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
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.