ETF 20.17 Note Note 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 Note Example 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 Note Example 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 Note Example 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(1)(e) (e) Limitation on creditable service purchases.

ETF 20.17(1)(e)1. 1. A maximum of two purchases per calendar year may be made under each of subs. (3) through (8).

ETF 20.17 Note Note: 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.

ETF 20.17 Note Example 1. A participant earned 0.40 years of creditable service working for a participating employer during the 2004 annual earnings period. During the same annual earnings period, the participant worked 1,905 hours, the equivalent of one full year of creditable service, for another governmental employer not covered by the Wisconsin retirement system. Even if the participant is otherwise eligible to purchase credit for the other governmental service, no more than 0.60 years of service for the 2004 annual earnings period may be purchased.

ETF 20.17 Note Example 2. A participant whose annual earnings periods are calendar years, earned 0.60 years of creditable service between January and May 2005 by working overtime. The participant then terminated and took a separation benefit, forfeiting the service. The participant then returned to participating employment in July and earned 0.58 years of creditable service for the remainder of 2005. Some years later, the participant meets the qualifications to purchase the forfeited service. The participant may not purchase credit for more than 0.42 years of the forfeited service.

ETF 20.17(1)(f) (f) Refunds. Refunds may not be made for amounts under the threshold established by s. 40.285 (7), Stats. Refunds shall be made in the manner provided by s. 40.285 (6), Stats. Interest on refunds is subject to the provisions of s. 40.08 (6), Stats. No excess funds transferred to the department by a plan-to-plan transfer may be refunded directly to the participant. If the department refunds any payment taken from additional contributions under subd. 2. or 3., it shall restore the refunded amount to the additional account as if the transfer had not occurred. The following order of priority shall determine the sources of any refund due:

ETF 20.17(1)(f)1. 1. The participant’s lump sum payment to the department. The refunded amount shall be paid directly to the participant.

ETF 20.17(1)(f)2. 2. Additional contributions transferred from the participant’s after-tax additional contribution account. The amount refunded shall be transferred back to the participant’s after-tax additional account.

ETF 20.17(1)(f)3. 3. Additional contributions transferred from the participant’s tax sheltered additional contribution account. The amount refunded shall be transferred back to the participant’s tax-sheltered additional account.

ETF 20.17(1)(f)4. 4. Funds transferred from another qualified retirement plan under s. 40.285 (5), Stats. When more than one qualified retirement plan was the source of transferred funds, the department shall determine the refunded amount to be returned to each qualified retirement plan.

ETF 20.17(1)(g) (g) Treatment of payments.

ETF 20.17(1)(g)1. 1. Payments retained by the department shall be deposited in the participant’s required contribution account under s. 40.04 (4) (a) 1., Stats. Except as otherwise provided in subd. 3., if the participant participates in the variable trust the payment shall be divided between the core and variable accounts in the same proportion as the participant’s current contributions are so divided at the time that payment is received.

ETF 20.17(1)(g)2. 2. For interest crediting purposes, except as otherwise provided in subd. 3., all payments received to purchase creditable service including plan-to-plan transfer funds shall be treated as amounts received during the year in which the department actually receives the payment or transferred funds.

ETF 20.17(1)(g)3. 3. Notwithstanding subd. 2., for interest crediting purposes, funds transferred from the participant’s voluntary employee additional contributions that were in the prior year’s closing balance of the additional contribution account, including interest credited, when the transfer occurs shall retain that status so that the participant will not forfeit interest to be credited on the prior year’s closing balance. Notwithstanding subd. 1., amounts transferred from a participant’s additional contributions in the core investment fund to buy service shall remain in the core investment fund, and additional contributions transferred from the participant’s variable additional contributions to buy service shall remain in the variable fund. Nothing in this subdivision shall be construed to affect an individual’s variable cancellation rights under s. ETF 10.30 (5).

ETF 20.17(1)(h) (h) Payment shortfalls.

ETF 20.17(1)(h)1. 1. For any type of creditable service purchased under s. 40.285 (2), Stats., if the purchase includes a plan-to-plan transfer and the total amount received by the department is less that amount required for the purchase of the service, and the difference exceeds the threshold for corrections under s. 40.285 (7), Stats., then the department shall proceed under s. 40.285 (5) (c), Stats., and allow the participant 30 days to pay the difference. If the difference is not received within 30 days after notice is sent to the participant, the department shall complete the purchase, reducing the amount of service credit purchased to the credit that can be purchased by the payment actually received.

ETF 20.17 Note Note: See s. ETF 20.17 (3) (d) for the required rules concerning how a forfeited service purchase is prorated when the participant forfeited service under more than one category of employment.

ETF 20.17(1)(h)2. 2. If the department determines that the actual cost of purchasing service under s. 40.285 (2), Stats., is greater than the amount estimated by the department for the participant, and the participant paid the estimated amount in full, then the participant shall be notified and allowed 30 days to either pay the balance due or withdraw the application, without prejudice. If the balance due or is not received prior to the deadline, then the department shall proceed under subd. 2. a., b., c. or d., as appropriate.

ETF 20.17(1)(h)2.a. a. When a plan-to-plan transfer made up part of the payment, the department shall proceed under the payment shortfall provisions of s. 40.285 (5) (c), Stats., except as otherwise provided by subd. 2. c. or d.

ETF 20.17(1)(h)2.b. b. When no plan-to-plan transfer is involved and subd. 2. c. or d. do not apply, or the participant made a timely request to withdraw the application, the department shall refund all amounts received as provided in par. (f).

ETF 20.17(1)(h)2.c. c. If a Wisconsin retirement system annuity or lump sum in lieu of an annuity under s. 40.25 (1), Stats., is to be paid to the applicant, and the applicant so requests, the balance due shall be deducted from the lump sum or a subsequent monthly annuity payment payable. This subdivision paragraph does not apply if the balance due exceeds the amount of the benefit under s. 40.25 (1), Stats., or if the Department determines that the amount of the monthly annuity available for this deduction is insufficient.

ETF 20.17(1)(h)2.d. d. If the application was for the purchase of credit for forfeited service or other governmental service, and subdivision paragraph c. does not apply, the department may complete a partial purchase as provided in sub. (3) (d) or (4) (g), respectively.

ETF 20.17(1)(i) (i) No participant withdrawal or cancellation of application; exception. The participant may not cancel or withdraw an application to purchase service credits once any payment has been received by the department, except under the circumstances specified in par. (h) 2. b.