2013 Wisconsin Act 20

40.05 (2r) (a) Contributions made under this section are subject to the limitations under s. 40.32 and the internal revenue code Internal Revenue Code.

20,725 Section 725. 40.05 (2r) (b) (intro.) of the statutes is amended to read:

40.05 (2r) (b) (intro.) If a participant in the Wisconsin retirement system also participates in a different retirement plan offered by an employer that is subject to section 401 of the internal revenue code Internal Revenue Code and the internal revenue service seeks to disqualify one or more of the plans because the aggregate contributions to the plans exceed the contribution limits under section 415 of the internal revenue code Internal Revenue Code, the internal revenue service, if it permits state law to determine the order of disqualification of such retirement plans, shall disqualify the retirement plans in the following order:

20,726 Section 726. 40.05 (4) (ag) 2. of the statutes is amended to read:

40.05 (4) (ag) 2. For eligible employees not specified in subd. 1. and s. 40.02 (25) (b) 2., an amount not more than 88 percent of the average premium cost of plans offered in the each tier with the lowest employee premium cost under s. 40.51 (6), as determined annually by the director of the office of state employment relations under par. (ah).

20,727 Section 727. 40.05 (4) (ah) of the statutes is renumbered 40.05 (4) (ah) 1.

20,728 Section 728. 40.05 (4) (ah) 2. of the statutes is created to read:

40.05 (4) (ah) 2. For purposes of establishing the amount that employees are required to pay for health insurance premiums, if a tier under s. 40.51 (6) contains no health insurance plans, but that tier is used to establish the premium amounts for employees who work and reside outside of the state, the amount these employees are required to pay shall be based on the premium contribution amount for that tier in the prior year, adjusted by the average percentage change of the premium contribution amount of the other tiers from the prior year.

20,729 Section 729. 40.05 (4) (ah) 3. of the statutes is created to read:

40.05 (4) (ah) 3. A craft employee shall pay 100 percent of health insurance premiums, unless otherwise determined by the director.

20,730 Section 730. 40.05 (4) (ah) 4. of the statutes is created to read:

40.05 (4) (ah) 4. Annually, the director shall determine the amount of contributions, if any, that the state must contribute into an employee's health savings account under s. 40.515 and the amount that employees are required to pay for health insurance premiums for a high-deductible health plan under s. 40.515.

20,731 Section 731. 40.05 (4) (ah) 5. of the statutes is created to read:

40.05 (4) (ah) 5. For purposes of establishing the amount that employees are required to pay for health insurance premiums, the director shall consider the amount of premium surcharges that employees are required to pay under s. 40.03 (6) (cm) 1.

20,732 Section 732. 40.05 (4r) of the statutes is amended to read:

40.05 (4r) Payment of certain insurance premiums. If an annuitant is a an eligible retired public safety officer and receives health care coverage or long-term care coverage under a plan other than one offered under subch. IV, and if the annuitant so elects by providing written notice to the department, the premium shall be paid as a deduction under s. 40.06 (1) (a) from the annuitant's annuity. If the annuitant receives an annuity that is not sufficient to cover premium payments, the annuitant shall make premium payments directly to the insurer. The department shall establish procedures to permit an annuitant who is a an eligible retired public safety officer to elect to have his or her premium paid as a deduction under s. 40.06 (1) (a) from his or her annuity. The annuitant shall provide the department with all necessary information to permit the department to make the payment in a timely manner.

20,733 Section 733. 40.07 (1r) of the statutes is created to read:

40.07 (1r) Upon request of the department of revenue, the department may disclose information, including social security numbers, to the department of revenue concerning an annuity only for the following purposes:

(a) To administer the payment of state taxes.

(am) To aid in collecting debts owed to the department of revenue.

(b) To locate participants, or the assets of participants, who have failed to file tax returns, underreported their taxable income, or who are delinquent debtors.

(c) To identify fraudulent tax returns and credit claims.

(d) To provide information for tax-related prosecutions.

