Chapter 40

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.

40.29 40.29 Temporary disability; creditable service.

40.29(1) (1) If a participating employee receives temporary disability compensation under s. 102.43 for any period prior to termination of employment with the participating employer which commences on or after April 30, 1980, the employee shall be:

40.29(1)(a) (a) Credited with creditable service during that period on the same basis as the employee was credited with creditable service immediately prior to the commencement of the period; and

40.29(1)(b) (b) Treated for all purposes of the Wisconsin retirement system, including, but not limited to, contributions and benefits, as having received the amount and rate of earnings the employee would have received if the disability had not occurred, including adjustments in the rate of earnings of the employee made during that period in good faith.

40.29(2) (2) Earnings and creditable service determined under sub. (1) shall be reported by the employer to the department. The employer shall pay all employer and required employee contributions payable under this section with respect to the earnings and current service except the employer may recover from the employee’s earnings paid after the employee returns to employment with the employer the amount which the employer paid on behalf of the employee which is customarily actually paid by the employee under s. 40.05 (1). The employer may not deduct the amount recoverable under this subsection from the employee’s earnings at a rate greater than 5 percent of each payment of earnings.

40.29 History History: 1981 c. 96; 1983 a. 290.

40.30 40.30 Intrastate retirement reciprocity.

40.30(1) (1) This section shall be construed as an enactment of statewide concern to encourage career public service by employees of the state, 1st class cities and counties having a population of 750,000 or more but shall not be construed to affect the authority of any 1st class city to exercise its power granted under article XI, section 3, of the constitution and chapter 441, laws of 1947, section 31 over any other provisions of any of the retirement systems established by chapter 589, laws of 1921, chapter 423, laws of 1923 or chapter 396, laws of 1937, or to affect the authority of any county having a population of 750,000 or more to exercise its power granted under chapter 405, laws of 1965, over any other provisions of the retirement system established by chapter 201, laws of 1937.

40.30(2) (2) Except as provided in sub. (7), any individual who has vested annuity benefit rights under the Wisconsin retirement system or under one of the retirement systems established by chapter 589, laws of 1921, chapter 423, laws of 1923, chapter 201, laws of 1937 or chapter 396, laws of 1937, who subsequently becomes covered by one or more of those other retirement systems, who, on or after May 11, 1990, terminates all employment covered by any of those retirement systems and who applies to have benefits begin within a 60-day period under all of those retirement systems from which the individual is entitled to receive benefits may, on a form provided by and filed with the department, elect to have retirement benefit computations and eligibility under each of those retirement systems determined as provided in this section.

40.30(3) (3) The sum of all service credited to the individual under each retirement system specified in sub. (2) shall be used in determining whether the individual has met any vesting period required for retirement benefit eligibility during any subsequent employment covered by any retirement system specified in sub. (2), but shall not be used in determining the amount of the benefit nor in determining credit for military service.

40.30(4) (4) The individual’s retirement benefits under each retirement system specified in sub. (2) shall be determined as follows:

40.30(4)(a) (a) The benefit formula used for each type of service credited to the individual shall be the benefit formula in effect for that type of service under the respective retirement system on the date on which the individual terminated all employment covered by any retirement system specified in sub. (2).

40.30(4)(b) (b) Subject to federal annual compensation limits, the final average salary or final average earnings used in the benefit formula computation for each retirement system under par. (a) shall be the individual’s final average salary or final average earnings under the respective retirement system, determined in accordance with the provisions of that retirement system based on the earnings covered by that retirement system and on all service permitted under that retirement system to be used in determining the final average salary or final average earnings, increased by the percentage increase in the average of the total wages, as determined under 42 USC 415 (b) (3) (A), between the date on which the individual terminated all employment covered by that retirement system and the date on which the individual terminated all employment covered by any of those retirement systems.

40.30(5) (5) The benefits computed under this section for each retirement system shall be in lieu of any other benefit payable by that retirement system and may not begin before the individual terminates all employment covered by any retirement system specified in sub. (2).

