AB 1027

This bill makes various changes to certain programs administered by the

Department of Employee Trust Funds.

Under federal law, a qualified governmental retirement plan is required to

begin minimum distributions to participants in the plan upon the participants

reaching a specific age. The federal Setting Every Community Up for Retirement

Enhancement (SECURE) Act of 2019 changed the age of the required minimum

distribution (RMD) age. The Wisconsin Retirement System is a qualified

governmental retirement plan and is required to comply with this change in federal

law. The bill changes the RMD references in Wisconsin law.

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

participating employer under the WRS may purchase other governmental service.

As currently written, the statute uses the terms “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 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.

Under current law, when a disability annuity under the WRS is terminated, the

person's WRS account is reestablished and credited with interest. While a person

is receiving an annuity from the WRS, the person cannot also be credited with

contributions and service. The bill removes obsolete language from the statute.

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.

The bill amends how DETF must treat a retirement account as abandoned if

an estate is never opened. The bill allows DETF to consider a benefit abandoned if

an estate is never opened within a specific period, the same as if an estate is closed

and not reopened.

The bill eliminates an expired provision regarding the execution of domestic

relations orders (DROs) 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