20,733m Section 733m. 40.08 (1m) (f) 2. of the statutes is amended to read:

40.08 (1m) (f) 2. Subject to subd. 3., if the participant is an annuitant on the decree date, the annuity shall be recomputed using the total value of the participant's account determined under par. (b) reduced by the total of the alternate payee share transferred under par. (e) 1., in accordance with the actuarial tables in effect and using the participant's age on the decree date. The decree date shall be the effective date of recomputation. If the optional annuity form before division of the participant's account under par. (b) was not a joint and survivor annuity with the alternate payee as the named survivor, the same annuity option with no change in the remaining guarantee period, if any, shall be continued upon recomputation to the participant. The present value of the alternate payee's share of the annuity after division shall be paid to the alternate payee as a straight life annuity based on the age of the alternate payee on the decree date. The alternate payee's annuity shall have the same remaining guarantee period, if any, as the participant's annuity. If the optional annuity form before division of the participant's account under par. (b) was a joint and survivor annuity with the alternate payee as the named survivor, the present value of the annuity after division shall be paid to both the participant and the alternate payee as a straight life annuity based upon their respective ages on the decree date. If the participant's account is reestablished under s. 40.26 (2) after the decree date, the memorandum account created under s. 40.26 (2) (b) shall be adjusted by the total of the alternate payee share computed under this subdivision. If the participant's account is reestablished under s. 40.63 (10) after the decree date, the amounts and creditable service reestablished shall be reduced by an amount equal to the percentage of the alternate payee share computed under this subdivision.

20,734 Section 734. 40.08 (2) (b) of the statutes is amended to read:

40.08 (2) (b) If permitted under a deferred compensation plan established under subch. VII, insurance premiums for health or long-term care insurance coverage for a an eligible retired public safety officer may be deducted from an amount distributed under a deferred compensation plan and paid directly to an insurer.

20,735 Section 735. 40.08 (14) of the statutes is amended to read:

40.08 (14) Rollovers to other retirement plans. If a participant who is entitled to receive a lump sum payment or a monthly annuity certain under s. 40.24 (1) (f) for which the participant has specified a term of less than 120 months or an annuity certain of less than 10 years in duration from the Wisconsin retirement system and who has an account established under any other retirement plan located in the United States so directs in writing, on a form prescribed by the department, the department shall pay the lump sum payment or the monthly annuity directly to the participant's account under that other retirement plan for credit under that other retirement plan. The department shall cease payment of the monthly annuity payments to the annuitant's account under the other retirement plan within 30 days of the written request of the annuitant or written notice of the annuitant's death. This subsection shall be applied in compliance with section 401 (a) (31) of the Internal Revenue Code pursuant to any applicable federal regulations or guidance adopted under the Internal Revenue Code.

20,736 Section 736. 40.19 (5) of the statutes is created to read:

40.19 (5) For the purpose of complying with section 401 (a) (7) of the Internal Revenue Code, a participant shall be 100 percent vested in, and have a nonforfeitable right to, his or her retirement benefits upon attaining eligibility for the retirement benefits. A participant shall also be 100 percent vested in, and have a nonforfeitable right to, his or her accumulated employee contributions at all times. In the event of a termination of, or a complete discontinuance of employer contributions to the Wisconsin retirement system, a participant shall be 100 percent vested in, and have a nonforfeitable right to, his or her accrued retirement benefits. All such benefits are nonforfeitable to the extent funded. For the purpose of complying with section 401 (a) (8) of the Internal Revenue Code, any forfeitures of benefits by participants or former participants of the Wisconsin retirement system may not be used to pay benefit increases.

20,737 Section 737. 40.22 (2) (a) of the statutes is amended to read:

40.22 (2) (a) Except as provided in sub. (2m), the employee was initially employed by a participating employer a participating employee before July 1, 2011, and is not expected to work at least one-third of what is considered full-time employment by the department, as determined by rule.

20,737m Section 737m. 40.22 (2) (L) of the statutes is amended to read:

40.22 (2) (L) The employee is employed by a participating employer after the person becomes an annuitant, unless the service is after the annuity is terminated suspended under s. 40.26.

