Chapter 40

40.02(15)(d) (d) Contributions, benefits, and service credit with respect to qualified military service, as defined in chapter 43 of title 38 of the United States Code, taken on or after December 12, 1994, are governed by section 414 (u) of the Internal Revenue Code and the federal Uniformed Services Employment and Reemployment Rights Act of 1994.

40.02(15)(e) (e)

40.02(15)(e)1. 1. Effective with deaths occurring on or after January 1, 2007, while a participant is performing qualified military service, as defined in chapter 43 of title 38 of the United States Code, death benefits shall be calculated as though the participant was a participating employee subject to par. (d) during the period or periods of military service between the date that the participant left participating employment to enter active military service and the date of death.

40.02(15)(e)2. 2. Effective with disabilities occurring on or after January 1, 2007, if a participant becomes disabled while performing qualified military service, as defined in chapter 43 of title 38 of the United States Code, to the extent permitted by section 414 (u) (8) of the Internal Revenue Code, and is unable to return to participating employment due to the disability incurred while performing such military service, for benefit calculation purposes the participant shall be treated as though the participant was a participating employee subject to par. (d) during the period or periods of military service between the date that the participant left participating employment to enter active military service and the date of discharge from military service.

40.02(15)(e)3. 3. Beginning January 1, 2009, an individual receiving differential wage payments while the individual is performing qualified military service, as defined in chapter 43 of title 38 of the United States Code, from an employer shall be treated as employed by that employer, and the differential wage payment shall be treated as compensation for purposes of applying the limits on annual additions under section 415 (c) of the Internal Revenue Code. This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner.

40.02(16) (16) “Creditable prior service” means all previous service for a participating employer of a person who became a participating employee on the effective date of participation for that employer if the service or employment conformed to the requirements for granting creditable current service, but no credit shall be granted for any period of service which was previously covered by a retirement system.

40.02(17) (17) “Creditable service” means the creditable current and prior service, expressed in years and fractions of a year to the nearest one-hundredth, for which a participating employee receives or is considered to receive earnings under sub. (22) (e), (ef), or (em) and for which contributions have been made as required by s. 40.05 (1) and (2) and creditable military service, service credited under s. 40.285 (2) (b) and service credited under s. 40.29, expressed in years and fractions of years to the nearest one-hundredth. How much service in any annual earnings period is the full-time equivalent of one year of creditable service shall be determined by rule by the department and the rules may provide for differing equivalents for different types of employment. Except as provided under s. 40.285 (2) (e) and (f), the amount of creditable service for periods prior to January 1, 1982, shall be the amount for which the participant was eligible under the applicable laws and rules in effect prior to January 1, 1982. No more than one year of creditable service shall be granted for any annual earnings period. Creditable service is determined in the following manner for the following persons:

40.02(17)(a) (a) Each person holding the offices of governor, lieutenant governor, secretary of state, state treasurer, representative to the assembly, senator, chief clerk and sergeant at arms of the assembly and chief clerk and sergeant at arms of the senate shall receive creditable service on a full-time basis for the period during which the office is held.

40.02(17)(d) (d)

40.02(17)(d)1. 1. Notwithstanding s. 40.19 (3), upon application to the department each participant who has been a protective occupation participant after July 1, 1969, if the participant has been employed as a protective occupation participant for the 12 months immediately preceding retirement, shall be granted creditable service as a protective occupation participant for all service prior to July 1, 1969, which was performed in a position designated under sub. (48) as a position in which an individual would be a protective occupation participant.

40.02(17)(d)2. 2. Any benefits authorized under subd. 1. for any person who terminated as a participating employee prior to April 27, 1982, which are in excess of the amounts otherwise payable to the person under other provisions of this chapter, shall be paid from the appropriation under s. 20.515 (1) (a).

40.02(17)(f) (f) Notwithstanding any other law or rule, any participating employee whose service includes Wisconsin teaching service performed before July 1, 1966, for which required contributions were made under the applicable statutes and rules of the former state teachers retirement system and for which the number of days of teaching service in a fiscal year was fewer than 120, shall receive creditable service for that service in an amount equal to the total number of teaching days credited during the fiscal year divided by 165 days.

