Senate Bill No. 564
(By Senators Wells, Fanning and Love)
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[Introduced February 13, 2007; referred to the Committee on
Finance.]
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A BILL to amend
the Code of West Virginia, 1931, as amended, by
adding thereto two new sections, designated §5-10B-3a and
§5-10B-10a
; to amend and reenact §11-21-12
of said code; and
to amend and reenact §36-8-13 of said code, all relating to
government employees' deferred compensation plans; authorizing
automatic enrollment in a plan; authorizing a matching
contribution program; establishing matching program term;
establishing qualifications for participation; limiting the
match to twenty-five percent of employee contributions at a
maximum of one hundred dollars per year, not to exceed four
hundred dollars over the life of the matching program;
establishing the Deferred Compensation Matching Fund;
specifying that operation of a matching program is contingent
upon funding by the Legislature and may be changed or
discontinued at any time for a time certain or indefinitely; specifying that disbursements from the matching fund may not
exceed one million dollars in any one fiscal year; allowing
earnings to accrue to the matching fund; authorizing a
reduction of adjusted gross income by up to two thousand
dollars per year of benefits received under the West Virginia
Government Employees Deferred Compensation Plan for personal
income tax purposes; and requiring the unclaimed property
administrator to transfer three million dollars from the
Unclaimed Property Trust Fund to the matching fund on or
before the first day of June, two thousand seven, and one
million dollars on or before the first day of June, two
thousand eight.
Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto two new sections, designated §5-10B-3a and
§5-10B-10a; that §11-21-12 of said code be amended and reenacted;
and that §36-8-13 of said code be amended and reenacted, all to
read as follows:
CHAPTER 5. GENERAL POWERS AND AUTHORITY OF THE GOVERNOR,
SECRETARY OF STATE AND ATTORNEY GENERAL.
ARTICLE 10B. GOVERNMENT EMPLOYEES DEFERRED COMPENSATION PLANS.
§5-10B-3a. Automatic enrollment.
(a) Every state employee commencing work on and after the
first day of July, two thousand seven, shall have a minimum of ten dollars per pay period of his or her salary deferred to the state
deferred compensation plan unless the state employee provides
written notice declining to participate in accordance with the
Treasurer's guidelines. A state employee may change the
contribution amount or cease participating at any time. An
employee declining participation in the state deferred compensation
plan may elect to participate at a later time.
(b) A political subdivision may establish an automatic
enrollment program in a deferred compensation plan pursuant to this
article. A political subdivision employee may elect to not
participate in the deferred compensation plan at any time and to
change the contribution amount.
§5-10B-10a. Matching contribution program.
(a) For a period commencing the first day of July, two
thousand seven, and continuing through the thirtieth day of
September, two thousand twelve, the Treasurer is authorized to
establish and operate a savings incentive program pursuant to
section 401(a) of the Internal Revenue Code of 1986, as amended, in
which a state employee participating in the deferred compensation
plan authorized in this article may receive certain matching
contributions pursuant to this section. The Treasurer shall
establish matching program guidelines in accordance with this
article.
(b) To qualify for participation in the matching program, a state employee shall have contributed to his or her deferred
compensation account not less than ten dollars every pay period
during a fiscal year.
(c) The Treasurer shall allocate and credit a matching sum of
up to twenty-five percent of the contributions a qualified state
employee made to his or her deferred compensation account during a
fiscal year subsequent to qualifying to participate in the matching
program for a period of up to five fiscal years, which
contributions shall be at least ten dollars in every pay period
during the fiscal year, and which matching contributions for any
employee shall not exceed one hundred dollars in any one fiscal
year and four hundred dollars total over the life of the matching
program. The Treasurer shall set the amount of funds a qualified
state employee may receive as a match in accordance with this
section in an amount not to exceed the amount of funds authorized
by the Legislature for this purpose.