40.30(6) (6) The secretary may promulgate rules affecting any retirement system specified in sub. (2) to carry out the purposes of this section.

40.30(7) (7) 

40.30(7)(a) (a) Retirement benefit computations or eligibility may not be determined as provided in this section with respect to service performed by an individual under any retirement system established by chapter 589, laws of 1921, chapter 423, laws of 1923, or chapter 396, laws of 1937, or to service performed by that individual under the Wisconsin retirement system, before the date on which the governing body of the city that established the retirement system under chapter 589, laws of 1921, chapter 423, laws of 1923, or chapter 396, laws of 1937, adopts a resolution approving the application of this section to the retirement benefit computations and eligibility determinations under all of those retirement systems that it has established.

40.30(7)(b) (b) Retirement benefit computations or eligibility may not be determined as provided in this section with respect to service performed by an individual under a retirement system established by chapter 201, laws of 1937, or to service performed by that individual under the Wisconsin retirement system, before the date on which the governing body of the county that established the retirement system under chapter 201, laws of 1937, adopts a resolution approving the application of this section to the retirement benefit computations and eligibility determinations under that retirement system.

40.30(7)(c) (c) A resolution adopted under par. (a) or (b) is irrevocable. Any governing body that adopts a resolution under par. (a) or (b) shall provide the department with a copy of the resolution.

40.30 History History: 1989 a. 323; 1995 a. 81; 2013 a. 20; 2017 a. 207 s. 5.

40.31 40.31 Maximum benefit limitations.

40.31(1) (1) General limitation. The maximum retirement benefits payable to a participant in a calendar year, excluding benefits attributable to contributions subject to the limit under s. 40.32, may not exceed the maximum benefit limitation established under section 415 (b) of the Internal Revenue Code, as adjusted under section 415 (d) of the Internal Revenue Code and any applicable regulations or guidance adopted under the Internal Revenue Code, except that the limit for an individual who first became a participant before January 1, 1990, may not be less than the accrued benefits of the participant, as determined without regard to any changes to the retirement system after October 14, 1987.

40.31(3) (3) Treatment of defined benefit and defined contribution plans. For the purpose of determining whether a participant’s retirement benefits exceed the maximum retirement limitations under this section, all defined benefit plans of the employer, including defined benefit plans that are terminated, shall be treated as a single defined benefit plan and all defined contribution plans of the employer, including defined contribution plans that are terminated, shall be treated as a single defined contribution plan. The department may provide by rule additional limitations for participants who are participating in more than one retirement system.

40.31(4) (4) Division of benefits. For the purpose of determining whether a participant’s retirement benefits exceed the maximum retirement limitations under this section for a participant whose retirement benefits have been divided under s. 40.08 (1m), the participant’s retirement benefits shall be measured as if no division had occurred.

40.31 History History: 1995 a. 302; 1997 a. 237; 2013 a. 20.

40.32 40.32 Limitations on contributions.

40.32(1) (1) The sum of all employee post-tax contributions allocated to a participant’s account may not in any calendar year exceed the maximum contribution limitation established under section 415 (c) of the Internal Revenue Code, as adjusted under section 415 (d) of the Internal Revenue Code and any applicable regulations adopted by the federal department of the treasury.

40.32(2) (2) The department may provide by rule additional limitations for participants who are participating in more than one retirement system.

40.32(3) (3) Any contribution that the department receives, which is allocated to the account of a participant and which exceeds the contributions limitation under this section, may be refunded or credited as provided in s. 40.08 (6). If the department refunds any contributions that exceed the limitation under this section, the department shall first refund amounts voluntarily contributed by a participating employee as an additional contribution under s. 40.05 (1) (a) 5.

40.32 History History: 1995 a. 302; 1997 a. 237; 2011 a. 10; 2013 a. 20.

subch. III of ch. 40 SUBCHAPTER III

SOCIAL SECURITY FOR PUBLIC EMPLOYEES

40.40 40.40 State-federal agreement. The secretary may, upon receipt of a certified copy of a resolution adopted by the governing body of any employer in accordance with s. 40.41 execute on behalf of the state a modification of the state-federal agreement with the secretary of the federal department of health and human services for the inclusion of a coverage group of the employees of the employer under the OASDHI system in conformity with federal regulations. The state and each employer included under the agreement or modification of the agreement shall thereafter be bound by federal regulations.

