Chapter 40

40.27(1)(c) (c) No payment shall be made under this subsection or sub. (1m) or (3), nor shall any right accrue under this subsection or sub. (1m) or (3), for or after any month following termination of the annuity on which the supplement was based.

40.27(1)(d) (d) Benefits under this subsection and subs. (1m) and (3) shall be payable to the surviving beneficiary, who receives an annuity, of eligible persons.

40.27(1m) (1m) Additional supplemental benefits. Any person who received an annuity for September 1974 from the Wisconsin retirement system shall be eligible to receive all of the following:

40.27(1m)(a) (a) The monthly annuities for which that person was eligible and which that person received for September 1974.

40.27(1m)(b) (b) An amount to be paid from the appropriation account under s. 20.515 (1) (a), subject to the continuation of that appropriation, equal to 4 percent times 5 years times either $200 or the initial monthly annuity, excluding amounts provided from additional deposits, whichever is smaller.

40.27(1m)(c) (c) Any supplement for which that person is eligible under sub. (1) and s. 41.23, 1979 stats., s. 42.49 (10), 1979 stats., or s. 42.82, 1979 stats.

40.27(2) (2) Core annuity reserve surplus distributions. Surpluses in the core annuity reserve established under s. 40.04 (6) and (7) shall be distributed by the board if the distribution will result in at least a 0.5 percent increase in the amount of annuities in force, except as otherwise provided by the department by rule, on recommendation of the actuary, as follows:

40.27(2)(a) (a) The distributions shall be expressed as percentage increases in the amount of the monthly annuity in force, including prior distributions of surpluses but not including any amount paid from funds other than the core annuity reserve fund, preceding the effective date of the distribution. For purposes of this subsection, annuities in force include any disability annuity suspended because the earnings limitation had been exceeded by that annuitant in that year.

40.27(2)(b) (b) Prorated percentages based on the annuity effective date may be applied to annuities with effective dates during the calendar year preceding the effective date of the distribution, as provided by rule, but no other distinction may be made among the various types of annuities payable from the core annuity reserve.

40.27(2)(c) (c) The distributions shall not be offset against any other benefit being received but shall be paid in full, nor shall any other benefit being received be reduced by the distributions. The annuity reserve surplus distributions authorized under this subsection may be revoked by the board in part or in total as to future payments upon recommendation of the actuary if a deficit occurs in the core annuity reserves and such deficit would result in a 0.5 percent or greater decrease in the amount of annuities in force, except as otherwise provided by the department by rule.

40.27(2)(d) (d) Notwithstanding s. 40.03 (2) (i), (7) (d), and (8) (d), the department may promulgate rules under this subsection without the approval of the teachers retirement board and the Wisconsin retirement board.

40.27(3) (3) Additional supplemental benefit adjustment. Beginning on November 1, 1997, any person who is eligible to receive supplemental benefits under subs. (1) and (1m) shall be eligible to receive an additional supplemental benefit, to be paid from the appropriation account under s. 20.515 (1) (a), in an amount equal to the amount by which the supplemental benefits paid under subs. (1) and (1m) are exceeded by the supplemental benefit that the person was eligible to receive on October 1, 1997, from the distribution paid under s. 40.04 (3) (e) 1. c., 1995 stats., as affected by adjustments under sub. (2) made after 1987, less any increase to the person’s base annuity under this chapter that results from any equitable distribution made by the board under the judgment in Wisconsin Retired Teachers Ass’n v. Employee Trust Funds Bd., 207 Wis. 2d 1 (1997), without regard to adjustments to sub. (2).

40.27 History History: 1981 c. 96; 1983 a. 290, 394; 1987 a. 27, 43; 1995 a. 302; 1997 a. 26; 2003 a. 153; 2005 a. 153.

40.27 Cross-reference Cross-reference: See also s. ETF 20.25, Wis. adm. code.

40.28 40.28 Variable benefits.

40.28(1) (1) Any annuity provided to a participant whose accounts include credits segregated for a variable annuity shall consist of a core annuity and a variable annuity.

