Chapter ETF 20

ETF 20.07(2) (2) The benefit shall be paid in the first of the following forms that applies:

ETF 20.07(2)(a) (a) For benefits payable solely from the participant’s additional contribution accumulations under s. 40.05 (1) (a) 5., Stats., or if the amount of the annuity in the normal form based on all undistributed balances in the account is less than the amount determined under s. 40.25 (1) (a), Stats., a lump sum payment.

ETF 20.07(2)(b) (b) If the participant’s or alternate payee’s age on the birthday which occurs during the year that the distribution begins is less than 72, the option specified in s. 40.24 (1) (c), Stats.

ETF 20.07(2)(c) (c) If the participant’s or alternate payee’s age on the birthday which occurs during the year that the distribution begins is 72 or more, except as provided in par. (d), the option specified in s. ETF 20.04 (4).

ETF 20.07(2)(d) (d) If the number of guaranteed payments determined under s. ETF 20.04 (4) is less than 60, a lump sum payment equal to the present value of the annuity.

ETF 20.07(3) (3) The effective date of the automatic distribution paid under sub. (2) shall be January 1 of the year in which the participant attains or would have attained the age provided in section 401 (a) (9) of the Internal Revenue Code, or January 1 of the year following the year in which the participant retires, if later. Standard sequence under s. 40.02 (8) (a) 2., Stats., shall become effective with regard to beneficiaries of death benefits under ss. 40.71 and 40.73, Stats., on the effective date of the automatic distribution.

ETF 20.07(4) (4) The participant or alternate payee may not cancel distributions under this section, except as provided in sub. (5). Subject to the requirements of the internal revenue code, the participant or alternate payee may change the optional form of payment as provided under s. 40.24 (4), Stats.

ETF 20.07(5) (5) The department shall distribute the account as specified in this section unless the department receives the participant’s or alternate payee’s application for the benefit on a form provided by the department. The application may specify a deferred effective date which may not be later than March 1 of the calendar year after the year in which participant attains the age provided in section 401 (a) (9) of the Internal Revenue Code, or March 1 of the calendar year following the year in which the participant retires, if later. For alternate payees of deceased participants, the deferred effective date may not be later than March 1 of the calendar year after the participant would have attained the age provided in section 401 (a) (9) of the Internal Revenue Code. The department must receive the application specifying a deferred benefit effective date on or after January 1 of the year before the year in which the participant attains (or, for alternate payees of deceased participants, would have attained) the age provided in section 401 (a) (9) of the Internal Revenue Code, but no later than the deadline to request cancellation provided under s. ETF 20.20 (3) or (4) with respect to the benefit which is being automatically distributed.

ETF 20.07 Note Note: Federal regulations require that a distribution from a qualified retirement plan begin no later than April 1 of the year following the year in which the participant would have attained the age provided in section 401 (a) (9) of the Internal Revenue Code or retires, whichever is later. A form specifying a requested annuity effective date, form ET-4934, is available from the department of employee trust funds at no charge.

ETF 20.07(6) (6) If the participant or alternate payee submits a waiver of a lump sum benefit under s. 40.08 (3), Stats., and the department receives it on or before the deadline specified in s. ETF 20.20 (3) or (4), the department shall defer the automatic distribution during the waiting period before the waiver effective date. The department shall not defer automatic distribution of monthly annuity benefits if a waiver is filed, but shall continue to make monthly payments until the waiver takes effect.

ETF 20.07 Note Note: This rule (CR 09-057) amends ss. ETF 20.07 (6) and 60.53 (1) (c) to conform to the new effective date for waivers in s. 40.08 (3), Stats., as affected by 2007 Wis. Act 131.

ETF 20.07 History History: Cr. Register, December, 1996, No. 492, eff. 1-1-97; correction in (2) (a) made under s. 13.93 (2m) (b) 4. and 7., Stats., Register, July, 1999, No. 523; CR 09-057: am. (6) Register May 2010 No. 653, eff. 6-1-10; CR 23-023: am. (3), (5) Register May 2024 No. 821, eff. 6-1-24.

