AB40,721 16Section 721. 40.05 (1) (a) 5. of the statutes is amended to read:
AB40,453,2217 40.05 (1) (a) 5. Additional contributions may be made by any participant by
18deduction from earnings or otherwise or may be provided on behalf of any participant
19in any calendar year in which the participant has earnings, subject to any limitations
20imposed on contributions by the internal revenue code Internal Revenue Code,
21applicable regulations adopted under the internal revenue code Internal Revenue
22Code
and rules of the department.
AB40,722 23Section 722. 40.05 (1) (a) 6. of the statutes is amended to read:
AB40,454,624 40.05 (1) (a) 6. Under the rules promulgated under s. 40.03 (2) (r), additional
25contributions, other than the first $5,000 of contributions, or a beneficiary's prorated

1share thereof,
that are attributable to a death benefit paid under s. 40.73, may be
2made to the core annuity division by any participant by rollover contribution of a
3payment or distribution from a pension or annuity qualified under section 401 of the
4Internal Revenue Code, subject to any limitations imposed on contributions by the
5Internal Revenue Code, applicable regulations adopted under the Internal Revenue
6Code, and rules of the department.
AB40,723 7Section 723. 40.05 (2) (intro.) of the statutes is amended to read:
AB40,454,118 40.05 (2) Employer retirement contributions. (intro.) For Wisconsin
9retirement system purposes and subject to the federal annual compensation limits
10under 26 USC 401 (a) (17) for a participating employee who first becomes a
11participating employee on or after January 1, 1996
:
AB40,724 12Section 724. 40.05 (2r) (a) of the statutes is amended to read:
AB40,454,1413 40.05 (2r) (a) Contributions made under this section are subject to the
14limitations under s. 40.32 and the internal revenue code Internal Revenue Code.
AB40,725 15Section 725. 40.05 (2r) (b) (intro.) of the statutes is amended to read:
AB40,454,2316 40.05 (2r) (b) (intro.) If a participant in the Wisconsin retirement system also
17participates in a different retirement plan offered by an employer that is subject to
18section 401 of the internal revenue code Internal Revenue Code and the internal
19revenue service seeks to disqualify one or more of the plans because the aggregate
20contributions to the plans exceed the contribution limits under section 415 of the
21internal revenue code Internal Revenue Code, the internal revenue service, if it
22permits state law to determine the order of disqualification of such retirement plans,
23shall disqualify the retirement plans in the following order:
AB40,726 24Section 726. 40.05 (4) (ag) 2. of the statutes is amended to read:
AB40,455,5
140.05 (4) (ag) 2. For eligible employees not specified in subd. 1. and s. 40.02 (25)
2(b) 2., an amount not more than 88 percent of the average premium cost of plans
3offered in the each tier with the lowest employee premium cost under s. 40.51 (6), as
4determined annually by the director of the office of state employment relations under
5par. (ah).
AB40,727 6Section 727. 40.05 (4) (ah) of the statutes is renumbered 40.05 (4) (ah) 1.
AB40,728 7Section 728. 40.05 (4) (ah) 2. of the statutes is created to read:
AB40,455,148 40.05 (4) (ah) 2. For purposes of establishing the amount that employees are
9required to pay for health insurance premiums, if a tier under s. 40.51 (6) contains
10no health insurance plans, but that tier is used to establish the premium amounts
11for employees who work and reside outside of the state, the amount these employees
12are required to pay shall be based on the premium contribution amount for that tier
13in the prior year, adjusted by the average percentage change of the premium
14contribution amount of the other tiers from the prior year.
AB40,729 15Section 729. 40.05 (4) (ah) 3. of the statutes is created to read:
AB40,455,1716 40.05 (4) (ah) 3. A craft employee shall pay 100 percent of health insurance
17premiums, unless otherwise determined by the director.
AB40,730 18Section 730. 40.05 (4) (ah) 4. of the statutes is created to read:
AB40,455,2219 40.05 (4) (ah) 4. Annually, the director shall determine the amount of
20contributions, if any, that the state must contribute into an employee's health
21savings account under s. 40.515 and the amount that employees are required to pay
22for health insurance premiums for a high-deductible health plan under s. 40.515.
AB40,731 23Section 731. 40.05 (4) (ah) 5. of the statutes is created to read:
AB40,456,224 40.05 (4) (ah) 5. For purposes of establishing the amount that employees are
25required to pay for health insurance premiums, the director shall consider the