40.02(17)(gm) (gm) Any assistant district attorney in a county having a population of 750,000 or more who did not have vested benefit rights under the retirement system established under chapter 201, laws of 1937, who became a participating employee on January 1, 1990, and who is a participating employee on October 29, 1999, shall receive creditable service for the total period of his or her service under the retirement system established under chapter 201, laws of 1937.

40.02(17)(h) (h) Notwithstanding par. (d), each participant who is a state motor vehicle inspector hired before January 1, 1968, shall be granted creditable service as a protective occupation participant for all covered service as a state motor vehicle inspector that was earned before, on or after May 1, 1990. Notwithstanding par. (d), each participant who is a state motor vehicle inspector hired on or after January 1, 1968, shall be granted creditable service as a protective occupation participant for all covered service as a state motor vehicle inspector that was earned on or after May 1, 1990, but may not be granted creditable service as a protective occupation participant for any covered service as a state motor vehicle inspector that was earned before May 1, 1990.

40.02(17)(m) (m) Notwithstanding par. (d), each participant who is a state probation and parole officer on or after January 1, 1999, shall be granted creditable service as a protective occupation participant for all covered service as a state probation and parole officer that was earned on or after January 1, 1999, but may not be granted creditable service as a protective occupation participant for any covered service as a state probation and parole officer that was earned before January 1, 1999, unless that service was earned while the participant was classified under sub. (48) (a) and s. 40.06 (1) (d) as a protective occupation participant.

40.02(17)(n) (n) Notwithstanding par. (d), each participant who is a county jailer and who is classified as a protective occupation participant shall be granted creditable service as a protective occupation participant for all covered service as a county jailer that was earned on or after January 1, 2024, but may not be granted creditable service as a protective occupation participant for any covered service as a county jailer that was earned before January 1, 2024, unless that service was earned while the participant was classified under sub. (48) (a) and s. 40.06 (1) (d) as a protective occupation participant.

40.02(18) (18) “Death benefit” means any amount payable to a beneficiary under s. 40.73.

40.02(18f) (18f) “Decree date” means the first day of the month in which a participant’s marriage is terminated by a court under a final judgment, decree or order.

40.02(18g) (18g) “Deferred compensation plan” means a plan which is in accordance with section 457 of the Internal Revenue Code, under which an employer executes an agreement by which an employee voluntarily agrees to defer a part of gross compensation for payment at a later date. Deferred compensation plan does not include annuity plans specified under section 403 (b) of the Internal Revenue Code.

40.02(18s) (18s) “Deferred compensation plan provider” means a person who provides administrative or investment services related to deferred compensation plans.

40.02(19) (19) “Department” means the department of employee trust funds.

40.02(20) (20) “Dependent” means the spouse, domestic partner, minor child, including stepchildren of the current marriage or domestic partnership dependent on the employee for support and maintenance, or child of any age, including stepchildren of the current marriage or domestic partnership, if handicapped to an extent requiring continued dependence. For group insurance purposes only, the department may promulgate rules with a different definition of “dependent” than the one otherwise provided in this subsection for each group insurance plan.

40.02(20m) (20m) “Differential wage payment” means any payment, including specifically a payment under s. 230.315, that satisfies all of the following:

40.02(20m)(a) (a) The payment is made by an employer to a participating employee with respect to any period during which the participating employee is performing service in the uniformed services, as defined in 38 USC 4303, while on active duty for a period of more than 30 days.

40.02(20m)(b) (b) The payment represents all or part of the earnings the participating employee would have received from the employer if the participating employee were performing services for the employer.

40.02(21) (21) “Disability annuity” means any annuity payable under s. 66.191, 1981 stats., or s. 40.63.

40.02(21c) (21c) “Domestic partner” means an individual in a domestic partnership.

40.02(21d) (21d) “Domestic partnership” means a relationship between 2 individuals, who submitted an affidavit of domestic partnership to the department before September 23, 2017, that satisfies all of the following:

40.02(21d)(a) (a) Each individual is at least 18 years old and otherwise competent to enter into a contract.