(d) The matching contribution shall be remitted annually by
the Treasurer from the West Virginia Deferred Compensation Matching
Fund, which is hereby created, to the employee's account in the
West Virginia Deferred Compensation Trust Fund no later than the
thirtieth day of September each year for the prior fiscal year.
(e) The Treasurer shall not obligate, authorize or pay any
match for which funds are not available in the West Virginia
Deferred Compensation Matching Fund.
(f) Operation of the matching program is contingent upon
funding made available by the West Virginia Legislature and may be
changed or discontinued at any time for a time certain or
indefinitely, as determined by the Legislature or the Treasurer.
The maximum amount of funds that may be expended from the Deferred
Compensation Matching Fund in any one fiscal year is one million
dollars.
(g) On or before the first day of June, two thousand seven,
the unclaimed property administrator shall transfer the amount of
three million dollars from the Unclaimed Property Trust Fund,
created in section thirteen, article eight of chapter thirty-six of
this code, to the Deferred Compensation Matching Fund for operation
of the matching program. On or before the first day of June, two
thousand eight, the unclaimed property administrator shall transfer
the amount of one million dollars from the Unclaimed Property Trust
Fund to the Deferred Compensation Matching Fund for operation of
the matching program.
(h) Moneys in the Deferred Compensation Matching Fund may be
invested, in whole or in part, with the West Virginia Board of
Treasury Investments or any other entity the Treasurer selects, and
all earnings shall accrue to and be retained by the fund.
(i) The State of West Virginia, the Treasurer and his or her
employees, agents and representatives shall not be liable for any
losses incurred by the Deferred Compensation Matching Fund.
(j) Any moneys remaining in the Deferred Compensation Matching
Fund at the termination of the matching program shall be
transferred to the General Revenue Fund of the state no later than
the thirty-first day of December, two thousand twelve.
(k) Any public employer may elect to operate its own matching
program.
CHAPTER 11. TAXATION.
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-12. West Virginia adjusted gross income of resident
individual.
(a) General. -- The West Virginia adjusted gross income of a
resident individual means his or her federal adjusted gross income
as defined in the laws of the United States for the taxable year
with the modifications specified in this section.
(b) Modifications increasing federal adjusted gross income. --
There shall be added to federal adjusted gross income unless
already included therein the following items:
(1) Interest income on obligations of any state other than
this state or of a political subdivision of any other state unless
created by compact or agreement to which this state is a party;
(2) Interest or dividend income on obligations or securities
of any authority, commission or instrumentality of the United
States, which the laws of the United States exempt from federal
income tax but not from state income taxes;(3) Any deduction allowed when determining federal adjusted
gross income for federal income tax purposes for the taxable year
that is not allowed as a deduction under this article for the
taxable year;
(4) Interest on indebtedness incurred or continued to purchase
or carry obligations or securities the income from which is exempt
from tax under this article, to the extent deductible in
determining federal adjusted gross income;
(5) Interest on a depository institution tax-exempt savings
certificate which is allowed as an exclusion from federal gross
income under Section 128 of the Internal Revenue Code, for the
federal taxable year;
(6) The amount of a lump sum distribution for which the
taxpayer has elected under Section 402(e) of the Internal Revenue
Code of 1986, as amended, to be separately taxed for federal income
tax purposes; and
(7) Amounts withdrawn from a medical savings account
established by or for an individual under section twenty, article
fifteen, chapter thirty-three of this code or section fifteen,
article sixteen of said chapter that are used for a purpose other
than payment of medical expenses, as defined in those sections.
