Subject
In January 2001, the Internal Revenue Service issued proposed regulations under Internal Revenue Code Section 401 (a) (9) that establishes new rules regarding the minimum required distributions (MRD) from a qualified plan. The regulations are primarily designed to simplify the calculation of the MRD and in some instances allow payments to be extended over a longer period of time. These rules may also have implications for certain other types of payment options. The new rules are scheduled to go into effect for the plan year beginning January 1, 2002. Distributions initiated after this date must comply with the new requirements.
Objective of the Rule. The Department will continue its analysis of the provisions of the proposed rule to determine its impact on the current Wisconsin Retirement System (WRS) distribution options as well as the policies and procedures for rollover distributions to other qualified plans and individual retirement accounts (IRAs). The objective of the proposed rule is to ensure all current policies and procedures relating to distributions that impact the calculation of the MRD will conform to the new regulations.
Policy analysis
Preliminary review of the new regulations has identified that an administrative rule is necessary to ensure compliance with federal tax requirements relating to the calculation of minimum required distributions (MRD) and how this impacts certain WRS distribution options. The new rules include a specific schedule that must be used in determining the MRD. As a result of this new table, current WRS distribution options may not be in compliance beginning with distributions initiated in 2002.
Policy alternatives to the proposed rule
The WRS must be administered in compliance with Section 401 (a) for a qualified retirement system. Non compliance with 401 (a) (9) creates plan qualification issues for the WRS and could potentially result in an excise tax penalty to a participant. Therefore, there is no acceptable alternative to this proposed rule making process.
Statutory Authority
Staff Time Required
The department estimates that state employees will spend between 100 and 200 hours developing this rule.
Financial Institutions-Division of Securities
Subject
Annual rule revision process for the Rules of the Division of Securities, Department of Financial Institutions, relating to the Wisconsin Uniform Securities Law.
Description of policy issues
Description of the objective of the rules:
The Division's annual rule revision process is conducted for the following purposes: (1) adopting new rules or amending existing rules, relating to the securities broker-dealer, agent, investment adviser, and investment adviser representative licensing provisions relating to certain limited agent examinations, designated supervisor requirements, and the filing of certain branch office information, to thereby effectively regulate new securities licensing developments that have occurred in the securities industry and marketplace that require regulatory treatment; (2) making modifications to existing federal covered security provisions to be consistent with federal securities law requirements; and (3) providing for electronic filing with the Division of any Consent To Service of Process.
Description of existing relevant policies and new policies proposed to be included in the rule and an analysis of policy alternatives
Existing and new policies contained in the proposed rules include:
1. Adding a new rule subsection under DFI-Sec 4.01 (3) providing for a new, additional type of limited securities agent examination (needed as a result of provisions in the Gramm-Leach-Bliley Act) for bank employees engaged in selling private placement securities offerings.
2. Clarifying the timing of the notification requirement under existing rule DFI-Sec 4.04 (8) (a) and 5.04 (5) (a) for broker-dealers and investment advisers to inform the Division of the opening or change of address of any branch office location in Wisconsin.
3. Repealing both the licensing requirement in DFI-Sec 4.05 (6) that every broker-dealer must appoint a designated supervisor, and the related examination requirement in DFI-Sec 4.01 (5).
4. Adding a new rule subsection under the existing Federal Covered Security rules in DFI-Sec 2.04 (1) to deal with filings seeking extension of the effectiveness period of notice filings previously made by unit investment trusts or closed-end investment companies.
5. Adding a new fee rule under DFI-Sec 7.01 (5) prescribing a $200 fee for filings for extension by entities identified in Item 4. above.
6. Creating a new rule subsection under the Service of Process statute in sec. 551.65, Wis. Stats., to provide for electronic filing of a Consent To Service of Process to thereby facilitate various electronic securities licensing and securities registration filing procedures.
7. Relocating the existing fee rule in DFI-Sec 7.01 (4) [regarding finance company prospectuses] to be a subsection of the registration fee rules in DFI-Sec 7.01 (1).
Statutory authority for the rules
Estimate of the amount of time state employees will spend to develop the rule and other resources necessary to develop the rule
Estimated time to be spent by state employees to develop the rules--25 hours. No other resources are necessary.
Health and Family Services
Subject
The Department proposes to develop a rulemaking order that modifies ch.
