Opinion ID: 2151564
Heading Depth: 2
Heading Rank: 7

Heading: Transaction Amortization Account

Text: ถ 33. The final pertinent account is the transaction amortization account, or TAA. [93] For purposes of this litigation, the TAA holds approximately $11.5 billion. [94] The TAA functions more as an accounting mechanism than as a receptacle for funds, such as the employer or employee reserves. [95] All gains and losses of the fixed trust are credited to the TAA, including both realized and unrealized gains and losses. [96] The purpose of the TAA is to smooth the impact of investment gains or losses on the accounts and reserves of the Fixed Trust. [97] Spreading the impact of gains and losses over a period of years, as opposed to absorbing actual investment experiences immediately, tends to create greater predictability for determining the contributions necessary to fund the WRS. [98] ถ 34. On December 31st of each year, 20 percent of the TAA balance is distributed to the fixed trust. [99] This distribution from the TAA is divided proportionately among all the accounts in the fixed trust, including the employee, employer, and the annuity reserves. [100] It enables the other accounts in the fixed trust to receive the investment income gained by the fixed trust. [101] Prior to 1989, only 7 percent of the TAA was distributed each year. [102] However, 1989 Wis. Act 13 changed the distribution to 20 percent at year's close. [103] ถ 35. Twice in the past, the legislature approved legislation providing for special one-time distributions from the TAA, apart from the annual statutory distributions. In 1987, the legislature passed 1987 Wis. Act 27, in which $230 million was distributed from the TAA to the various accounts in the trust. [104] Part of the $230 million was distributed to the annuity reserve to fund a special investment performance dividend (SIPD) for a specific group of annuitants. [105] Various employee associations successfully challenged the constitutionality of 1987 Wis. Act 27, งง 436m, 684r, and 688km in Wisconsin Retired Teachers Ass'n v. Employe Trust Funds Board, 207 Wis. 2d 1, 8, 558 N.W.2d 83 (1997). The Retired Teachers court did not decide that case, however, on the propriety of the distribution from the TAA. [106] Thus, about $74.2 million was distributed to the employee reserve, $77.2 million to the employer reserve, and $78.5 million to the annuity reserve, according to the petitioner's brief in Retired Teachers. ถ 36. Two years later, the legislature passed 1989 Wis. Act 13, in which $500 million was distributed from the TAA. [107] This legislation did not face a legal challenge. [108] The 1989 legislation also distributed money to the employee, employer, and annuity reserves. [109] Like the 1987 and 1989 Acts, Act 11 orders a lump sum distribution from the TAA to the accounts and reserves in the fixed trust.