40.28(1)(a) (a) The initial amount of the variable annuity shall be the amount which can be provided on the basis of the actuarial tables in effect on the effective date of the annuity by the following amounts, if otherwise available:

40.28(1)(a)1. 1. The amount of the additional contribution accumulations reserved for a variable annuity as of the date the annuity begins;

40.28(1)(a)2. 2. The amount equal to 200 percent of employee required contribution accumulations reserved for a variable annuity as of the date the annuity begins. Except, for a county jailer described in s. 40.02 (48) (am) 23., the amount equal to the employee required contributions and the employer required contributions paid for a county jailer under s. 40.05 (2) (a), including interest, reserved for a variable annuity on the date the annuity begins. The amount applicable for a county jailer applies only to a county jailer who becomes a protective occupation participant on or after January 1, 2024, and who is either employed in a county that did not classify county jailers as protective occupation participants on January 1, 2024, or employed in a county that classified county jailers as protective occupation participants on January 1, 2024, and the county subsequently determines to not classify county jailers as protective occupation participants and instead classify county jailers as general participating employees; and

40.28(1)(a)3. 3. The amount equal, as of the date the annuity begins, to the accumulated prior service credits reserved for the participant for a variable annuity within the employer accumulation account, together with the net gain or loss credited to the accumulations.

40.28(1)(b) (b) The initial amount of the core annuity shall be the excess of the total annuity payable, as determined under s. 40.23, over the amount of the variable annuity.

40.28(2) (2) Whenever the balance in the variable annuity reserve, as of December 31 of any year, exceeds or is less than the then present value of all variable annuities in force, determined in accordance with the rate of interest and approved actuarial tables then in effect, by at least 2 percent of the present value of all variable annuities in force, the amount of each variable annuity payment shall be proportionately increased or decreased, disregarding fractional percentages, and effective on a date determined by rule, so as to reduce the variance between the balance of the variable annuity reserve and the present value of variable annuities to less than one percent.

40.28(3) (3) Except as otherwise specifically provided, benefits based on variable accumulations shall be determined on the same basis and paid in the same manner and at the same time as benefits based on accumulations not so segregated insofar as practicable considering the nature of variable annuities.

40.28 History History: 1981 c. 96; 2005 a. 153; 2023 a. 4.

40.28 Cross-reference Cross-reference: See also s. ETF 20.25, Wis. adm. code.

40.285 40.285 Purchase of creditable service.

40.285(1) (1) General requirements.

40.285(1)(a) (a) Deadline for purchase of creditable service. An application to purchase creditable service must be received by the department, on a form provided by the department, from an applicant who is a participating employee on the day that the department receives the application.

40.285(1)(b) (b) Calculation of creditable service. Creditable service purchased under this section shall be calculated in an amount equal to the year and fractions of a year to the nearest one-hundredth of a year.

40.285(1)(c) (c) Use of creditable service. Credit for service purchased under this section is added to a participant’s total creditable service, but may not be treated as service for a particular annual earnings period and does not confer any other rights or benefits.

40.285(1)(d) (d) Applicability of Internal Revenue Code. The crediting of service under this section is subject to any applicable limit or requirement under the Internal Revenue Code.

40.285(2) (2) Conditions for the purchase of different types of creditable service.

40.285(2)(a) (a) Forfeited service.

40.285(2)(a)1. 1. A participating employee may purchase creditable service forfeited in the manner specified in subd. 2., subject to all of the following:

40.285(2)(a)1.a. a. The participating employee must have at least 3 continuous years of creditable service at the time of application to purchase the creditable service.

40.285(2)(a)1.b. b. The number of years that may be purchased may not be greater than the accumulated current creditable service of the participating employee at the date of application, excluding all creditable service purchased under this section or s. 40.02 (17) (b), 1981, 1983, 1985, 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (e), 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (i), 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (k), 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.25 (6), 1981, 1983, 1985, 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., or s. 40.25 (7), 1991, 1993, 1995, 1997, 1999, and 2001 stats., less the number of years of creditable service previously purchased under this paragraph or s. 40.25 (6), 1981, 1983, 1985, 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats.

40.285(2)(a)1.c. c. The participating employee pays to the fund an amount equal to the employee’s statutory contribution on earnings under s. 40.05 (1) (a) for each year of forfeited service to be purchased, based upon the participating employee’s final average earnings, determined as if the employee had retired on the first day of the annual earnings period during which the department receives the application. The amount payable shall be paid in a lump sum payment, except as provided in sub. (4) (b), and no employer may pay any amount payable on behalf of a participating employee.