(c) Modifications reducing federal adjusted gross income. --
There shall be subtracted from federal adjusted gross income to the
extent included therein:(1) Interest income on obligations of the United States and
its possessions to the extent includable in gross income for
federal income tax purposes;
(2) Interest or dividend income on obligations or securities
of any authority, commission or instrumentality of the United
States or of the state of West Virginia to the extent includable in
gross income for federal income tax purposes but exempt from state
income taxes under the laws of the United States or of the state of
West Virginia, including federal interest or dividends paid to
shareholders of a regulated investment company, under Section 852
of the Internal Revenue Code for taxable years ending after the
thirtieth day of June, one thousand nine hundred eighty-seven;
(3) Any amount included in federal adjusted gross income for
federal income tax purposes for the taxable year that is not
included in federal adjusted gross income under this article for
the taxable year;
(4) The amount of any refund or credit for overpayment of
income taxes imposed by this state, or any other taxing
jurisdiction, to the extent properly included in gross income for
federal income tax purposes;
(5) Annuities, retirement allowances, returns of contributions
and any other benefit received under the West Virginia Public
Employees Retirement System, the West Virginia State Teachers
Retirement System and all forms of military retirement, including regular Armed Forces, Reserves and National Guard, including any
survivorship annuities derived therefrom, to the extent includable
in gross income for federal income tax purposes: Provided, That
notwithstanding any provisions in this code to the contrary this
modification shall be limited to the first two thousand dollars of
benefits received under the West Virginia Public Employees
Retirement System, the West Virginia State Teachers Retirement
System and, including any survivorship annuities derived therefrom,
to the extent includable in gross income for federal income tax
purposes for taxable years beginning after the thirty-first day of
December, one thousand nine hundred eighty-six; and the first two
thousand dollars of benefits received under any federal retirement
system to which Title 4 U.S.C. §111 applies: Provided, however,
That the total modification under this paragraph shall not exceed
two thousand dollars per person receiving retirement benefits and
this limitation shall apply to all returns or amended returns filed
after the last day of December, one thousand nine hundred eighty-eight;
(6)Any benefit received under a government employees
deferred compensation plan operated pursuant to article ten-b,
chapter five of this code, to the extent includable in gross income
for federal income tax purposes: Provided, That notwithstanding
any provisions in this code to the contrary, this modification
shall be limited to the first two thousand dollars of benefits
received in any one taxable year, beginning after the thirty-first day of December, two thousand six;
(6)
(7) Retirement income received in the form of pensions and
annuities after the thirty-first day of December, one thousand nine
hundred seventy-nine, under any West Virginia police, West Virginia
Firemen's Retirement System or the West Virginia State Police
Death, Disability and Retirement Fund, the West Virginia State
Police Retirement System or the West Virginia Deputy Sheriff
Retirement System, including any survivorship annuities derived
from any of these programs, to the extent includable in gross
income for federal income tax purposes;
(7)
(8) (A) For taxable years beginning after the thirty-first
day of December, two thousand, and ending prior to the first day of
January, two thousand three, an amount equal to two percent
multiplied by the number of years of active duty in the Armed
Forces of the United States of America with the product thereof
multiplied by the first thirty thousand dollars of military
retirement income, including retirement income from the regular
Armed Forces, reserves and National Guard paid by the United States
or by this state after the thirty-first day of December, two
thousand, including any survivorship annuities, to the extent
included in gross income for federal income tax purposes for the
taxable year.
(B) For taxable years beginning after the thirty-first day of
December, two thousand two, the first twenty thousand dollars of military retirement income, including retirement income from the
regular Armed Forces, reserves and National Guard paid by the
United States or by this state after the thirty-first day of
December, two thousand two, including any survivorship annuities,
to the extent included in gross income for federal income tax
purposes for the taxable year.
(C) In the event that any of the provisions of this
subdivision are found by a court of competent jurisdiction to
violate either the Constitution of this state or of the United
States, or is held to be extended to persons other than specified
in this subdivision, this subdivision shall become null and void by
operation of law.