20,738 Section 738. 40.22 (2m) (intro.) of the statutes is amended to read:

40.22 (2m) (intro.) An employee who was initially employed by a participating employer a participating employee before July 1, 2011, who is not expected to work at least one-third of what is considered full-time employment by the department, as determined by rule, and who is not otherwise excluded under sub. (2) from becoming a participating employee shall become a participating employee if he or she is subsequently employed by the state agency or other participating employer for either of the following periods:

20,738d Section 738d. 40.23 (1) (am) 3. of the statutes is amended to read:

40.23 (1) (am) 3. No participant who elects under subd. 2. may have his or her annuity terminated suspended under s. 40.26 (1) because of earnings received for any part-time services as an elected official.

20,738p Section 738p. 40.23 (2) (intro.) of the statutes is amended to read:

40.23 (2) (intro.) Except as provided in ss. s. 40.19 (2) and 40.26, this subsection applies only to participants who are not participating employees after March 9, 1984. The retirement annuity in the normal form shall be an annuity payable for the life of the annuitant with a guarantee of 60 monthly payments. Except as provided in sub. (3) and s. 40.26, the initial monthly amount of the normal form annuity shall be the amount which, when added to the OASDHI benefit, equals 85% of the participant's final average earnings plus the amount which can be provided under pars. (a) and (c) and adjusted under pars. (d) and (e) or, if less, shall be in the monthly amount equal to the sum of the amounts determined under pars. (a), (b) and (c) as modified by pars. (d) and (e) and in accordance with the actuarial tables in effect on the annuity effective date.

20,739 Section 739. 40.23 (4) (a) of the statutes is amended to read:

40.23 (4) (a) Subject to all requirements under the internal revenue code section 401 (a) (9) of the Internal Revenue Code and federal regulations applicable to that section, which relate to a governmental plan, as defined in section 414 (d) of the Internal Revenue Code, the department shall distribute to the participant the entire amount that is credited to the account of a participant under the Wisconsin retirement system no later than the required beginning date, unless the department distributes this amount as an annuity or in more than one payment. If the department distributes this amount as an annuity or in more than one payment, the department shall begin the distribution no later than the required beginning date.

20,740 Section 740. 40.23 (4) (b) (intro.) of the statutes is amended to read:

40.23 (4) (b) (intro.) In the calendar year immediately preceding the calendar year of a participant's required beginning date, if the department distributes the amount that is credited to the account of a participant under the Wisconsin retirement system in a form other than as a lump sum payment, the department, subject to all requirements under the internal revenue code Internal Revenue Code, shall calculate the distribution to the participant according to one of the following:

20,741 Section 741. 40.23 (4) (e) of the statutes is amended to read:

40.23 (4) (e) 1. Subject to subds. 2. to 4. and section 401 (a) (9) of the Internal Revenue Code, if a participant dies before the distribution of benefits has commenced and the participant's beneficiary is the spouse or domestic partner, the department shall begin the distribution within 5 years after the date of the participant's death.

2. If Subject to section 401 (a) (9) of the Internal Revenue Code, if the spouse or domestic partner files a subsequent beneficiary designation with the department, the payment of the distribution may be deferred until the January 1 of the year in which the participant would have attained the age of 70.5 years.

3. If Subject to section 401 (a) (9) of the Internal Revenue Code, if the spouse or domestic partner does not apply for a distribution, the distribution shall begin as an automatic distribution as provided under subd. 1. or under par. (c), whichever distribution date is earlier.

4. If Subject to section 401 (a) (9) of the Internal Revenue Code, if the spouse or domestic partner dies, but has designated a new beneficiary, the birth date of the spouse or domestic partner shall be used for the purposes of determining the required beginning date.

5. The department shall specify by rule all procedures relating to an automatic distribution to the spouse or domestic partner. These rules shall comply with the internal revenue code Internal Revenue Code.

20,742 Section 742. 40.23 (4) (f) (intro.) of the statutes is amended to read:

40.23 (4) (f) (intro.) If a participant dies before the distribution of benefits has commenced and the participant's beneficiary is not the spouse or domestic partner beneficiary cannot delay the automatic payment of benefits under section 401 (a) (9) of the Internal Revenue Code, the beneficiary shall do one of the following:

20,743 Section 743. 40.23 (4) (h) of the statutes is created to read:

40.23 (4) (h) Death and disability benefits provided under this chapter are limited by the incidental benefit rule under section 401 (a) (9) (G) of the Internal Revenue Code and applicable federal regulations and guidance adopted under the Internal Revenue Code.