HFS 119 regarding the Wisconsin Health Insurance Risk-Sharing Plan (HIRSP). Modifications to ch.
HFS 119 would reflect an actuarial update of HIRSP policyholder health insurance premiums, insurer assessments and provider payment rates for the period beginning July 1, 2001.
Policy Analysis
The Department has a longstanding Health Insurance Risk-Sharing Plan (HIRSP) for medically at-risk citizens. The proposed amendments to policyholder premiums, insurance assessments and provider assessments reflect updated HIRSP costs, in accordance with generally accepted actuarial principles. The Department has regularly amended ch.
HFS 119 in the past (1998, 1999 and 2000) and this proposed rulemaking order is the most recent such amendment. One difference of the proposed rules will be that they may also reflect the conversion of HIRSP from a “cash" to an “accrual" basis of accounting, as recommended by the Legislative Audit Bureau and approved by the HIRSP Board of Governors at its April 25, 2001 meeting. The purpose of converting to an accrual basis of accounting is to provide a more accurate reflection of the program's financial condition.
The effect of the amended rule will be to ensure DHFS coverage of ongoing HIRSP costs for fiscal year 2002. Without this annual update, the revenues of the HIRSP program will quickly be eclipsed by program costs.
Statutory Authority
Staff Time Required
The estimated DHCF staff time and other resources needed to develop and promulgate these rules will be about 120 hours. Included in this estimate is the time required to make actuarial calculations, rule drafting and promulgation.
Public Instruction
Subject
Ch.
PI 16 relating to testing of pupils with limited-English proficiencies.
Objective of the Rule. The proposed rules will:
1. Repeal the criteria and procedures relating to testing children with disabilities.
2. Ensure that all LEP pupils are given the Wisconsin Knowledge and Concept Examinations (WKCE) unless it has been determined, on a case by case basis, that such tests would not be a valid and reliable indicator of the pupil's academic knowledge and skills.
3. Clarify that exempting a pupil from taking the WKCE may not be used as the sole criterion in determining grade promotion, eligibility for courses or programs, eligibility for graduation or eligibility for postsecondary education opportunities. Current rules seem to require school districts to promote or graduate and LEP pupil if the pupil is exempt from taking a standardized test.
4. Change the term “limited-English speaking" to “limited-English proficient" to be consistent with statutory terminology under s.
115.955 (7), Stats.
5. Clarify that the criteria under the chapter also applies to the 4th grade test administered under s.
118.30, Stats. At the time the rules were originally developed, only the 8th and 10th grade tests were being administered under s.
118.30, Stats. Since that time, the 4th grade test was added to the WKCE administered under s.
118.30, Stats., and the rules should be changed accordingly.
Policy analysis
Under s.
118.30, Stats., the state superintendent must adopt or approve examinations designed to measure pupil attainment of knowledge and concepts in the 4th, 8th and 10th grades. The statutes require the state superintendent to set criteria, by rule, regarding the testing of limited-English proficient (LEP) pupils. Currently, the rules establish criteria and procedures to determine whether a pupil with limited-English proficiency (LEP) or a pupil having an exceptional educational need or EEN (now referred to as child with a disability) may be exempt from taking a test under s.
118.30, Stats.
The U.S. Department of Education has recommended that for Wisconsin's Title I program to be appropriately inclusive and thereby in compliance with federal regulations under the Improving America's Schools Act, the current rules need to be modified to ensure that pupils at lower proficiency levels are not automatically exempt from taking standardized tests. In addition, the rules relating to the testing of children with disabilities may be repealed because current state statutes and addition, the rules relating to the testing of children with disabilities may be repealed because current state statutes and federal law comprehensively address such testing issues and the rules conflict with the state statutes and federal law.
Policy alternatives to the proposed rule
If the department chooses not to change the current rules, the State of Wisconsin could be found out of compliance with federal regulations under the Improving America's Schools Act thereby compromising the status of more than $130 million in federal Title I funds.
Statutory Authority
Staff Time Required
The amount of time needed for rule development by department staff and the amount of other resources necessary are indeterminable. The time needed in creating the rule language, itself, will be minimal. However, the time involved with guiding the rule through the required rule promulgation process is fairly significant. The rule process takes more than 6 months to complete.
