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 NoteNote: 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: (608) 266-3285 or toll free at (877) 533-5020. The forms also are available on the department’s website: etf.wi.gov.
ETF 20.10 HistoryHistory: 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 20.12ETF 20.12 Payments considered Wisconsin retirement system earnings. 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)(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)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 NoteNote: “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 NoteNote: 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)(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 NoteExample: 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)(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)(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 HistoryHistory: 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. ETF 20.17(1)(b)1.1. Upon request, the department shall prepare a written estimate of the cost of purchasing service under s. 40.285 (2), Stats., on an application form to be used for the purpose and send the application form to the participating employee. Anytime after the department receives a completed application and at least the minimum payment or authorization to transfer additional contributions required to accompany that application, the department may update and correct the calculation of the amount due as necessary, before finalizing the purchase of service credit. ETF 20.17(1)(b)2.2. Except as provided in subd. 3. the application to purchase creditable service, on the form approved by the department, must be actually received at the department on or before the date the applicant terminates all participating employment covered by the Wisconsin retirement system. ETF 20.17(1)(b)3.3. The deadline for a part-time elected official whose date of separation from the last participating employer is determined under s. 40.23 (1) (am) 2., Stats., is the date the applicant terminated participating employment other than as a part-time elected official, or the date on which the applicant elected to waive further Wisconsin retirement system participation under s. 40.23 (1) (am) 2., Stats., whichever date is later. ETF 20.17 NoteNote: The “Waiver of Part-Time Elected Service,” form ET-4303, becomes effective on the day after its receipt by the department or, if more than one ET-4303 is being submitted, on the first day after the first waiver is received by the department.
ETF 20.17(1)(c)2.2. If the department determines that the participant is ineligible to purchase service for which the participant has applied, the application shall be rejected and any payment previously received by the department shall be refunded as provided in par. (f). ETF 20.17(1)(c)3.3. The department shall reject an application which is not accompanied by a payment in one of the following forms: ETF 20.17(1)(c)3.a.a. Payment in full of the department’s estimated cost of the service credit if the purchase is for a qualifying period, teacher improvement leave or previously uncredited service as a junior teacher or executive official under s. 40.285 (2) (c) to (f), Stats. Such payment may include authority to transfer 403(b) funds or additional contributions under s. 40.05 (1) (a) 5., Stats., already held by the department in order to make the purchase. A transfer of 403(b) funds must be authorized by the school district or other educational institution employer operating the plan under section 403(b) of the internal revenue code. ETF 20.17(1)(c)3.b.b. In lieu of payment in full, the applicant may include at least 10% of the department’s estimated cost of the creditable service with the application and arrange for the balance to be paid by a plan-to-plan transfer under s. 40.285 (5), Stats. Such transfer funds must be received within 90 days after receipt of the application or the application or the purchase will be treated under the payment shortfall provisions of s. 40.285 (5) (c), Stats., and par. (h). ETF 20.17(1)(c)3.c.c. Partial payment of the department’s estimated cost of the service credit, but only if the purchase is for forfeited service or other governmental service, under s. 40.285 (2) (a) or (b), Stats. ETF 20.17(1)(c)4.4. The department may reject any application which 90 days after the date of application remains incomplete in any respect other than receipt of payment. If an application is rejected under this subdivision then the department shall refund any associated payment as provided by par. (f). ETF 20.17(1)(c)5.5. An application to purchase creditable service for forfeited service or other governmental service under s. 40.285 (2) (a) or (b), Stats., shall be rejected if the applicant does not have at least three continuous years of creditable service immediately preceding the date the completed application form is received by the department, with no break in service between the three continuous years and the application date. ETF 20.17(1)(d)(d) Effect of purchasing service. Buying creditable service under this section adds the amount of service purchased to the person’s total creditable service for the purpose of calculating a formula annuity benefit under s. 40.23 (2) (b) or (2m) (e), Stats., or making a formula annuity calculation in the same manner, including under s. 40.25 (1), 40.63 (8) or 40.73 (1) (c), Stats. Buying creditable service has no retroactive effect, including but not limited to the following: ETF 20.17(1)(d)1.1. Buying creditable service does not undo any effects of the requirement that a person who takes a separation benefit must thereafter be treated as a new employee upon subsequent employment by a participating employer. ETF 20.17(1)(d)2.2. Buying creditable service does not establish an earlier date of participation nor restore an account as though it had never been closed. ETF 20.17(1)(d)3.3. Buying creditable service does not restore or entitle the purchaser to any benefits or rights associated with being a participant in the Wisconsin retirement system, or