(8)
(9) Federal adjusted gross income in the amount of eight
thousand dollars received from any source after the thirty-first
day of December, one thousand nine hundred eighty-six, by any
person who has attained the age of sixty-five on or before the last
day of the taxable year, or by any person certified by proper
authority as permanently and totally disabled, regardless of age,
on or before the last day of the taxable year, to the extent
includable in federal adjusted gross income for federal tax
purposes: Provided, That if a person has a medical certification
from a prior year and he or she is still permanently and totally
disabled, a copy of the original certificate is acceptable as proof
of disability. A copy of the form filed for the federal disability income tax exclusion is acceptable: Provided, however, That:
(i) Where the total modification under subdivisions (1), (2),
(5), (6) and (7) of this subsection is eight thousand dollars per
person or more, no deduction shall be allowed under this
subdivision; and
(ii) Where the total modification under subdivisions (1), (2),
(5), (6) and (7) of this subsection is less than eight thousand
dollars per person, the total modification allowed under this
subdivision for all gross income received by that person shall be
limited to the difference between eight thousand dollars and the
sum of modifications under subdivisions (1), (2), (5), (6) and (7)
of this subsection;
(9)
(10) Federal adjusted gross income in the amount of eight
thousand dollars received from any source after the thirty-first
day of December, one thousand nine hundred eighty-six, by the
surviving spouse of any person who had attained the age of
sixty-five or who had been certified as permanently and totally
disabled, to the extent includable in federal adjusted gross income
for federal tax purposes: Provided, That:
(i) Where the total modification under subdivisions (1), (2),
(5), (6), (7) and (8) of this subsection is eight thousand dollars
or more, no deduction shall be allowed under this subdivision; and
(ii) Where the total modification under subdivisions (1), (2),
(5), (6), (7) and (8) of this subsection is less than eight thousand dollars per person, the total modification allowed under
this subdivision for all gross income received by that person shall
be limited to the difference between eight thousand dollars and the
sum of subdivisions (1), (2), (5), (6), (7) and (8) of this subsection;
(10)
(11) Contributions from any source to a medical savings
account established by or for the individual pursuant to section
twenty, article fifteen, chapter thirty-three of this code or
section fifteen, article sixteen of said chapter, plus interest
earned on the account, to the extent includable in federal adjusted
gross income for federal tax purposes: Provided, That the amount
subtracted pursuant to this subdivision for any one taxable year
may not exceed two thousand dollars plus interest earned on the
account. For married individuals filing a joint return, the
maximum deduction is computed separately for each individual;
(11)
(12) For the two thousand six taxable year only,
severance wages received by a taxpayer from an employer as the
result of the taxpayer's permanent termination from employment
through a reduction in force and through no fault of the employee,
not to exceed thirty thousand dollars. For purposes of this
subdivision:
(i) The term "severance wages" means any monetary compensation
paid by the employer in the taxable year as a result of permanent
termination from employment in excess of regular annual wages or
regular annual salary;
(ii) The term "reduction in force" means a net reduction in
the number of employees employed by the employer in West Virginia,
determined based on total West Virginia employment of the
employer's controlled group;
(iii) The term "controlled group" means one or more chains of
corporations connected through stock ownership with a common parent
corporation if stock possessing at least fifty percent of the
voting power of all classes of stock of each of the corporations is
owned directly or indirectly by one or more of the corporations and
the common parent owns directly stock possessing at least fifty
percent of the voting power of all classes of stock of at least one
of the other corporations;
(iv) The term "corporation" means any corporation, joint-stock
company or association and any business conducted by a trustee or
trustees wherein interest or ownership is evidenced by a
certificate of interest or ownership or similar written instrument;
and
(12)
(13) Any other income which this state is prohibited from
taxing under the laws of the United States.
(d) Modification for West Virginia fiduciary adjustment. --
There shall be added to or subtracted from federal adjusted gross
income, as the case may be, the taxpayer's share, as beneficiary of
an estate or trust, of the West Virginia fiduciary adjustment
determined under section nineteen of this article.
