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HB 5989

Retirement: other; naming a special needs trust as beneficiary; allow. Amends 2017 PA 202 (MCL 38.2801 - 38.2812) by adding sec. 4a & repeals sec. 2 of 2017 PA 202 (MCL 38.2802).

2023-2024 Regular Session Introduced by Erin Byrnes and 2 co-sponsors

Allows municipal pensions to be paid directly into first-party or pooled special needs trusts for disabled beneficiaries under 65, preserving means-tested benefit eligibility.

referred to second reading
#probate:trusts #retirement:other
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Bill Summary · HB 5989

Summary — HB 5989 (Protecting Local Government Retirement and Benefits Act amendment)

Status: Referred to second reading (committee reported with substitute H‑1).
Introduced: Sep 26, 2024 (Rep. John Fitzgerald; co-sponsors Rep. Byrnes and Rep. Hill).
Key citation: adds a new section (4a) to 2017 PA 202 (MCL 38.2801–38.2812) and repeals MCL 38.2802.

Purpose

Allow a retirement allowance payable under a local government retirement system governed by the Protecting Local Government Retirement and Benefits Act to be paid directly into a qualifying "special needs" trust for a disabled beneficiary, preserving eligibility for means‑tested public benefits.

Key provisions

  • Adds section 4a to the Protecting Local Government Retirement and Benefits Act to permit payment of a retirement allowance to a trust that is a beneficiary under 42 U.S.C. §1396p(d)(4)(A) or (C) (commonly known as first‑party payback trusts and certain pooled trusts for disabled individuals under age 65).
  • Payment to the trust may be made on written direction to the retirement system:
    • by the retirant (the person whose retirement benefit designates the beneficiary), or
    • after the retirant’s death, by the retirement allowance beneficiary (or the beneficiary’s legal representative if the beneficiary is a minor or incapacitated).
  • Repeals section 2 of 2017 PA 202 (MCL 38.2802), which contained legislative findings and declarations related to the 2017 enactment of that act.

Who would be affected

  • Retirants and designated beneficiaries under local government retirement systems covered by the Act (i.e., municipal/local government pension plans governed by 2017 PA 202).
  • Disabled beneficiaries under age 65 who are beneficiaries of qualifying special needs trusts (per 42 U.S.C. §1396p(d)(4)(A) or (C)).
  • Retirement system administrators and trustees of special needs trusts.
  • Potential indirect effect: helps preserve beneficiaries’ eligibility for means‑tested benefits (e.g., Medicaid, SSI) by routing pension payments into compliant trusts.

Fiscal impact

House Fiscal Agency analysis: no direct fiscal impact on retirement systems.

Procedural/timeline notes

  • Introduced 9/26/2024; read first time same day and referred to Judiciary Committee.
  • Referred to Committee on Families, Children and Seniors (Rule 41) and reported with substitute (H‑1) on 12/3/2024.
  • Referred to second reading; referred to Joint Committee on Finance, Revenue and Bonding 1/22/2025.
  • Companion bills (HBs 5985–5988) would add comparable trust‑payment provisions to other Michigan public retirement acts (judges, state employees, public school employees, state police).

Context

The change implements an administrative mechanism to direct pension payments into federally recognized special needs trusts (per 42 U.S.C. §1396p(d)(4)(A)/(C)), which are structured to prevent those funds from being counted as personal assets for purposes of eligibility for Medicaid and other means‑tested programs. The repeal of section 2 removes prior legislative findings from the 2017 Act without changing substantive operative provisions other than adding section 4a.

Compiled from official sources — confirm details with the bill’s official record.

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