ETF 20.08 ETF 20.08 Termination of marriage or domestic partnership for determination of beneficiary. For purposes of determining a beneficiary under s. 40.02 (8) (a) 2., Stats., a judgment, order or decree of divorce, legal separation or an annulment of the marriage terminates the marital relationship. A domestic partnership terminates as specified in s. ETF 20.10 (3) for the purposes of determining a beneficiary under s. 40.02 (8) (a) 2., Stats.

ETF 20.08 History History: EmR0938: emerg. cr. eff. 1-1-10; CR 10-004: cr. Register July 2010 No. 655, eff. 8-1-10; title created under s. 13.92 (4) (b) 2., Stats., Register July 2010 No. 655.

ETF 20.10 ETF 20.10 Domestic partner benefits.

ETF 20.10(1) (1) For the purposes of this section, “member” means any of the following persons:

ETF 20.10(1)(a) (a) Participant.

ETF 20.10(1)(b) (b) Annuitant.

ETF 20.10(1)(c) (c) Eligible employee.

ETF 20.10(1)(d) (d) Beneficiary.

ETF 20.10(1)(e) (e) Alternate payee.

ETF 20.10(1)(f) (f) Recipient of duty disability benefits under s. 40.65, Stats.

ETF 20.10(2) (2) 

ETF 20.10(2)(a) (a) For the purposes of the benefits authorized under ch. 40, Stats., a domestic partnership as defined in s. 40.02 (21d), Stats., becomes effective on the date that the department receives a completed and notarized Affidavit of Domestic Partnership form (ET-2371), except that a domestic partnership cannot become effective before January 1, 2010.

ETF 20.10(2)(c) (c) Registering as domestic partners under the provisions of ch. 770, Stats., does not establish a domestic partnership for the purposes of the benefits authorized in ch. 40, Stats.

ETF 20.10(2)(d) (d) Establishing a domestic partnership in another state does not establish a domestic partnership for the purposes of the benefits authorized in ch. 40, Stats.

ETF 20.10(3) (3) Once a domestic partnership becomes effective it remains in force until the earlier of the following dates:

ETF 20.10(3)(a) (a) The date on which the department receives a notarized Affidavit of Termination of Domestic Partnership form (ET-2372) signed by either the member or the domestic partner.

ETF 20.10(3)(b) (b) Based on evidence provided to the department, the date established to the department’s satisfaction that the domestic partnership no longer met all of the conditions in s. 40.02 (21d), Stats. Examples of no longer meeting the conditions include one of the domestic partners marrying another person or establishing a new domestic partnership with a different partner under sub. (2), or no longer sharing a common residence.

ETF 20.10(3)(c) (c) The date on which neither domestic partner is a member as defined in sub. (1).

ETF 20.10(3)(d) (d) The date determined by the court that a domestic partnership terminated.

ETF 20.10(3)(e) (e) The department may reject any Affidavit of Termination of Domestic Partnership (ET-2372) that is illegible or missing information necessary for benefit administration purposes. Any affidavit terminating a domestic partnership that is missing the name of either domestic partner, the signature of the domestic partner who is terminating the domestic partnership, or is not notarized shall be rejected, and shall have no force or effect. Except as provided in pars. (b), (c), and (d), for the purposes of the benefits authorized in ch. 40, Stats., the effective date of the termination of the domestic partnership shall be based on the date the department receives a completed, signed and notarized Affidavit of Termination of Domestic Partnership form (ET- 2372).

ETF 20.10(3)(f) (f) Terminating a domestic partnership created under the provisions of ch. 770, Stats., does not terminate a domestic partnership established under sub. (2) for the purposes the benefits authorized in ch. 40, Stats.

ETF 20.10(4) (4) Affidavits certifying or terminating a domestic partnership that are received after the date of death of either domestic partner are invalid, and shall have no force or effect.

ETF 20.10(5) (5) The domestic partner provisions in ss. 40.08 (8) (a) 4. and 40.23 (4) (e) 1. and (f), Stats., shall not apply if such provisions are inconsistent with any internal revenue code provisions that authorize and regulate the benefit plan.