1amount of premium surcharges that employees are required to pay under s. 40.03 (6)
2(cm) 1.
AB40,732 3Section 732. 40.05 (4r) of the statutes is amended to read:
AB40,456,154 40.05 (4r) Payment of certain insurance premiums. If an annuitant is a an
5eligible retired
public safety officer and receives health care coverage or long-term
6care coverage under a plan other than one offered under subch. IV, and if the
7annuitant so elects by providing written notice to the department, the premium shall
8be paid as a deduction under s. 40.06 (1) (a) from the annuitant's annuity. If the
9annuitant receives an annuity that is not sufficient to cover premium payments, the
10annuitant shall make premium payments directly to the insurer. The department
11shall establish procedures to permit an annuitant who is a an eligible retired public
12safety officer to elect to have his or her premium paid as a deduction under s. 40.06
13(1) (a) from his or her annuity. The annuitant shall provide the department with all
14necessary information to permit the department to make the payment in a timely
15manner.
AB40,733 16Section 733. 40.07 (1r) of the statutes is created to read:
AB40,456,1917 40.07 (1r) Upon request of the department of revenue, the department may
18disclose information, including social security numbers, to the department of
19revenue concerning an annuity only for the following purposes:
AB40,456,2020 (a) To administer the payment of state taxes.
AB40,456,2121 (am) To aid in collecting debts owed to the department of revenue.
AB40,456,2322 (b) To locate participants, or the assets of participants, who have failed to file
23tax returns, underreported their taxable income, or who are delinquent debtors.
AB40,456,2424 (c) To identify fraudulent tax returns and credit claims.
AB40,456,2525 (d) To provide information for tax-related prosecutions.
AB40,734
1Section 734. 40.08 (2) (b) of the statutes is amended to read:
AB40,457,62 40.08 (2) (b) If permitted under a deferred compensation plan established
3under subch. VII, insurance premiums for health or long-term care insurance
4coverage for a an eligible retired public safety officer may be deducted from an
5amount distributed under a deferred compensation plan and paid directly to an
6insurer.
AB40,735 7Section 735. 40.08 (14) of the statutes is amended to read:
AB40,457,218 40.08 (14) Rollovers to other retirement plans. If a participant who is
9entitled to receive a lump sum payment or a monthly annuity certain under s. 40.24
10(1) (f) for which the participant has specified a term of less than 120 months or an
11annuity certain of less than 10 years in duration from the Wisconsin retirement
12system and who has an account established under any other retirement plan located
13in the United States so directs in writing, on a form prescribed by the department,
14the department shall pay the lump sum payment or the monthly annuity directly to
15the participant's account under that other retirement plan for credit under that other
16retirement plan. The department shall cease payment of the monthly annuity
17payments to the annuitant's account under the other retirement plan within 30 days
18of the written request of the annuitant or written notice of the annuitant's death.
19This subsection shall be applied in compliance with section 401 (a) (31) of the
20Internal Revenue Code pursuant to any applicable federal regulations or guidance
21adopted under the Internal Revenue Code.
AB40,736 22Section 736. 40.19 (5) of the statutes is created to read:
AB40,458,923 40.19 (5) For the purpose of complying with section 401 (a) (7) of the Internal
24Revenue Code, a participant shall be 100 percent vested in, and have a nonforfeitable
25right to, his or her retirement benefits upon attaining eligibility for the retirement

1benefits. A participant shall also be 100 percent vested in, and have a nonforfeitable
2right to, his or her accumulated employee contributions at all times. In the event of
3a termination of, or a complete discontinuance of employer contributions to the
4Wisconsin retirement system, a participant shall be 100 percent vested in, and have
5a nonforfeitable right to, his or her accrued retirement benefits. All such benefits are
6nonforfeitable to the extent funded. For the purpose of complying with section 401
7(a) (8) of the Internal Revenue Code, any forfeitures of benefits by participants or
8former participants of the Wisconsin retirement system may not be used to pay
9benefit increases.
AB40,737 10Section 737. 40.22 (2) (a) of the statutes is amended to read:
AB40,458,1411 40.22 (2) (a) Except as provided in sub. (2m), the employee was initially
12employed by a participating employer
a participating employee before July 1, 2011,
13and is not expected to work at least one-third of what is considered full-time
14employment by the department, as determined by rule.
AB40,738 15Section 738. 40.22 (2m) (intro.) of the statutes is amended to read:
AB40,458,2216 40.22 (2m) (intro.) An employee who was initially employed by a participating
17employer
a participating employee before July 1, 2011, who is not expected to work
18at least one-third of what is considered full-time employment by the department,
19as determined by rule, and who is not otherwise excluded under sub. (2) from
20becoming a participating employee shall become a participating employee if he or she
21is subsequently employed by the state agency or other participating employer for
22either of the following periods:
AB40,739 23Section 739. 40.23 (4) (a) of the statutes is amended to read:
AB40,459,724 40.23 (4) (a) Subject to all requirements under the internal revenue code
25section 401 (a) (9) of the Internal Revenue Code and federal regulations applicable