40.02(21d)(b) (b) Neither individual is married to, or in a domestic partnership with, another individual.

40.02(21d)(c) (c) The 2 individuals are not related by blood in any way that would prohibit marriage under s. 765.03.

40.02(21d)(d) (d) The 2 individuals consider themselves to be members of each other’s immediate family.

40.02(21d)(e) (e) The 2 individuals agree to be responsible for each other’s basic living expenses.

40.02(21d)(f) (f) The 2 individuals share a common residence. Two individuals may share a common residence even if any of the following applies:

40.02(21d)(f)1. 1. Only one of the individuals has legal ownership of the residence.

40.02(21d)(f)2. 2. One or both of the individuals have one or more additional residences not shared with the other individual.

40.02(21d)(f)3. 3. One of the individuals leaves the common residence with the intent to return.

40.02(22) (22) “Earnings”:

40.02(22)(a) (a) Except as provided in pars. (b) to (f) and s. 40.63 (1) (c), means the gross amount paid to an employee by a participating employer as salary or wages, including amounts provided through deferred compensation or tax shelter agreements, for personal services rendered to or for an employer, or which would have been available for payment to the employee except for the employee’s election that part or all of the amount be used for other purposes; any amount considered earnings under sub. (15) (d) and (e); and the money value, as determined by the employer, of any board, lodging, fuel, laundry and other allowances provided for the employee in lieu of money. For purposes of this paragraph, the gross amount shall be determined prior to deductions for taxes, insurance premiums, retirement contributions or deposits, charitable contributions or similar amounts and shall be considered received as of the date when the earnings would normally be payable by the employer. For reporting and computation purposes, fractions of a dollar shall be disregarded in determining annual earnings.

40.02(22)(b) (b) Does not mean payments made for reasons other than for personal services rendered to or for an employer, including, but not limited to:

40.02(22)(b)1. 1. Uniforms purchased directly by the employer.

40.02(22)(b)2. 2. Employer contributions for insurance and retirement.

40.02(22)(b)3. 3. Unemployment insurance benefits.

40.02(22)(b)4. 4. Payments contingent on the employee providing the employer with or assisting the employer in acquiring tangible or intangible property of the employee.

40.02(22)(b)5. 5. Payments contingent on the employee having attained an age which, if increased by 5 years, is greater than what the employee’s age would be on the employee’s normal retirement date.

40.02(22)(b)6. 6. Lump sum payments at termination for accumulated vacation, sick leave or compensatory time, except that for disability purposes any lump sum payments shall be treated as a continuation of the employee’s earnings and service at the employee’s then current rate of pay. This subdivision does not exclude payments which are broadly applicable to the employees of the employer regardless of age, length of service or likelihood of employment termination.

40.02(22)(b)7. 7. Payments contingent on the employee having terminated covered employment or having died.

40.02(22)(b)8. 8. Payments contingent on the employee terminating employment at a specified time in the future including payments to secure voluntary release of an unexpired contract of employment.

40.02(22)(b)9. 9. Payments for damages, attorney fees, interest or penalties paid under court judgment or by compromise settlement to satisfy a grievance or wage claim even though the amount of damages or penalties might be based on previous salary levels. However, the department may by rule provide that a payment of additional wages to a continuously participating employee, or the payment of salary to a participant for any period of improper termination of participating employment, is earnings, if the payment is treated by the employer and employee as taxable income and is consistent with previous payment for hours of service rendered by the employee.

40.02(22)(b)10. 10. Payments made in the last 5 years of employment which are the result of a change in the method of computing the base compensation of an employee, unless the change in method for computing the base compensation is a permanent change and is broadly applicable to the employees of that employer or unless the change is the result of a significant change in the nature of the duties and activities expected of the employee.

40.02(22)(b)11. 11. Payment in lieu of fringe benefits normally paid for or provided by the employer but which can be paid to the employee at the employee’s option.

