procured by the department by action
20brought against the person or estate.
AB893, s. 16 21Section 16. 40.08 (6) (e) of the statutes is repealed and recreated to read:
AB893,9,2422 40.08 (6) (e) In accordance with rules promulgated by the department, and at
23the rate of interest established by rule, the department may credit interest on
24moneys refunded or credited under this subsection.
AB893, s. 17 25Section 17. 40.24 (1) (e) of the statutes is amended to read:
AB893,10,11
140.24 (1) (e) A reduced annuity payable in the normal form or any of the
2optional life forms provided under this section, plus a temporary annuity payable
3monthly but terminating with the payment payable in the month following the
4month in which the annuitant attains age 62 or, if earlier, on the death of the
5annuitant
. If the annuitant dies before the end of the final payment, the remaining
6payments of the temporary annuity certain shall be made to the named survivor or,
7if there is no living named survivor, in accordance with s. 40.73 (2) to the annuitant's
8beneficiary
. It is the intent of this option that so far as is practicable the amounts
9of the life annuity and temporary annuity shall be determined so that the annuitant's
10total anticipated benefits from the fund and from his or her primary OASDHI benefit
11will be the same each month both before and after attainment of age 62.
AB893, s. 18 12Section 18. 40.25 (5) (b) of the statutes is amended to read:
AB893,11,313 40.25 (5) (b) The full amount of the benefit paid, plus interest at the effective
14rate
assumed rate, unless the department sets a different rate by rule, shall be repaid
15to the Wisconsin retirement system by the employer of an employee whose rights and
16creditable service are reestablished under par. (a) within 60 days after the effective
17date of the employee's reinstatement. The amount repaid by the employer under this
18paragraph shall be deducted by the employer from any payment due the employee
19as a result of the resolution of the appeal or, if that amount is insufficient, the balance
20shall be deducted from the employee's earnings except the amount deducted from
21each earnings payment shall be not less than 10% nor more than 25% of the earnings
22payment. If the employee terminates employment the employer shall notify the
23department of the amount not yet repaid, including any interest due, at the same
24time it notifies the department of the termination of employment, and the
25department shall repay to the employer the balance of the amount due from

1retentions made under s. 40.08 (4). The employer may charge interest at a rate not
2in excess of the current year's assumed rate on any amount unpaid at the end of any
3calendar year after the year of reinstatement.
AB893, s. 19 4Section 19. 40.65 (3) of the statutes is amended to read:
AB893,11,155 40.65 (3) The Wisconsin retirement board shall determine the amount of each
6monthly benefit payable under this section and its effective date. The board shall
7periodically review the dollar amount of each monthly benefit and adjust it to
8conform with the provisions of this section. The board may request any income or
9benefit information, or any information concerning a person's marital status, which
10it considers to be necessary to implement this subsection and shall may require a
11participant to submit a certified authorize the board to obtain a copy of his or her
12most recent state or federal income tax return. The board may terminate the
13monthly benefit of any person who refuses to submit information requested by the
14board, who refuses to authorize the board to obtain a copy of his or her most recent
15state or federal income tax return,
or who submits false information to the board.
AB893, s. 20 16Section 20. 40.70 (1) (b) of the statutes is amended to read:
AB893,11,2117 40.70 (1) (b) The employee files with the department an application in the
18manner provided by rule or contract
, to be effective on a date fixed by the department,
19for one or more of the types of coverage established under this subchapter. The group
20insurance board may provide a different method of enrollment than provided under
21this subsection.
AB893, s. 21 22Section 21. 40.70 (6) of the statutes is amended to read:
AB893,12,523 40.70 (6) Except as provided in sub. (7m), any employee who has not applied
24for coverage under sub. (1) within 6 months the time period specified by rule or
25contract
after becoming eligible for coverage or any employee whose insurance