ETF 20.10 Note Note: The Affidavit of Termination of Domestic Partnership form, ET-2372, can be obtained at no charge by writing to: department of employee trust funds, P.O. Box 7931, Madison, WI 53707-7931, or by calling: [phone] or toll free at [phone]. The forms also are available on the department’s website: etf.wi.gov.

ETF 20.10 History History: EmR0938: emerg. cr. eff. 1-1-10; CR 10-004: cr. Register July 2010 No. 655, eff. 8-1-10; correction in (3) (e) made under s. 13.92 (4) (b) 7., Stats., Register July 2010 No. 655; CR 19-126: r. (2) (b), am. (2) (d) Register May 2021 No. 785, eff. 6-1-21.

ETF 20.12 ETF 20.12 Payments considered Wisconsin retirement system earnings.

ETF 20.12(1) (1) 

ETF 20.12(1)(a) (a) The purpose of this section is to establish the circumstances under which some or all payments made as a remedy for an employment dispute may be treated as earnings for Wisconsin retirement system purposes and to state the elements required for such treatment.

ETF 20.12(1)(b) (b) This section applies to court orders and compromise settlements having an effective date which is on or after May 16, 1996.

ETF 20.12(1)(c) (c) This section does not apply to retroactive or other wage payments made to all eligible employees in a bargaining unit under a collective bargaining contract.

ETF 20.12(2) (2) Definitions.

ETF 20.12(2)(a) (a) “Compromise settlement,” for purposes of this section, means a written, binding agreement between a participating employer and a current or former participating employee of that employer, to settle a wage claim or a dispute involving an involuntary suspension or termination of participating employment. For purposes of this section only, the department shall treat a final order issued by the Wisconsin employment relations commission or an arbitration award under a collective bargaining agreement, for which all appeal opportunities have expired without an appeal being filed, as a compromise settlement.

ETF 20.12(2)(b) (b) “Effective date” of the court order or compromise settlement, for purposes of this section, means the date an order of the court, the Wisconsin employment relations commission, or an arbitrator is issued or, when the matter is resolved by a compromise settlement signed by the parties rather than a final order, the date on which the compromise settlement in its final form is first signed by all of the parties.

ETF 20.12(3) (3) Except as provided in this section, no payment resulting from a court order or compromise settlement may be considered as earnings for Wisconsin retirement system purposes. The department may decline to act on a court order or compromise settlement which does not contain all of the information required under this section or is otherwise defective.

ETF 20.12(4) (4) Subject to all provisions of this section, the department shall treat as earnings for Wisconsin retirement system purposes a payment made under a court order or compromise settlement by a participating employer to an employee or former employee provided all of the following conditions are met:

ETF 20.12(4)(a) (a) The payment is one of the following:

ETF 20.12(4)(a)1. 1. Retroactive wages paid to a participant for a period following an involuntary termination of the employee’s participating employment by that participating employer, which are paid under court order or the terms of a compromise settlement which also expunges the previously reported termination.

ETF 20.12(4)(a)2. 2. Retroactive wages paid to a participant for a period during which the participating employee was involuntarily placed on unpaid leave or suspension by that participating employer.

ETF 20.12(4)(a)3. 3. Additional wages properly due to a continuously participating employee from that participating employer for hours of service actually rendered and previously reported to the department.

ETF 20.12(4)(a)4. 4. Additional wages properly due to a continuously participating employee from that participating employer for hours of service actually rendered but not previously reported to the department.

ETF 20.12(4)(b) (b) The employee or former employee is living on the effective date of the court order or compromise settlement.

ETF 20.12(4)(c) (c) The court order or compromise settlement is in writing and is signed and dated by the issuing authority or by the parties to the agreement.

ETF 20.12(4)(d) (d) The court order or compromise settlement specifies the wages to be paid to the employee for each annual earnings period and the associated hours of service actually rendered by the employee or that would have been rendered but for the disputed suspension or termination.

ETF 20.12 Note Note: “Annual earnings period” is defined by s. 40.02 (3), Stats.