40.02(22)(b)12. 12. For any employer, earnings paid to an employee directly by any other unit of government except county supplements to judges under s. 20.923 (3m), 1977 stats., s. 753.016, 1977 stats., s. 753.071, 1977 stats., and s. 753.075, 1977 stats., are earnings if the supplemental payments were subject to subch. I of ch. 41, 1977 stats.

40.02(22)(b)14. 14. Any other type of payment determined by the department by rule to be a distortion of the normal progression patterns on which an individual’s benefits should be based.

40.02(22)(c) (c) For OASDHI purposes, has the meaning specified for wages under federal regulations.

40.02(22)(d) (d)

40.02(22)(d)1. 1. For Wisconsin retirement system purposes only, for a state elected official who is prohibited by law from receiving an increase in compensation during the official’s term of office, means the compensation which would have been payable to the participant if the participant had not been prohibited by law from receiving an increase in compensation during his or her term of office.

40.02(22)(d)2. 2. For Wisconsin retirement system purposes only, for a state senator, means the compensation which would have been payable to the participant if the participant had not been prohibited by law from receiving an increase in compensation during part of his or her term of office.

40.02(22)(e) (e) For purposes of the Wisconsin retirement system, but not for OASDHI purposes, means compensation determined as required under 38 USC 4318 (b) (3) and regulations adopted thereunder with respect to a person who has actually returned to employment under section 414 (u) (9) (A) of the Internal Revenue Code, 38 USC 4312, or any predecessor veteran’s reemployment rights provision under federal law, provided contributions and premiums on the compensation are paid as required under s. 40.05. If the participant does not pay any portion of the employee contributions that the participant would have paid if the participant had not left employment to enter military service, the value of the benefits payable from the participant’s account shall be reduced by the value of the unpaid contributions plus interest as provided by rule.

40.02(22)(ec) (ec) Includes contributions made by a reduction in salary as provided in s. 40.05 (1) (b).

40.02(22)(ef) (ef) For Wisconsin retirement system purposes only, for a state employee, means compensation that would have been payable to the participant, at the participant’s rate of pay immediately prior to the beginning of any mandatory temporary reduction of work hours or days during the period from July 1, 2009, to June 30, 2011, for service that would have been rendered by the participant during that period if the mandatory temporary reduction of work hours or days had not been in effect. Contributions and premiums on earnings considered to be received under this paragraph shall be paid as required under s. 40.05.

40.02(22)(em) (em) For Wisconsin retirement system purposes only, for a member of the faculty, as defined in s. 36.05 (8), of a university who is on sabbatical leave under s. 36.11 (17), means the compensation that would have been payable to the participant, at the participant’s rate of pay immediately prior to beginning the sabbatical leave, for service that would have been rendered at the university during the period of the sabbatical leave if the participant had continued to render services for the participant’s employer during that period. Contributions and premiums on earnings considered to be received under this paragraph shall be paid as required under s. 40.05.

40.02(22)(f) (f) Does not mean credits for payment of health insurance premiums converted from accumulated unused sick leave for a participating employee who qualifies for a disability benefit under s. 40.63 or 40.65, and who qualifies for the conversion of accumulated unused sick leave under s. 40.05 (4) (b), (bc) or (bf) or as provided by a participating employer’s compensation plan or contract.

40.02(22)(g) (g) Does not include credits for the payment of health insurance premiums provided under s. 40.05 (4) (bw) or subch. IX or any sabbatical or vacation leave converted into such credits.

40.02(22m) (22m) “Educational support personnel employee” means a person who is a school district employee, but who is not a teacher.

40.02(23) (23) “Effective rate” means:

40.02(23)(a) (a) For the core annuity division, the rate, disregarding fractions of less than one-tenth of one percent, determined by dividing the remaining core annuity division investment earnings for the calendar year or part of the calendar year, after making provision for any necessary reserves and after deducting prorated interest and the administrative costs of the core annuity division for the year, by the core annuity division balance at the beginning of the calendar year as adjusted for benefit payments and refunds paid during the year excluding prorated interest.

40.02(23)(b) (b) For the variable annuity division, the rate, disregarding fractions less than one percent, which will distribute the net gain or loss of the variable annuity division to the respective variable annuity balances and reserves using the same procedure as provided in par. (a) for the core annuity division.

