Department of Employee Trust Funds
August 12, 2008

Some Beneficiaries of Participants Who Died in Active Military Service May Be Eligible for Higher Death Benefits

On June 17, 2008, the federal “Heroes Earnings Assistance and Relief Tax Act “ (HEART Act) became effective. This legislation is retroactive to January 1, 2007, and may increase the death benefits payable to the survivors of participants who die as “inactive” Wisconsin Retirement System (WRS) participants while on active military duty.

Inactive WRS death benefits consist of the employee required contribution balance plus any voluntary additional contributions. “Active” WRS death benefits generally include the employee required contribution balance plus a matching amount of employer contributions, and any additional contributions. Under the HEART Act, the beneficiaries of participants who left WRS employment to enter military service and then died during the period of active military service are eligible for the WRS death benefits that would have been payable if the participant had died in active status under the WRS.

Note: If the participant was on a leave of absence during the period of military service (rather than terminated), and died while on a leave of absence, the HEART Act has no effect because the death benefits will already be calculated as a death in active WRS employment. However, if the participant’s employment with a WRS employer terminated, and the participant died in inactive WRS status, the death benefits would normally be calculated as an inactive death benefit.

Under the HEART Act, when a participant leaves employment to enter the military and then dies in active military service, the death benefit must be calculated as though the he/she returned to employment on the date of death. This means that the WRS death benefit would also include the matching employer contributions, which, in most situations, will double the death benefit.

Since the HEART Act is retroactive to January 1, 2007, it applies to deaths that occurred on or after that date. If you received a death benefit from the account of a deceased participant who may meet the criteria described above, contact the Department and we will determine whether the HEART Act will increase the death benefits that you received.

Please note that it will be necessary to amend the Wisconsin laws governing WRS death benefits before we can pay the higher benefit amount. Due to legislative calendars, the soonest that the laws can be amended is early 2009. However, contacting the Department of Employee Trust Funds now will help us determine whether you qualify for the higher death benefit and, if you are eligible, pay the increased benefit as quickly as possible after the statutes are amended.