40.285(2)(a)1.d. d. Upon receipt by the fund of the total payment required under this subdivision, the creditable service meeting the conditions and requirements of this paragraph shall be credited to the account of the participating employee making the payment.

40.285(2)(a)2. 2. Creditable service may be purchased under this paragraph if it was forfeited as a result of any of the following:

40.285(2)(a)2.a. a. Payment of an amount under s. 40.25 (2).

40.285(2)(a)2.b. b. The receipt of a separation or withdrawal benefit under the applicable laws and rules in effect prior to January 1, 1982.

40.285(2)(a)2.c. c. Payment of an amount under s. 40.25 (2m), 1991, 1993, 1995, and 1997 stats.

40.285(2)(a)3. 3. Unless otherwise provided by the department by rule, a participating employee may not purchase creditable service under this paragraph more than 2 times in any calendar year.

40.285(2)(b) (b) Other governmental service.

40.285(2)(b)1. 1. Each participating employee who has performed service as an employee of the federal government or a state or local governmental entity in the United States, other than a participating employer, that is located within or outside of this state, or each participating employee whose creditable service terminates on or after May 4, 1994, and who has performed service as an employee for an employer who was not at the time a participating employer but who subsequently became a participating employer, may receive creditable service for such service if all of the following occur:

40.285(2)(b)1.a. a. The participating employee has at least 3 continuous years of creditable service at the time of application.

40.285(2)(b)1.b. b. The number of years of creditable service applied for under this paragraph does not exceed the number of years of creditable service that the participating employee has at the date of application, excluding all creditable service purchased under this section or s. 40.02 (17) (b), 1981, 1983, 1985, 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (e), 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (i), 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (k), 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.25 (6), 1981, 1983, 1985, 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., or s. 40.25 (7), 1991, 1993, 1995, 1997, 1999, and 2001 stats., less the number of years of creditable service previously purchased under this paragraph or s. 40.25 (7), 1991, 1993, 1995, 1997, 1999, and 2001 stats.

40.285(2)(b)1.c. c. At the time of application, the participating employee furnishes evidence of such service that is acceptable to the department.

40.285(2)(b)1.d. d. Except as provided in sub. (4) (b), at the time of application, the participating employee pays to the department a lump sum equal to the present value of the creditable service applied for under this paragraph, in accordance with rates actuarially determined to be sufficient to fund the cost of the increased benefits that will result from granting the creditable service under this paragraph. The department shall by rule establish different rates for different categories of participating employees, based on factors recommended by the actuary.

40.285(2)(b)1.e. e. If the participating employee is applying to receive creditable service for service in the U.S. armed forces or national guard, the participating employee must have been discharged from the U.S. armed forces or national guard under honorable or general conditions.

40.285(2)(b)2. 2. The creditable service granted under this paragraph shall be the same type of creditable service as the type that is granted to participants who are not executive participating employees, elected officials, or protective occupation participants.

40.285(2)(b)3. 3. A participating employee may apply to receive part or all of the creditable service that he or she is eligible to receive under this paragraph.

40.285(2)(b)4. 4. A participating employee may not receive creditable service under this paragraph for service that is used for the purpose of establishing entitlement to, or the amount of, any other benefit to be paid by any federal, state, or local government entity, except for the following:

40.285(2)(b)4.a. a. A disability or OASDHI benefit.

40.285(2)(b)4.b. b. A benefit under the retired pay for nonregular military service program under 10 USC 12731 to 12740.

40.285(2)(b)4.c. c. A benefit paid for service in the national guard.

40.285(2)(b)5. 5. Unless otherwise provided by the department by rule, a participating employee may not purchase creditable service under this paragraph more than 2 times in any calendar year.

40.285(2)(c) (c) Uncredited elected official and executive participating employee service. Each executive participating employee whose creditable service terminates on or after May 3, 1988, and each participating employee who is a present or former elected official or an appointee of a present or former elected official and who did not receive creditable service under s. 40.02 (17) (e), 1987 stats., or s. 40.02 (17) (e), 1989 stats., and whose creditable service terminates on or after August 15, 1991, who was previously in the position of the president of the University of Wisconsin System or in a position designated under s. 20.923 (4), (8), or (9), but did not receive creditable service because of age restrictions, may receive creditable service equal to the period of executive service not credited if the participant pays to the department a lump sum payment equal to 5.5 percent of one-twelfth of the employee’s highest earnings in a single annual earnings period multiplied by the number of months of creditable service granted under this paragraph.