1terminates under sub. (8) shall not thereafter become insured for that coverage
2unless prior to the attainment of age 55 the employee furnishes evidence of
3insurability satisfactory to the insurer, at his or her own expense. If the evidence is
4approved, the employee shall become insured on the first day of the first month
5beginning after the approval.
AB893, s. 22 6Section 22. 40.73 (3) (e) of the statutes is amended to read:
AB893,12,127 40.73 (3) (e) Any beneficiary who is eligible to receive a beneficiary annuity
8may elect to receive the annuity in any of the optional annuity forms provided for
9retirement annuities, other than as an annuity under s. 40.24 (1) (c) or any annuity
10payable over the joint life expectancies of the beneficiary and another person. The
11number of guaranteed monthly payments available to a beneficiary may not exceed
12the life expectancy of the beneficiary.
AB893, s. 23 13Section 23. 40.74 (2) of the statutes is amended to read:
AB893,13,314 40.74 (2) A beneficiary of a deceased participant, annuitant, alternate payee,
15beneficiary, or employee may waive absolutely and without right of reconsideration
16or recovery all or part of any benefit payable under this chapter. The beneficiary
17shall then be determined as if the waiving beneficiary had died prior to the decedent
18except that if the person was a beneficiary under group 2 under s. 40.02 (8) (a) 2.,
19payment shall be made as if at least one child had survived the participant, alternate
20payee, beneficiary, employee, or annuitant. Unless the department receives the
21beneficiary's written request to cancel the waiver before the date on which it would
22otherwise become effective, the waiver shall be effective on the first day of the 2nd
23month commencing
30 days after it is received by the department or the date
24specified in the waiver, if later earlier. The waiver may be cancelled by the
25beneficiary in writing before the effective date
. A waiver received after the effective

1date on which a beneficiary has commenced a monthly annuity under s. 40.73 (2) or
2(3) shall apply to monthly payments payable after the effective date of the waiver.
3Payment shall be subject to the restrictions specified in s. 40.73 (2) (b).
AB893, s. 24 4Section 24. 40.74 (6) of the statutes is created to read:
AB893,13,95 40.74 (6) Any potential primary beneficiary under s. 40.02 (8) who cannot be
6located by reasonable efforts within 12 months after the later of the date of death of
7the participant or the date on which the department determines the person, trust,
8or estate initially became a potential primary beneficiary may be treated as a
9beneficiary that predeceased the participant and all other potential beneficiaries.
AB893, s. 25 10Section 25. 40.74 (7) of the statutes is created to read:
AB893,13,1511 40.74 (7) A trust that does not exist on the date of the participant's death or an
12estate not opened or reopened within 12 months after the department determines the
13estate initially became a potential primary beneficiary under s. 40.02 (8) may be
14treated as a beneficiary that predeceased the participant and all other potential
15beneficiaries.
AB893, s. 26 16Section 26. 40.80 (2r) (b) of the statutes is renumbered 40.08 (1r) and amended
17to read:
AB893,13,2218 40.08 (1r) Notwithstanding s. 40.08 sub. (1), a participant's accumulated
19assets held in an account in the deferred compensation plan established under this
20subchapter
subch. VII may be divided, in the manner provided by the deferred
21compensation board and under s. 40.80 (2r),
pursuant to a domestic relations order,
22as defined under s. 40.80 (2r) (a)
.
AB893, s. 27 23Section 27. Nonstatutory provisions.
AB893,14,424 (1) Distribution of moneys from reserve established under 1999 Wisconsin
25Act 11
.
Notwithstanding the requirement under 1999 Wisconsin Act 11, section 27

1(1) (b), that the employee trust funds board make deductions on a monthly basis from
2employers' credit balances, the board shall distribute all remaining moneys in the
3reserve established under 1999 Wisconsin Act 11, section 27 (1) (b), before January
41, 2009.
AB893, s. 28 5Section 28 . Initial applicability.
AB893,14,86 (1) The treatment of section 40.05 (2) (b) of the statutes first applies to
7unfunded prior service liabilities under the Wisconsin Retirement System that are
8incurred on the effective date of this subsection.
AB893,14,109 (2) The treatment of section 40.24 (1) (e) of the statutes first applies to annuities
10that became effective on the effective date of this subsection.
AB893, s. 29 11Section 29. Effective dates. This act takes effect on the day after publication,
12except as follows:
AB893,14,1413 (1) The treatment of section 40.24 (1) (e) of the statutes and Section 28 (2) of
14this act take effect on the first day of the 3rd month after publication.
AB893,14,1515 (End)
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