40.40 History History: 1981 c. 96.

40.41 40.41 Coverage.

40.41(1) (1) Except as provided in sub. (6), all the employees of any employer shall be included under OASDHI through adoption of a resolution by the governing body of the employer providing for the coverage and stating the effective date of coverage. All groups covered by OASDHI, under s. 40.41, 1979 stats., prior to January 1, 1982, shall continue to be covered by OASDHI. Whenever any employer is created, the territory of which includes more than one-half of the last assessed valuation of an employer which prior to creation of the new employer had adopted a resolution under this subsection, and the employer so created assumes the functions and responsibilities of the previous employer with respect to the territory, then the employees of the employer so created shall be covered from the inception of the created employer as if a resolution had been adopted under this subsection.

40.41(2) (2) The resolution provided for in sub. (1) may specify a coverage group comprised of persons under a retirement system which is eligible under federal regulations for inclusion under the state-federal OASDHI agreement, in which case a referendum in conformity with section 218 (d) (3) of the federal social security act shall be conducted. The governor may take any and all actions which may be required in connection with such a referendum. The agreement with the secretary of health and human services may be modified to cover the coverage group.

40.41(3) (3) No agreement with the federal department of health and human services may be executed for the purpose of permitting one or more individuals to transfer by individual choice from that part of a retirement system which is composed of positions of employees who do not desire coverage under OASDHI to that part of a retirement system which is composed of positions of employees who desire OASDHI coverage.

40.41(4) (4) Except as provided in sub. (6), all state employees, all teachers, the participating employees of all participating employers under the Wisconsin retirement system and all employees who would have become a participating employee of a participating employer except for the requirement of s. 40.22 (6) shall be included under OASDHI, notwithstanding sub. (1).

40.41(5) (5) Except as provided in sub. (6), employees under any retirement system included in whole or in part under OASDHI, prior to January 1, 1982, under a referendum or a choice held in conformity with section 218 (d) (3) or 218 (d) (6) of the federal social security act, shall continue to be included under OASDHI in accordance with the results of the referendum or choice, notwithstanding sub. (1).

40.41(6) (6) The following services shall be excluded from OASDHI coverage, and subsequent modifications of the state-federal agreement shall continue to provide for their exclusion:

40.41(6)(a) (a) Services performed by persons or in positions not eligible for inclusion under federal regulations. Any exclusion under this paragraph shall not continue if federal regulations are subsequently modified to include the services.

40.41(6)(b) (b) Services performed by a member of a board or commission, except members of governing bodies, in a position or office which does not normally require actual performance of duty for at least 600 hours in each calendar year. For purposes of this paragraph, a “board” or “commission” is a body referred to in the statutes as a board or commission.

40.41(6)(c) (c) Service performed in the employ of a school, college or university, if the service is performed by a student who is enrolled and regularly attending classes at the school, college or university.

40.41(6)(d) (d) Services of an employee whose participating employment in a position covered by a specific retirement system is not covered by OASDHI by reason of eligibility for a choice provided by statute prior to January 1, 1982, but only with respect to services in a position covered by that retirement system.

40.41(6)(e) (e) Services in police and fire fighter positions under a retirement system except:

40.41(6)(e)1. 1. If the services were covered under the federal OASDHI system under this section prior to the effective date of the retirement system coverage.

40.41(6)(e)2. 2. If the services have been covered under the federal OASDHI system under section 218 (m) of the federal social security act.

40.41(6)(f) (f) Services in a position eligible for participation in the Wisconsin retirement system only by virtue of s. 40.22 (2m). This exclusion does not apply to any employee who is a teacher, who is a participating employee in the Wisconsin retirement system or whose employer has adopted a resolution under sub. (1).

40.41 History History: 1981 c. 96; 1987 a. 372; 1989 a. 13; 1999 a. 9.