Bill
HB 4659
Allows a special needs trust to be named as the beneficiary of state employee retirement survivor benefits and to receive payments directly for the disabled beneficiary's needs.
Status and procedural history
- Bill number: HB 4659 (companion: SB 2955)
- Title: Retirement: state employees; naming a special needs trust as beneficiary; allow. (amends MCL 38.31)
- Filed: March 12, 2025. Electronically reproduced: 06/17/2025. Introduced in House: June 17, 2025 (Rep. Kara Hope). Referred to Committee on Judiciary.
- Key committee activity (April–May 2025): read, referred to Ways & Means, committee hearings and substitute reported favorably, placed on General State Calendar.
Purpose and intent
- The bill’s stated purpose is to amend section 31 of the State Employees’ Retirement Act (MCL 38.31) to allow a member (or deferred member) to name a special needs trust (SNT) as the designated retirement allowance beneficiary under the available survivor payment options. The change is intended to permit retirement benefits to be paid directly to an SNT for the benefit of a disabled person without jeopardizing their eligibility for public benefit programs.
Key provisions (what the bill would do)
- Modify MCL 38.31 (section 31) to permit a special needs trust to be named and function as a retirement allowance beneficiary under the existing survivor payment options (Option A, B, C).
- Retain core mechanics of section 31: members must elect a payment option before (but not after) their effective retirement date; actuarial equivalents and reduced allowances still apply; survivor payments generally begin the month after the retirant’s death.
- Preserve existing procedural requirements for making written beneficiary designations filed with the retirement board; the bill would likely require documentation showing the named SNT meets statutory standards (typical administrative step — the bill text as summarized indicates the allowance to name an SNT rather than detailed administrative changes).
Who is affected
- Primary: Michigan state employees, deferred members, retiring members, and their designated beneficiaries (particularly disabled persons who receive means-tested public benefits).
- Secondary: trustees and administrators of special needs trusts, the State Employees’ Retirement Board (administration, verification, and payment processes), and potentially state benefit programs (because SNTs can help preserve eligibility).
Potential impacts and considerations
- Positive effect for beneficiaries with disabilities: allows survivor benefits to be paid into an SNT so funds can be used for supplemental needs without causing loss of public benefits (e.g., Medicaid).
- Administrative: the retirement system may need to adopt procedures to accept, verify, and process payments to trusts (trust documentation, trustee identification, tax/reporting implications).
- Fiscal impact: the bill does not change how benefits are calculated; it changes the permitted recipient of survivor benefits. Any actuarial cost or administrative cost impacts are not specified in the bill text provided.
Notes
- The bill amends the existing statutory beneficiary restrictions in section 31 (which currently limits beneficiary designations to relatives such as spouse, children, parents, siblings, grandchildren). HB 4659 would explicitly allow a special needs trust to be listed and paid as a retirement allowance beneficiary under the same survivor payment options.
Compiled from official sources — confirm details with the bill’s official record.
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