(e) Partners and S corporation shareholders. -- The amounts of
modifications required to be made under this section by a partner
or an S corporation shareholder, which relate to items of income,
gain, loss or deduction of a partnership or an S corporation, shall
be determined under section seventeen of this article.
(f) Husband and wife. -- If husband and wife determine their
federal income tax on a joint return but determine their West
Virginia income taxes separately, they shall determine their West
Virginia adjusted gross incomes separately as if their federal
adjusted gross incomes had been determined separately.
(g) Effective date. -- (1) Changes in the language of this
section enacted in the year two thousand shall apply to taxable
years beginning after the thirty-first day of December, two
thousand.
(2) Changes in the language of this section enacted in the
year two thousand two shall apply to taxable years beginning after
the thirty-first day of December, two thousand two.
CHAPTER 36. ESTATES AND PROPERTY.
ARTICLE 8. THE UNIFORM UNCLAIMED PROPERTY ACT.
§36-8-13. Deposit of funds.
(a) The administrator shall record the name and last known
address of each person appearing from the holders reports to be
entitled to the property and the name and last known address of
each insured person or annuitant and beneficiary and with respect to each policy or annuity listed in the report of an insurance
company, its number, the name of the company and the amount due.
(b) The Unclaimed Property Fund is continued. The
administrator shall deposit all funds received pursuant to this
article in the Unclaimed Property Fund, including the proceeds from
the sale of abandoned property under section twelve of this
article. In addition to paying claims of unclaimed property duly
allowed, the administrator may deduct the following expenses from
the Unclaimed Property Fund:
(1) Expenses of the sale of abandoned property;
(2) Expenses incurred in returning the property to owners,
including without limitation the costs of mailing and publication
to locate owners;
(3) Reasonable service charge; and
(4) Expenses incurred in examining records of holders of
property and in collecting the property from those holders.
(c) The Unclaimed Property Trust Fund is continued within the
State Treasury. After deducting the expenses specified in
subsection (b) of this section and maintaining a sum of money from
which to pay claims duly allowed, the administrator shall transfer
the remaining moneys in the Unclaimed Property Fund to the
Unclaimed Property Trust Fund.
(d) On or before the fifteenth day of December of each year
and after receipt of a report from the Chairman of the Board of Trustees of the West Virginia College Prepaid Tuition and Savings
Program stating the amount certified by an actuary in accordance
with the provisions of section six, article thirty, chapter
eighteen of this code, notwithstanding any provision of this code
to the contrary, the administrator shall transfer the sum of money
certified by the actuary from the Unclaimed Property Trust Fund to
the Prepaid Tuition Trust Escrow Fund, the amount transferred not
to exceed one million dollars annually.
(e) On or before the first day of June, two thousand seven,
the unclaimed property administrator shall transfer the amount of
three million dollars from the Unclaimed Property Trust Fund to the
Deferred Compensation Matching Fund for operation of the deferred
compensation matching program for state employees. On or before
the first day of June, two thousand eight, the unclaimed property
administrator shall transfer the amount of one million dollars from
the Unclaimed Property Trust Fund to the Deferred Compensation
Matching Fund for operation of the matching program.
(e) (f)
After transferring any money required by
subsection
(d)
subsections (d) and (e) of this section, the administrator
shall transfer moneys remaining in the Unclaimed Property Trust
Fund to the General Revenue Fund.
NOTE: The purpose of this bill is to authorize automatic
enrollment in the deferred compensation program, allow for the
creation of a matching program for a period of five years of up to
twenty five percent of employee contributions in an amount not to exceed one hundred dollars per year and four hundred dollars over
the life of the matching program, authorize the transfer of three
million dollars by the first day of June, two thousand seven and
one million dollars by first day of June, two thousand eight from
the Unclaimed Property Trust Fund to the created Deferred
Compensation Matching Fund, and allow for exemption of up to two
thousand dollars of benefit funds withdrawn each year from these
deferred compensation accounts for West Virginia personal income
tax purposes.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
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