20,744 Section 744. 40.23 (4) (i) of the statutes is created to read:

40.23 (4) (i) Distributions of benefits shall conform to a reasonable and good faith interpretation of section 401 (a) (9) of the Internal Revenue Code.

20,745 Section 745. 40.23 (4) (j) of the statutes is created to read:

40.23 (4) (j) Pursuant to a qualified domestic relations order, the department may establish separate benefits for a participant and an alternate payee.

20,746m Section 746m. 40.26 (1) of the statutes is amended to read:

40.26 (1) Except as provided in sub. (1m) and ss. 40.05 (2) (g) 2. and 40.23 (1) (am), if a participant receiving a retirement annuity, or a disability annuitant who has attained his or her normal retirement date, receives earnings that are subject to s. 40.05 (1) or that would be subject to s. 40.05 (1) except for the exclusion specified in s. 40.22 (2) (L), the annuity shall be terminated suspended, including any amount provided by additional contributions, and no annuity payment shall be payable after the month in which the participant files with the department a written election to be included within the provisions of the Wisconsin retirement system as a participating employee.

20,747 Section 747. 40.26 (1m) of the statutes is created to read:

40.26 (1m) (a) If a participant receiving a retirement annuity, or a disability annuitant who has attained his or her normal retirement date, is employed in a position in covered employment in which he or she is expected to work at least two-thirds of what is considered full-time employment by the department, as determined under s. 40.22 (2r), the participant's annuity shall be suspended and no annuity payment shall be payable until after the participant terminates covered employment.

(b) If a participant receiving a retirement annuity, or a disability annuitant who has attained his or her normal retirement date, enters into a contract to provide employee services with a participating employer and he or she is expected to work at least two-thirds of what is considered full-time employment by the department, as determined under s. 40.22 (2r), the participant's annuity shall be suspended and no annuity payment shall be payable until after the participant no longer provides employee services under the contract.

20,748b Section 748b. 40.26 (2) (intro.) of the statutes is amended to read:

40.26 (2) (intro.) Upon termination suspension of an annuity under sub. (1) or (1m), the retirement account of the participant whose annuity is so terminated suspended shall be reestablished established on the following basis:

20,748d Section 748d. 40.26 (2) (a) of the statutes is repealed.

20,748f Section 748f. 40.26 (2) (b) of the statutes is amended to read:

40.26 (2) (b) Crediting of amounts under suspended annuity. The amount of the annuity payments, excluding any portion originally provided by additional contributions, which would have been paid under the terminated suspended annuity, if the annuity had been a straight life annuity, prior to the participant's normal retirement date or prior to from the original annuity termination suspension date, whichever would first occur to the subsequent retirement date, shall be credited to a memorandum account which is subject to s. ss. 40.04 (4) (a) 2., 2g. and 2m. and (c). If the annuity was recomputed under s. 40.08 (1m) because of a qualified domestic relations order, the memorandum account established under this paragraph shall be adjusted as provided under s. 40.08 (1m) (f) 2 and 40.08 (1m).

20,748h Section 748h. 40.26 (2) (c) of the statutes is amended to read:

40.26 (2) (c) Establishment of subsequent retirement account. Except as provided in pars. (a) and (b), the Upon becoming a participating employee, a subsequent retirement account shall be reestablished as if the terminated annuity had never been effective established, including any amounts in a memorandum account under par. (b), crediting of interest, and of any contributions made and creditable service earned during the period the annuity was in force subsequent participating employment.

20,748j Section 748j. 40.26 (3) of the statutes is repealed and recreated to read:

40.26 (3) Upon subsequent retirement and application for an annuity, the suspended annuity shall be reinstated and the subsequent annuity of a former annuitant shall be computed as an original annuity, based upon the participant's attained age on the effective date of the subsequent annuity, in an optional form as elected by the participant under s. 40.24. The subsequent annuity shall be initiated at the same time the suspended annuity is reinstated.

20,748L Section 748L. 40.26 (4) of the statutes is repealed.

