SB 802

Under current law, investment gains and losses of the core and variable

retirement investment trust funds are distributed in a ratio of each participating

account's average daily balance to the total average daily balance of all participating

accounts. The State of Wisconsin Investment Board invests assets of the core and

variable investment trust funds, which are commingled under current law, and all

activity is not recorded on a daily basis for the separate participating accounts.

SWIB provides certified annual earnings reports for the core and variable trust

funds.

This bill provides that the Department of Employee Trust Funds may distribute

the earnings to each participating account by calculating a simple average balance,

which uses beginning and end-of-year balances for each participating account, and

comparing that average balance to the total average balance of all participating

accounts.

The bill clarifies that only an employee who is currently employed with an

participating employer under the Wisconsin Retirement System may purchase other

governmental service. As currently written, the statute uses the term “participant”

and “participating employee.” The term “participant” includes a person who

previously worked for a participating employer but has not yet taken a WRS benefit.

Under current law, the Employee Trust Funds Board contracts with

employee-funded reimbursement account plan providers to provide accounts to be

used by state agencies. Employee-funded reimbursement accounts are governed by

provisions of the Internal Revenue Code. The bill aligns the statutory language with

the language in the IRC.

Under the bill, references to beneficiaries and named survivors in statutes

regarding annuity options under the WRS are amended to distinguish between a

named survivor who will receive a benefit and a beneficiary.

The bill eliminates an expired provision regarding the execution of domestic

relations orders (DRO) that divide a WRS account. Under current law, a DRO must

be provided to DETF within 20 years after the judgment of divorce is entered. Under

the original DRO law, DETF could not accept a DRO for a judgment of divorce entered

before April 28, 1990. The law was amended by

1997 Wisconsin Act 125

to cover

DROs for a judgment of divorce entered between January 1, 1982, and April 27, 1990.

The Wisconsin Supreme Court held in

Johnson v. Masters

, 2013 WI 43, 347 Wis.

2d 238, 830 N.W. 2d 647 (2012), that the 20-year limit for execution of DROs issued

under the amended law did not begin until the date DETF was able to divide a WRS

account. The 20-year period did not begin to toll until May 2, 1998. DETF has not