40.285(2)(d) (d) Qualifying service. Each participating employee in the Wisconsin retirement system whose creditable service terminates on or after January 1, 1982, who was previously a participant in the Wisconsin retirement fund and who has not received a separation benefit may receive creditable service equal to the period of service during any qualifying period under s. 41.02 (6) (c), 1969 stats., s. 66.901 (4) (d), 1967 stats., or under any predecessor statute, but not to exceed 6 months. The additional creditable service shall be granted upon application by the employee if the applicant pays to the department a lump sum payment equal to 5 percent of one-twelfth of the employee’s highest earnings in a single annual earnings period multiplied by the number of months of creditable service granted under this paragraph.

40.285(2)(e) (e) Teacher improvement leave. Each participating employee in the Wisconsin retirement system whose creditable service terminates on or after April 25, 1990, and whose earnings include compensation for teacher improvement leave granted by the board of regents of the Wisconsin State Colleges during the period beginning on January 1, 1964, and ending on August 31, 1967, in a written and satisfied contract, may receive creditable service for the period for which those earnings were received in an amount not to exceed one year if all of the following apply:

40.285(2)(e)1. 1. The participant meets the requirements of this paragraph and submits an application to the board of regents of the University of Wisconsin System.

40.285(2)(e)2. 2. The board of regents of the University of Wisconsin System certifies the creditable service requested under subd. 1.

40.285(2)(e)3. 3. The participant pays to the department a lump sum equal to 5 percent of one-twelfth of the employee’s highest earnings in a single annual earnings period multiplied by the number of months of creditable service that is granted under this paragraph.

40.285(2)(e)4. 4. The employer does not pay any amount payable under this paragraph on behalf of any participating employee.

40.285(2)(f) (f) Uncredited junior teaching service. Each participating employee whose creditable service terminates on or after May 11, 1990, and who submits to the department proof that the participant performed service in this state as a junior teacher, as defined in s. 42.20 (6), 1955 stats., that was not credited under s. 42.40, 1955 stats., shall receive creditable service for the period for which that service was performed, even if the participant did not become a member of the state teachers retirement system after performing that service, if all of the following occur:

40.285(2)(f)1. 1. The participant pays to the department a lump sum equal to 5 percent of one-twelfth of the employee’s highest earnings in a single annual earnings period multiplied by the number of months of creditable service that is granted under this paragraph.

40.285(2)(f)2. 2. The employer does not pay any amount payable under this paragraph on behalf of any participating employee.

40.285(3) (3) Application process.

40.285(3)(a) (a) Provision of application forms and estimates. Upon request, the department shall provide a participating employee an application form for the purchase of creditable service under sub. (2) and shall also provide to the participating employee an estimate of the cost of purchasing the creditable service.

40.285(3)(b) (b) Certification of plan-to-plan transfers. Upon request, the department shall provide a participating employee a transfer certification form for payments made by a plan-to-plan transfer under sub. (5) (b). If the participating employee intends to make payments from more than one plan, the participating employee must submit to the department a separate transfer certification form for each plan from which moneys will be transferred.

40.285(4) (4) Payment.

40.285(4)(a) (a) Required with application. Except as provided in par. (b), the department may not accept an application for the purchase of creditable service without payment in full of the department’s estimated cost of creditable service accompanying the application. A participating employee may also do any of the following:

40.285(4)(a)1. 1. Use his or her accumulated after-tax additional contributions that are made under s. 40.05 (1) (a) 5., including interest, to make payment.

40.285(4)(a)2. 2. Use his or her accumulated contributions, including interest, to a tax sheltered annuity under section 403 (b) of the Internal Revenue Code, to make payment, but only if the participating employee’s plan under section 403 (b) of the Internal Revenue Code authorizes the transfer.

40.285(4)(b) (b) Alternate payment options. Notwithstanding par. (a), the department may accept an application under this section without full payment if payment of at least 10 percent of the department’s estimate of the cost of the creditable service is included with the application, in the manner required under par. (a), and the remaining balance is received by the department no later than 90 days after receipt of the application, in the form of a plan-to-plan transfer under sub. (5) (b).