a member of any predecessor retirement system, at the time the services for which credit is being purchased were actually performed. ETF 20.17(1)(d)4.4. Buying creditable service does not establish creditable service in or for any particular annual earnings period or calendar year, or prior to any past date, or for purposes of measuring continuous years of creditable service. ETF 20.17 NoteNote 1: As a consequence of purchased service credits not establishing creditable service in or for any particular annual earnings period or calendar year, purchased service does not affect the denominator for the calculation of final average earnings in s. 40.02 (33) (a) 2., Stats., nor the amount of a person’s creditable service in a particular annual earnings period for purposes of s. 40.23 (2m) (fm) or 40.63 (1) (a), Stats., for example. ETF 20.17 NoteNote 2: Purchased service credit is included in the “creditable service” used to determine the normal retirement age and the maximum formula benefit for a protective occupation participant under ss. 40.02 (42) (a) and 40.23 (2m) (b), Stats., respectively, as well as months of creditable service for reducing the actuarial adjustment under s. 40.23 (2m) (f) 2., Stats., and the reduction of duty disability benefits for service over 25 years under s. 40.65 (5) (a), Stats. Credit purchased under s. 40.285, Stats., except under s. 40.285 (2) (b), Stats., also applies to the “creditable service” used to determine eligibility for creditable military service, group health, and post-retirement life insurance, under ss. 40.02 (15) (c), 40.02 (25) (b) 6. a., 6e., 6m. b. and 6r. and 40.72 (4) (b), Stats. Limitations on the use of purchased credit for other governmental service in particular are listed in sub. (4) (e) 5. ETF 20.17 NoteNote 3: Service purchased under s. 40.285, Stats., shall be included with all other creditable service in the participant’s account divided by a qualified domestic relations order pursuant to s. 40.08 (1m) (b), Stats., provided the application for the purchase was actually received by the department prior to the decree date, as that term is defined by s. 40.02 (18f), Stats. See s. ETF 20.35 (3) (c). ETF 20.17 NoteExample 1. A person became a participating employee covered by the Wisconsin retirement system in 1995. The participant terminated employment in 1999 and took a separation benefit in 2000 thereby closing her Wisconsin retirement system account. She again became a participating employee on January 1, 2002, and later purchased all the service forfeited by taking the separation benefit in 2000. The years of service purchased are added to the participant’s current service balance and are included in the creditable service used to calculate a formula annuity benefit under s. 40.23 (2) (e), Stats. However, for all Wisconsin retirement system purposes she is treated as a new participant as of January 1, 2002. Her account and benefit rights are not restored as though her account had never been closed. ETF 20.17 NoteExample 2. A former member of the state teacher retirement system took a separation benefit in 1971. Subsequently buying creditable service for teaching services rendered in 1970 does not confer any present right to the minimum retirement age of 50 for teachers that was in effect in 1970.
ETF 20.17 NoteExample 3. A former member of either the state or Milwaukee teacher retirement system before 1964 whose account was later closed by withdrawing member contributions as a member of either the combined or formula group, or by withdrawing both member and state deposits as a member of the separate group, does not reestablish that account by subsequently purchasing credit for the forfeited service. The former teacher is treated for all WRS purposes as a new employee upon returning to participating employment. Consequently, any benefits now paid to the participant are not being paid on the account of a December 31, 1963, member. However, nothing in this section shall be construed to prevent the Wisconsin department of revenue from interpreting s. 71.05 (1) (a), Stats., as it sees fit for its purposes. ETF 20.17(1)(d)5.5. Buying credit for service does not affect or restore earnings for any annual earnings period or for purposes of calculating a benefit or final average earnings. ETF 20.17 NoteNote: The purchase of the service for the qualifying period, teacher improvement leave, and previously uncredited service as a junior teacher or executive participating employee are all intended to be one-time purchases of the entire available credit with payment-in-full accompanying the application. Applications without full payment would generally be rejected. However, because a plan-to-plan transfer under s. 40.285 (5), Stats., is now an available payment option for all forms of creditable service purchase, the possibility exists that there will be a payment shortfall resulting in proration of the service purchased as provided by s. 40.285 (5) (c), Stats. This paragraph permits an additional creditable service purchase of the same type during the same calendar year, provided the participating employee remains otherwise eligible. ETF 20.17(1)(e)2.2. A person may not purchase credit for service to the extent that the effect would be to exceed the 1.0 year limit on creditable service for any annual earnings period. For purposes of this subdivision, notwithstanding par. (d) 4., the service for which the person wishes to purchase credit and all the person’s other purchased service credits shall be treated as if credited under the Wisconsin retirement system or a predecessor retirement system in the annual earnings periods when the services were actually rendered. The person’s current creditable service for an annual earnings period together with all previously granted service credits associated with that annual earnings period, including but not limited to purchased service credits as provided in this subdivision, shall first be subtracted from 1.0 year to determine the balance remaining, if any, for each annual earnings period that may be purchased under this section and s. 40.285, Stats.