ETF 20.12(4)(e) (e) The employer reports the wages and hours of service to the department under a transaction code designated by the department for actions resulting from court orders and compromise settlements. At the department’s request, the employer shall report wages and hours of service in sufficient detail to enable the department readily to calculate the wages and hours for each payroll period during the period under dispute and shall distinguish between additional wages, if any, paid for hours of service previously reported to the department, and wages and hours of service not previously reported.

ETF 20.12 Note Note: Employer reporting is described in detail in ET-1127, WRS Administration Manual, which is available from the Department at no charge.

ETF 20.12(4)(f) (f) If the dispute concerns a termination of participating employment or if the amount of wages reported under par. (e) exceeds the employee’s current basic rate of pay multiplied by 80, the employer submits with the transaction report the original court order or compromise settlement or a complete copy thereof. The department may require submittal of the court order or compromise settlement associated with a smaller wage payment. If the employer fails to submit the transaction report and the court order or compromise settlement, if required, within 90 days after the effective date, the employee, the collective bargaining agent, or the issuing court or agency may submit a complete copy of the court order or compromise settlement to the department for purposes of requesting employer reporting.

ETF 20.12(4)(g) (g) The employer remits required contributions on the wages, or that portion of the wages which the department treats as earnings, including interest computed under s. 40.06 (5), Stats., and s. ETF 10.635.

ETF 20.12(4)(h) (h) If the remedy includes payment of wages for a period following a disputed termination of participating employment, the court order or compromise settlement does all of the following:

ETF 20.12(4)(h)1. 1. Directs the employer to rescind the termination date previously reported to the department and, if the employee is not to be reinstated, specifies the date on which the employee-employer relationship terminated, which date shall be treated as the termination date for Wisconsin retirement system purposes. This date may not be later than the effective date of the court order or compromise settlement.

ETF 20.12(4)(h)2. 2. Directs the employer to pay the employee all wages from the rescinded termination date to the date the employee returns to work or the new termination date reported under subd. 1. as if the employee had been continuously employed throughout the period under the conditions of employment prevailing prior to the termination, except that the court order or compromise settlement may direct that wages be reduced by amounts earned from other sources and may identify a period of suspension for which wages are not paid.

ETF 20.12(5) (5) The department may not consider any of the following payments as earnings:

ETF 20.12(5)(a) (a) A payment that results from resolution of a dispute over the employer’s failure to hire a person. Any payment in such cases shall be considered by the department as a damage award. This paragraph does not exclude retroactive wages related to a participating employer’s failure to hire a participating employee of that employer for another position, provided the court order or compromise settlement also directs that the employee’s basic pay rate be permanently increased.

ETF 20.12(5)(b) (b) A payment directed by a court order or compromise settlement if either the specified hours of service or associated wages exceed the creditable service and earnings which would have been properly reported for the employee if the employee had been continuously employed through the period at issue under the conditions of employment prevailing prior to the dispute.

ETF 20.12(5)(c) (c) A payment directed by a court order or compromise settlement which purports to pay earnings in one annual earnings period which actually result from employment during another annual earnings period or a combination of annual earnings periods.

ETF 20.12(5)(d) (d) A payment for actual or constructive services rendered, or deemed to have been rendered, after termination of employment.

ETF 20.12(5)(e) (e) A payment directed by a court order or compromise settlement which is excluded from earnings under s. 40.02 (22) (b), Stats., including all of the following:

ETF 20.12(5)(e)1. 1. A payment which is other than wages or salary for personal services actually rendered to that participating employer by the participating employee, or which would have been rendered but for the disputed termination or suspension;

ETF 20.12(5)(e)2. 2. A payment, including a wage payment, made in return for, or in order to secure, the employee’s resignation or termination from participating employment, whether immediately or at some specified time in the future, or to secure release from an unexpired contract of employment, including the employee’s voluntary waiver of grievance rights under a collective bargaining contract. This subdivision does not prevent a remedy from including both a wage payment and a payment to secure the employee’s agreement to other conditions, provided the court order or compromise settlement specifies the portion of the total payment that represents wages.

ETF 20.12(5)(e)3. 3. A lump sum payment for accumulated vacation, sick leave, or compensatory time, unless the payment is broadly applicable to the employees of the employer regardless of age, length of service or likelihood of employment termination.