40.285(4)(c) (c) Final cost calculation for purchase of creditable service. The department may audit any transaction to purchase creditable service under this subsection and make any necessary correction to the estimated cost of purchasing the creditable service to reflect the amount due under sub. (2). Except as otherwise provided in sub. (7), if the department determines that the final amount that is due is more than the amount paid to the department, the department shall notify the participant of the amount of the shortfall. If payment of the amount of the shortfall is not received by the department within 30 calendar days after the date on which the department sends notice to the participant, the department shall complete the creditable service purchase transaction by prorating the amount of creditable service that is purchased based on the payment amount actually received and shall notify the participant of the amount and category of service that is credited. The department, by rule, shall specify how a forfeited service purchase is prorated when the participant forfeited service under more than one category of employment under s. 40.23 (2m) (e).

40.285(4)(d) (d) Treatment of amounts to purchase creditable service. All amounts retained by the department for the purchase of creditable service under sub. (2) shall be credited and treated as employee required contributions for all purposes of the Wisconsin Retirement System, except as provided in ss. 40.23 (3) and 40.73 (1) (am).

40.285(5) (5) Transfer of funds; plan-to-plan transfers.

40.285(5)(a) (a) Transfer from certain benefit plans. Subject to any applicable limitations under the Internal Revenue Code, a participating employee may elect to use part or all of any of the following to purchase creditable service under this section:

40.285(5)(a)1. 1. Accumulated after-tax additional contributions, including interest, made under s. 40.05 (1) (a) 5.

40.285(5)(a)2. 2. Accumulated contributions treated by the department as contributions to a tax sheltered annuity under section 403 (b) of the Internal Revenue Code, but only if the employer sponsoring the annuity plan authorizes the transfer.

40.285(5)(b) (b) Other plan-to-plan transfers. The department may also accept a plan to plan transfer from any of the following:

40.285(5)(b)1. 1. Accumulated contributions under a state deferred compensation plan under subch. VII.

40.285(5)(b)2. 2. The trustee of any plan qualified under sections 401 (a) or (k), 403 (b), or 457 of the Internal Revenue Code, but only if the purpose of the transfer is to purchase creditable service under this section.

40.285(5)(c) (c) Payment shortfall. Except as otherwise provided in sub. (7), if the department determines that the amount paid to the department to purchase creditable service under this subsection, together with the amount transferred under a plan-to-plan transfer, is less than the amount that is required to purchase the creditable service, the department shall notify the participant of the amount of the shortfall. If payment of the amount of the shortfall is not received by the department within 30 calendar days after the date on which the department sends notice to the participant, the department shall complete the creditable service purchase transaction by prorating the amount of creditable service that is purchased based on the payment amount actually received and shall notify the participant of the amount and category of service that is credited. The department, by rule, shall specify how a forfeited service purchase is prorated when the participant forfeited service under more than one category of employment under s. 40.23 (2m) (e).

40.285(6) (6) Refunds. Except as provided in sub. (7), if the department determines that the amount paid to the department to purchase creditable service, including any amount in a plan-to-plan transfer, is greater than the amount that is required to purchase the creditable service, as determined by the department, the department shall refund the difference. The department shall pay any refund to the participant, up to the amount received from the participant. Any remaining amount shall be returned to the applicable account in the trust fund for transfers under sub. (5) (a) or to the trustee of a plan which was the source of a plan-to-plan transfer under sub. (5) (b). When more than one plan-to-plan transfer occurs, the department may determine which transfer is to be refunded, in whole or part. No funds transferred to the department by a plan-to-plan transfer may be refunded to a participant.

40.285(7) (7) Limit on payment of corrections. The department may not require a participant to pay any shortfall under sub. (4) (c) or (5) (c) that is $25 or less. The department may not pay any refund under sub. (6) if the amount of the refund is $25 or less.

40.285 History History: 2003 a. 33 ss. 996 to 999, 1025; 2003 a. 320; 2005 a. 154; 2013 a. 191; 2021 a. 245.

40.285 Cross-reference Cross-reference: See also s. ETF 20.17, Wis. adm. code.