1to that section, which relate to a governmental plan, as defined in section 414 (d) of
2the Internal Revenue Code
, the department shall distribute to the participant the
3entire amount that is credited to the account of a participant under the Wisconsin
4retirement system no later than the required beginning date, unless the department
5distributes this amount as an annuity or in more than one payment. If the
6department distributes this amount as an annuity or in more than one payment, the
7department shall begin the distribution no later than the required beginning date.
AB40,740 8Section 740. 40.23 (4) (b) (intro.) of the statutes is amended to read:
AB40,459,149 40.23 (4) (b) (intro.) In the calendar year immediately preceding the calendar
10year of a participant's required beginning date, if the department distributes the
11amount that is credited to the account of a participant under the Wisconsin
12retirement system in a form other than as a lump sum payment, the department,
13subject to all requirements under the internal revenue code Internal Revenue Code,
14shall calculate the distribution to the participant according to one of the following:
AB40,741 15Section 741. 40.23 (4) (e) of the statutes is amended to read:
AB40,459,1916 40.23 (4) (e) 1. Subject to subds. 2. to 4. and section 401 (a) (9) of the Internal
17Revenue Code
, if a participant dies before the distribution of benefits has commenced
18and the participant's beneficiary is the spouse or domestic partner, the department
19shall begin the distribution within 5 years after the date of the participant's death.
AB40,459,2320 2. If Subject to section 401 (a) (9) of the Internal Revenue Code, if the spouse
21or domestic partner files a subsequent beneficiary designation with the department,
22the payment of the distribution may be deferred until the January 1 of the year in
23which the participant would have attained the age of 70.5 years.
AB40,460,224 3. If Subject to section 401 (a) (9) of the Internal Revenue Code, if the spouse
25or domestic partner does not apply for a distribution, the distribution shall begin as