20,749 Section 749. 40.26 (5) (intro.) of the statutes is amended to read:

40.26 (5) (intro.) If a participant applies for an annuity or lump sum payment during the period in which less than 30 75 days have elapsed between the termination of employment with a participating employer and becoming a participating employee with any participating employer, all of the following shall apply:

20,750 Section 750. 40.30 (4) (b) of the statutes is amended to read:

40.30 (4) (b) Subject to the federal annual compensation limits under 26 USC 401 (a) (17) for a participating employee who first becomes a participating employee on or after January 1, 1996, the final average salary or final average earnings used in the benefit formula computation for each retirement system under par. (a) shall be the individual's final average salary or final average earnings under the respective retirement system, determined in accordance with the provisions of that retirement system based on the earnings covered by that retirement system and on all service permitted under that retirement system to be used in determining the final average salary or final average earnings, increased by the percentage increase in the average of the total wages, as determined under 42 USC 415 (b) (3) (A), between the date on which the individual terminated all employment covered by that retirement system and the date on which the individual terminated all employment covered by any of those retirement systems.

20,751 Section 751. 40.31 (1) of the statutes is amended to read:

40.31 (1) General limitation. The maximum retirement benefits payable to a participant in a calendar year, excluding benefits attributable to contributions subject to any limitations under s. 40.23 (2) (a), (2m) (c) and (3) the limit under s. 40.32, may not exceed the maximum benefit limitation established under section 415 (b) of the Internal Revenue Code, as adjusted under section 415 (d) of the Internal Revenue Code and any applicable regulations or guidance adopted under the Internal Revenue Code, except that the limit for an individual who first became a participant before January 1, 1990, may not be less than the accrued benefits of the participant, as determined without regard to any changes to the retirement system after October 14, 1987.

20,752 Section 752. 40.32 (1) of the statutes is amended to read:

40.32 (1) The sum of all employee post-tax contributions allocated to a participant's account under each defined contribution plan sponsored by the employer, including all employer contributions and picked-up contributions credited with interest at the effective rate under ss. 40.04 (4) (a) and (5) (b) and 40.05 (2) (g) and all employee contributions made under ss. 40.02 (17) and 40.05 (1), may not in any calendar year exceed the maximum contribution limitation established under section 415 (c) of the Internal Revenue Code, as adjusted under section 415 (d) of the Internal Revenue Code and any applicable regulations adopted by the federal department of the treasury.

20,753 Section 753. 40.515 of the statutes is created to read:

40.515 Health savings accounts; high-deductible health plan. (1) In addition to the health care coverage plans offered under s. 40.51 (6), beginning on January 1, 2015, the group insurance board shall offer to all state employees the option of receiving health care coverage through a high-deductible health plan and the establishment of a health savings account. Under this option, each employee shall receive health care coverage through a high-deductible health plan. The state shall make contributions into each employee's health savings account in an amount specified by the director of the office of state employment relations under s. 40.05 (4) (ah) 4. In designing a high-deductible health plan, the group insurance board shall ensure that the plan may be used in conjunction with a health savings account.

(2) The group insurance board may contract with any person to provide administrative and other services relating to health savings accounts established under this section.

(3) The group insurance board may collect fees from state agencies to pay all administrative costs relating to the establishment and operation of health savings accounts established under this section. The group insurance board shall develop a methodology for determining each state agency's share of the administrative costs. Moneys collected under this subsection shall be credited to the appropriation account under s. 20.515 (1) (tm).

(4) Beginning on January 1, 2015, to the extent practicable, any agreement with any insurer or provider to provide health care coverage to state employees under s. 40.51 (6) shall require the insurer or provider to also offer a high-deductible health plan that may be used in conjunction with a health savings account.

20,754 Section 754. 40.72 (4r) of the statutes is amended to read:

40.72 (4r) At any time after an insured employee's amount of life insurance is reduced under subs. (2) and (3) and life insurance premiums are no longer required under s. 40.05 (6) (b), the employee may convert the present value of the life insurance to pay the premiums for health or long-term care insurance provided under subch. IV, but only if the department determines that the value of the conversion is exempt from taxation under the internal revenue code Internal Revenue Code.