Special Needs Trust Definition for State Retirement Benefits
Summary
Kentucky SB85 defines 'special needs trust' (SNT) for the State Police Retirement System, Kentucky Employees Retirement System, County Employees Retirement System, Teachers' Retirement System, and Judicial Retirement Plan. The bill allows SNTs to receive lifetime retirement payments when a member dies before retirement and permits beneficiaries of SNTs to be designated as recipients of lifetime retirement benefits.
What changed
Kentucky SB85 amends multiple sections of Kentucky Revised Statutes (KRS 16.505, 61.510, 78.510, 16.578, 61.635, 61.640, 61.690, 78.5532, 161.525, 161.640, 161.700, 21.420, 21.425) to define 'special needs trust' across five state-administered retirement systems. The bill permits SNTs to receive lifetime retirement payments when a member dies before retirement, allows beneficiaries of SNTs to be designated as beneficiaries of lifetime retirement benefits, and clarifies that directing payments to an SNT does not constitute an assignment or transfer.
Retirement system administrators (KPPA and TRS) must update procedures to accept SNT designations, issue payments to trustees, and promulgate administrative regulations. Trustees of SNTs must notify the respective retirement system upon the beneficiary's death and repay any payments not properly payable. The bill also prevents annuity payments to SNTs from being used to reimburse Medicaid benefits paid on behalf of the beneficiary.
What to do next
- Update beneficiary designation procedures to accept special needs trust designations
- Develop administrative processes for issuing retirement payments to SNT trustees
- Promulgate administrative regulations to administer SNT provisions as required by the bill
Source document (simplified)
ChangeBridge / Kentucky / SB85 Signed by Governor SB85 Senate Bill Signed by Governor 2026-04-03
AN ACT relating to designating a special needs trust to receive state-administered retirement benefits.
Amend KRS 16.505, 61.510, and 78.510 to define "special needs trust" (SNT) for purposes of the State Police Retirement System, Kentucky Employees Retirement System, and County Employees Retirement System; amend the definition of "beneficiary" to include a SNT; amend KRS 16.578 to allow a SNT to receive a lifetime retirement payment if a member dies before retirement; amend KRS 61.635 to allow a person who is the beneficiary of a SNT to be designated as the beneficiary of a lifetime retirement benefit; require the trustee of a SNT to notify the Kentucky Public Pensions Authority (KPPA) upon the death of the beneficiary of a SNT and repay any payment not properly payable to the SNT; allow KPPA to promulgate administrative regulations to administer the SNT provisions; amend KRS 61.640 to allow a SNT to receive a lifetime retirement payment if a member dies before retirement; amend KRS 61.690 to allow a recipient or legal representative to direct retirement benefits to be paid to a SNT and clarify that it is not an assignment or transfer; amend KRS 78.5532 to allow a SNT to receive a lifetime retirement benefit if a member dies before retirement; amend KRS 161.525, relating to the Teachers' Retirement System (TRS) to allow a SNT to receive a lifetime annuity if a member dies before retirement; amend KRS 161.640 to allow checks to be sent by mail to the trustee of a SNT; require the trustee to notify the TRS upon the death of the beneficiary; require any payments not properly payable to the SNT to be repaid to TRS; allow TRS to promulgate administrative regulations to administer the SNT provisions; amend KRS 161.700 to require TRS to assign annuity payments to a SNT, issue payments to the trustee, and prevent annuity payments from being used to reimburse any state for any Medicaid benefits paid on behalf of the beneficiary of a SNT; amend KRS 21.420, relating to the Judicial Retirement Plan, to allow for a SNT to be selected as a beneficiary, and define "special needs trust"; amend KRS 21.425 to allow a member to designate a SNT to receive lifetime survivorship benefits on behalf of a surviving spouse, dependent child, or disabled child.
Bill Details
State Kentucky
Session 2026 Regular Session
Chamber Senate
Official Source apps.legislature.ky.gov/record/26RS/sb85.html
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Sponsors
Robin Webb (Sen - R) Danny Carroll (Sen - R)
Action History
2026-04-03 S signed by Governor 2026-03-27 S delivered to Governor 2026-03-27 S enrolled, signed by Speaker of the House 2026-03-27 S enrolled, signed by President of the Senate 2026-03-27 S received in Senate 2026-03-27 H 3rd reading, passed 90-0 2026-03-26 H posted for passage in the Regular Orders of the Day for Friday, March 27 2026 2026-03-20 H 2nd reading, to Rules 2026-03-19 H reported favorably, 1st reading, to Calendar 2026-03-16 H to State Government (H) 2026-02-19 H to Committee on Committees (H) 2026-02-19 H received in House 2026-02-18 S 3rd reading, passed 36-0 2026-02-13 S posted for passage in the Regular Orders of the Day for Wednesday, February 18 2026 2026-02-05 S 2nd reading, to Rules 2026-02-04 S reported favorably, 1st reading, to Calendar 2026-02-02 S to State & Local Government (S) 2026-01-13 S to Committee on Committees (S) 2026-01-13 S introduced in Senate
Votes
2026-02-18 Senate: Third Reading RSN# 3834 Yea: 36 Nay: 0 2026-03-27 House: Veto Override RCS# 351 Yea: 90 Nay: 0
Committee Referrals
2026-01-13 S Committee on Committees 2026-02-02 S State & Local Government 2026-02-05 S Rules 2026-02-19 H Committee On Committees 2026-03-16 H State Government 2026-03-20 H Rules
Bill Text Versions
0000-00-00 Introduced 0000-00-00 Engrossed
Subjects
Judges and Court Commissioners Public Officers and Employees Retirement and Pensions State Agencies Teachers Actuarial Analysis Legislative data powered by LegiScan (CC BY 4.0)
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