1an automatic distribution as provided under subd. 1. or under par. (c), whichever
2distribution date is earlier.
AB40,460,63 4. If Subject to section 401 (a) (9) of the Internal Revenue Code, if the spouse
4or domestic partner dies, but has designated a new beneficiary, the birth date of the
5spouse or domestic partner shall be used for the purposes of determining the required
6beginning date.
AB40,460,97 5. The department shall specify by rule all procedures relating to an automatic
8distribution to the spouse or domestic partner. These rules shall comply with the
9internal revenue code Internal Revenue Code.
AB40,742 10Section 742. 40.23 (4) (f) (intro.) of the statutes is amended to read:
AB40,460,1411 40.23 (4) (f) (intro.) If a participant dies before the distribution of benefits has
12commenced and the participant's beneficiary is not the spouse or domestic partner
13beneficiary cannot delay the automatic payment of benefits under section 401 (a) (9)
14of the Internal Revenue Code
, the beneficiary shall do one of the following:
AB40,743 15Section 743. 40.23 (4) (h) of the statutes is created to read:
AB40,460,1916 40.23 (4) (h) Death and disability benefits provided under this chapter are
17limited by the incidental benefit rule under section 401 (a) (9) (G) of the Internal
18Revenue Code and applicable federal regulations and guidance adopted under the
19Internal Revenue Code.
AB40,744 20Section 744. 40.23 (4) (i) of the statutes is created to read:
AB40,460,2221 40.23 (4) (i) Distributions of benefits shall conform to a reasonable and good
22faith interpretation of section 401 (a) (9) of the Internal Revenue Code.
AB40,745 23Section 745. 40.23 (4) (j) of the statutes is created to read:
AB40,460,2524 40.23 (4) (j) Pursuant to a qualified domestic relations order, the department
25may establish separate benefits for a participant and an alternate payee.
AB40,746
1Section 746. 40.26 (1) of the statutes is amended to read:
AB40,461,92 40.26 (1) Except as provided in sub. (1m) and ss. 40.05 (2) (g) 2. and 40.23 (1)
3(am), if a participant receiving a retirement annuity, or a disability annuitant who
4has attained his or her normal retirement date, receives earnings that are subject
5to s. 40.05 (1) or that would be subject to s. 40.05 (1) except for the exclusion specified
6in s. 40.22 (2) (L), the annuity shall be terminated and no annuity payment shall be
7payable after the month in which the participant files with the department a written
8election to be included within the provisions of the Wisconsin retirement system as
9a participating employee.
AB40,747 10Section 747. 40.26 (1m) of the statutes is created to read:
AB40,461,1711 40.26 (1m) If a participant receiving a retirement annuity, or a disability
12annuitant who has attained his or her normal retirement date, is employed in a
13position in covered employment in which he or she is expected to work at least
14two-thirds of what is considered full-time employment by the department, as
15determined under s. 40.22 (2r), the participant's annuity shall be terminated and no
16annuity payment shall be payable until after the participant terminates covered
17employment.
AB40,748 18Section 748. 40.26 (2) (intro.) of the statutes is amended to read:
AB40,461,2119 40.26 (2) (intro.) Upon termination of an annuity under sub. (1) or (1m), the
20retirement account of the participant whose annuity is so terminated shall be
21reestablished on the following basis:
AB40,749 22Section 749. 40.26 (5) (intro.) of the statutes is amended to read:
AB40,462,223 40.26 (5) (intro.) If a participant applies for an annuity or lump sum payment
24during the period in which less than 30 75 days have elapsed between the
25termination of employment with a participating employer and becoming a

1participating employee with any participating employer, all of the following shall
2apply:
AB40,750 3Section 750. 40.30 (4) (b) of the statutes is amended to read:
AB40,462,164 40.30 (4) (b) Subject to the federal annual compensation limits under 26 USC
5401 (a) (17) for a participating employee who first becomes a participating employee
6on or after January 1, 1996
, the final average salary or final average earnings used
7in the benefit formula computation for each retirement system under par. (a) shall
8be the individual's final average salary or final average earnings under the
9respective retirement system, determined in accordance with the provisions of that
10retirement system based on the earnings covered by that retirement system and on
11all service permitted under that retirement system to be used in determining the
12final average salary or final average earnings, increased by the percentage increase
13in the average of the total wages, as determined under 42 USC 415 (b) (3) (A),
14between the date on which the individual terminated all employment covered by that
15retirement system and the date on which the individual terminated all employment
16covered by any of those retirement systems.
AB40,751 17Section 751. 40.31 (1) of the statutes is amended to read:
AB40,463,218 40.31 (1) General limitation. The maximum retirement benefits payable to
19a participant in a calendar year, excluding benefits attributable to contributions
20subject to any limitations under s. 40.23 (2) (a), (2m) (c) and (3) the limit under s.
2140.32
, may not exceed the maximum benefit limitation established under section 415
22(b) of the Internal Revenue Code, as adjusted under section 415 (d) of the Internal
23Revenue Code and any applicable regulations or guidance adopted under the
24Internal Revenue Code, except that the limit for an individual who first became a
25participant before January 1, 1990, may not be less than the accrued benefits of the