40.02(24) (24) “Elected official”, except as otherwise provided in sub. (48), means a participating employee who is:

40.02(24)(a) (a) A supreme court justice, court of appeals judge, circuit judge or state, county or municipal official elected by vote of the people.

40.02(24)(b) (b) Appointed as provided by statute to fill a vacancy in a position specified in par. (a).

40.02(24)(c) (c) The chief clerk and sergeant at arms of the senate and assembly.

40.02(25) (25) “Eligible employee” means:

40.02(25)(a) (a) For the purpose of any group insurance:

40.02(25)(a)1. 1. Any participating state employee.

40.02(25)(a)2. 2. Any state employee who is a member or employee of the legislature, a state constitutional officer, a district attorney who did not elect under s. 978.12 (6) to continue insurance coverage with a county, or who did elect such coverage but has terminated that election under s. 978.12 (6), a justice of the supreme court, a court of appeals judge, a circuit judge or the chief clerk or sergeant at arms of the senate or assembly.

40.02(25)(a)3. 3. The blind employees of the Wisconsin workshop for the blind authorized under s. 47.03 (1) (b), 1989 stats., or of the nonprofit corporation with which the department of workforce development contracts under s. 47.03 (1m) (a), 1989 stats. Persons employed by an employer who are blind when hired shall not be eligible for life insurance premium waiver because of any disability that is directly or indirectly attributed to blindness and may convert life insurance coverage only once under the contract.

40.02(25)(a)4. 4. Only a person who has not attained age 70 at the time of becoming initially eligible for the group insurance coverage provided under this chapter; but this subdivision does not exclude any participant from participation in the group health insurance plan nor does it exclude from participation in the group life insurance plan any employee who is initially eligible on the employer’s effective date of participation.

40.02(25)(a)5. 5. Any participating state employee who is on union service leave except the cost for premium payments shall be entirely the responsibility of the state employee on union service leave.

40.02(25)(a)6. 6. Any participating state employee of the office of district attorney, other than the district attorney, in a county having a population of 750,000 or more who did not elect under s. 978.12 (6) to continue insurance coverage with that county, or who did elect such coverage but has terminated that election under s. 978.12 (6), and who has participated under the retirement system established under chapter 201, laws of 1937, and under the Wisconsin retirement system.

40.02(25)(b) (b) For the purpose of group health insurance coverage:

40.02(25)(b)1. 1. Any teacher who is employed by the university for an expected duration of not less than 6 months on at least a one-third full-time employment basis and who is not described in subd. 1m.

40.02(25)(b)1m. 1m. Any teacher who is a participating employee and who is employed by the university for an expected duration of not less than 6 months on at least a one-third full-time employment basis.

40.02(25)(b)2. 2. Any person employed as a teaching assistant or graduate assistant and other employees-in-training as are designated by the board of regents of the university, who are employed on at least a one-third full-time basis.

40.02(25)(b)2c. 2c. A state employee described in s. 49.825 (4) or (5) or 49.826 (4).

40.02(25)(b)2g. 2g. Any person employed as a graduate assistant and other employees-in-training as are designated by the board of directors of the University of Wisconsin Hospitals and Clinics Authority, who are employed on at least a one-third full-time basis with an expected duration of employment of at least 6 months.

40.02(25)(b)3. 3. The surviving spouse or domestic partner of an employee, or of a retired employee, who is currently covered by health insurance at the time of death of the employee or retired employee. The spouse or domestic partner shall have the same right to health insurance coverage as the deceased employee or retired employee, but without state contribution, under rules promulgated by the secretary.

40.02(25)(b)4. 4. Any insured employee who is retired on an immediate or disability annuity, or who receives a lump sum payment under s. 40.25 (1) that would have been an immediate annuity if paid as an annuity, if the employee meets all of the requirements for an immediate annuity including filing of application whether or not final administrative action has been taken.

40.02(25)(b)5. 5. Any participating state employee under the Wisconsin retirement system, notwithstanding par. (a) 1.

40.02(25)(b)6. 6. A participating state employee who terminates creditable service: