KentuckySB 852026 Regular SessionSenateWALLET

AN ACT relating to designating a special needs trust to receive state-administered retirement benefits.

Sponsored By: Robin L. Webb (Republican)

Signed by Governor

Judges And Court CommissionersPublic Officers And EmployeesRetirement And PensionsState AgenciesTeachersActuarial Analysis

Personalized for You

How does this bill affect your finances?

Personalize government policy and PRIA will tell you what this bill means for your household, plus every other piece of legislation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.

Free to download

Bill Overview

Analyzed Economic Effects

7 provisions identified: 2 benefits, 4 costs, 1 mixed.

Pensions can pay to special needs trusts

The law lets you name a special needs trust to get your public pension and death benefits. Plans can send monthly checks to the trust when the retiree, survivor, spouse, or dependent is the trust’s sole beneficiary. Judicial members may also split a death benefit between a spouse and children or a special needs trust by filing the manager’s form. Payments sent to a special needs trust are not used for state Medicaid payback. Trustees must report deaths and return any overpayments. You may also direct payments to another trust if you keep unrestricted access or the trust is only for you.

Special needs trusts get survivor choices

If a member dies before their first pension check and had a beneficiary on file, a person or a special needs trust can pick the same survivor options. Choices include a lifetime benefit, a Social Security adjustment option, 60‑ or 120‑month certain payments, or a lump‑sum of equal value. This applies if the member met service rules at death: eligible to retire; or active/on leave with 5+ years; or inactive with 12+ years. When the beneficiary is a special needs trust, the trust beneficiary’s age is used to set the payment. The trustee must report deaths and return wrong payments. Wrong payments to a trust are not treated as Medicaid payback.

Broader gainful work rule for disability

The law treats seasonal, volunteer, part‑time, and on‑call work as gainful employment. This can change disability decisions and may reduce or stop disability payments for members who do this work.

Newer judicial members lose survivor rules

If you joined the Judicial Retirement Plan on or after January 1, 2014, the earlier survivor‑child sections do not apply to you. Those survivor‑child benefits are only for members who started before 2014.

Survivor checks continue for children

If no spouse survives, the spouse’s monthly check keeps going to the children. It continues until no child is under age 21, or for disabled children, until the last disabled child dies. For these benefits, “disabled” means Social Security has found the person entitled to total disability benefits.

Limits for non‑special needs trusts

If your beneficiaries are multiple people or a trust that is not a special needs trust, they can choose only fixed 60‑ or 120‑month payouts. The plan uses the member’s age to set the amounts. Special needs trusts are not limited by this rule.

Some post‑2008 contributions not refundable

If you started on or after September 1, 2008, employee money placed in a 401(h) health account is not counted in your “accumulated contributions.” That can lower the amount you or your heirs can get back as a refund.

Sponsors & Cosponsors

Sponsor

Robin L. Webb
Republican • Senate

Cosponsors

Danny Carroll
Republican • Senate

Roll Call Votes

All Roll Calls

Yes: 126 • No: 0

House vote • 3/27/2026

3rd reading, passed

Yes: 90 • No: 0

Senate vote • 2/18/2026