ETF 20.12(5)(e)4. 4. A payment for damages, attorney fees, interest or penalties included in the court order or compromise settlement, regardless of whether the amount of the payment reflects previous salary levels.

ETF 20.12(5)(e)5. 5. A payment based on a change in the method of computing the base compensation of the employee during the last 5 years of employment, unless resulting from application of a broader change permitted under s. 40.02 (22) (b) 10., Stats.

ETF 20.12(5)(e)6. 6. A payment made in lieu of fringe benefits normally paid for or provided by the employer.

ETF 20.12(6) (6) The department may not consider as earnings a payment for wages for a period during which the employee was an annuitant, or a payment made to a person whose Wisconsin retirement system account was closed by receipt of a benefit under s. 40.25 (1), or (2), Stats., on or before the effective date of the court order or compromise settlement. This subsection shall not be construed to affect a reinstatement as provided under s. 40.25 (5), Stats.

ETF 20.12(7) (7) 

ETF 20.12(7)(a) (a) Except as provided in par. (b), if the court order or compromise settlement directs that the retroactive earnings to be paid first be reduced by amounts earned from other sources, the department shall determine the earnings to be credited in each annual earnings period based on the unreduced amount, subject to the limitations of section 415 of the internal revenue code and to sub. (5) (b). The department may determine the hours of service to be credited in each annual earnings period from data available to the department or by dividing the unreduced amount otherwise treatable as earnings in accord with this section for each affected annual earnings period by the rate of pay the department determines applied during the period under dispute.

ETF 20.12(7)(b) (b) If the employee has other participating employment during the disputed period, the department shall reduce the amount of earnings and service it credits under the court order or compromise settlement by the earnings and service resulting from the other participating employment.

ETF 20.12 Note Example: An employee who normally earns $12.00 per hour in a full-time position works half-time in another participating position for $10.00 per hour during the disputed termination. In each week, the employee earns $200.00 and 20 hours of service. If the employee is made whole for wages and benefits under the compromise settlement and receives back wages of $480.00 per week for the period of termination, the department will credit only an additional $280 in earnings and an additional 20 hours of service for each week.

ETF 20.12(7)(c) (c) In cases of part-time participating employment, the department may increase the service and earnings credited under par. (b) if the employee submits satisfactory evidence showing that the total earnings and service credited during the disputed period, if properly reported, would have been greater than those prevailing before the dispute.

ETF 20.12(8) (8) Regardless of when payment to the employee actually occurs and regardless of whether payment is reported as taxable income in the year payment was made or by revising reports of taxable income for previous years, any payments considered as earnings under this section shall be treated for the purposes of the Wisconsin retirement system as earnings in the annual earnings period in which the earnings should normally have been paid.

ETF 20.12(9) (9) 

ETF 20.12(9)(a) (a) Except as limited by sub. (10), resolution of any employment dispute between a participating employer and participating employee may include making additional contributions to the participant’s account.

ETF 20.12(9)(b) (b) The department shall respond to reasonable requests by a participant or a participating employer to estimate the amount of additional contribution necessary to fund a benefit equivalent to a hypothetical Wisconsin retirement system benefit.

ETF 20.12(10) (10) 

ETF 20.12(10)(a) (a) Regardless of the terms of a court order or compromise settlement, if the department finds that a contribution exceeds the limits on contributions to qualified pension plans established by the internal revenue code and regulations promulgated thereunder, as determined by the department, the department shall refuse to accept the contribution. If any excess contribution is accepted in error, the department shall refund or credit it as provided in s. 40.08 (6), Stats.

ETF 20.12(10)(b) (b) In order to establish the amount of an employee’s reportable income for a specified year, as necessary to compute contribution limits, and in order to verify that payments requested to be considered as earnings under this section were reported as taxable income, the employee shall furnish to the department upon request proof of all taxable compensation received and all retirement contributions made to all retirement plans during each year at issue.

ETF 20.12 History History: Cr., Register, July, 1997, No. 499, eff. 8-1-97; correction in (6) made under s. 13.93 (2m) (b) 7., Stats., Register, July, 1999, No. 523.