1participant, as determined without regard to any changes to the retirement system
2after October 14, 1987
.
AB40,752 3Section 752. 40.32 (1) of the statutes is amended to read:
AB40,463,124 40.32 (1) The sum of all employee post-tax contributions allocated to a
5participant's account under each defined contribution plan sponsored by the
6employer, including all employer contributions and picked-up contributions
7credited with interest at the effective rate under ss. 40.04 (4) (a) and (5) (b) and 40.05
8(2) (g) and all employee contributions made under ss. 40.02 (17) and 40.05 (1),
may
9not in any calendar year exceed the maximum contribution limitation established
10under section 415 (c) of the Internal Revenue Code, as adjusted under section 415 (d)
11of the Internal Revenue Code and any applicable regulations adopted by the federal
12department of the treasury
.
AB40,753 13Section 753. 40.515 of the statutes is created to read:
AB40,463,23 1440.515 Health savings accounts; high-deductible health plan. (1) In
15addition to the health care coverage plans offered under s. 40.51 (6), beginning on
16January 1, 2015, the group insurance board shall offer to all state employees the
17option of receiving health care coverage through a high-deductible health plan and
18the establishment of a health savings account. Under this option, each employee
19shall receive health care coverage through a high-deductible health plan. The state
20shall make contributions into each employee's health savings account in an amount
21specified by the director of the office of state employment relations under s. 40.05 (4)
22(ah) 4. In designing a high-deductible health plan, the group insurance board shall
23ensure that the plan may be used in conjunction with a health savings account.
AB40,464,3
1(2) The group insurance board may contract with any person to provide
2administrative and other services relating to health savings accounts established
3under this section.
AB40,464,9 4(3) The group insurance board may collect fees from state agencies to pay all
5administrative costs relating to the establishment and operation of health savings
6accounts established under this section. The group insurance board shall develop a
7methodology for determining each state agency's share of the administrative costs.
8Moneys collected under this subsection shall be credited to the appropriation account
9under s. 20.515 (1) (tm).
AB40,464,13 10(4) Beginning on January 1, 2015, to the extent practicable, any agreement
11with any insurer or provider to provide health care coverage to state employees
12under s. 40.51 (6) shall require the insurer or provider to also offer a high-deductible
13health plan that may be used in conjunction with a health savings account.
AB40,754 14Section 754. 40.72 (4r) of the statutes is amended to read:
AB40,464,2115 40.72 (4r) At any time after an insured employee's amount of life insurance is
16reduced under subs. (2) and (3) and life insurance premiums are no longer required
17under s. 40.05 (6) (b), the employee may convert the present value of the life
18insurance to pay the premiums for health or long-term care insurance provided
19under subch. IV, but only if the department determines that the value of the
20conversion is exempt from taxation under the internal revenue code Internal
21Revenue Code
.
AB40,755 22Section 755. 40.80 (2) (g) of the statutes is amended to read:
AB40,465,323 40.80 (2) (g) Serve as trustee of any deferred compensation plan established
24under this section, hold the assets and income of the plan in trust for the exclusive
25benefit of the employees who participate in the plan and their beneficiaries, and

1maintain the plan as an eligible deferred compensation plan, as defined in 26 USC
2section 457 (b) of the Internal Revenue Code, and as a governmental plan for eligible
3employers, as defined in 26 USC section 457 (e) (1) (A) of the Internal Revenue Code.
AB40,756 4Section 756. 40.80 (2t) of the statutes is amended to read:
AB40,465,95 40.80 (2t) The deferred compensation board may require a deferred
6compensation plan under this subchapter, upon election by a participant who is a an
7eligible retired
public safety officer, to allow for the deduction of insurance premiums
8for health or long-term care insurance coverage from an amount distributed from a
9participant's account and for the payment of the premiums directly to an insurer.
AB40,757 10Section 757. 40.81 (2) of the statutes is amended to read:
AB40,465,1711 40.81 (2) Any local government employer, or 2 or more employers acting jointly,
12may also elect under procedures established by the employer or employers to
13contract directly with a deferred compensation plan provider to administer a
14deferred compensation plan or to manage any compensation deferred under the plan
15and may also provide a plan under section 403 (b) of the internal revenue code
16Internal Revenue Code under procedures established by the local government
17employer or employers.
AB40,758 18Section 758. 40.86 (intro.) of the statutes is amended to read:
AB40,465,23 1940.86 Covered expenses. (intro.) An employee-funded reimbursement
20account plan may provide reimbursement to an employee for only the following
21expenses that are actually incurred and paid by an employee and that the board
22determines are consistent with the applicable requirements of the internal revenue
23code
Internal Revenue Code:
AB40,759 24Section 759. 41.23 of the statutes is amended to read:
AB40,466,8
141.23 Sale of excess or surplus property. The department may acquire
2excess or surplus property from the department of administration under ss. 16.72 (4)
3(b) and 16.98 (1) or from the department of transportation under s. 84.09 (5s) and,
4subject to any prior action under s. 13.48 (14) (am) or 16.848 (1), the department may

5sell the property acquired under this section to any person at a price determined by
6the department of tourism. All proceeds received by the department of tourism from
7the sale of property under this section shall be credited to the appropriation account
8under s. 20.380 (1) (h).
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