ETF 20.35 NoteNote: The department has approved the following forms for orders to divide benefits of the Wisconsin retirement system: ET-4926, Order to Divide Wisconsin Retirement System Benefits, for use if the termination of a marriage or domestic partnership occurred inside of Wisconsin; and ET-4935, Foreign Jurisdiction Order to Divide Wisconsin Retirement System Benefits, for use if the termination of a marriage or domestic partnership occurred outside of Wisconsin but within a state or territory of the United States. Either form is available from the department of employee trust funds at no charge or can be accessed on the department’s website by searching for the form number.

ETF 20.35(1)(b)(b) The purpose of this section is to specify how the department shall apply a QDRO to the participant’s account or annuity or respond to an order which is not a QDRO.

ETF 20.35(1)(c)(c) For purposes of ss. 40.02 (48m) and 40.08 (1m), Stats., and this section, a marriage is terminated upon entry of a judgment, decree or order of divorce, annulment or legal separation. A domestic partnership, as defined in s. 40.02 (21d), Stats., is terminated as provided in s. ETF 20.10 (3). A domestic partnership, as defined in s. 770.01 (2), Stats., is terminated as provided in s. 770.12, Stats.

ETF 20.35(1)(d)(d) The department must receive the DRO from either the participant or the alternate payee within 20 years after the marriage was terminated by a final judgment or decree, or the otherwise valid DRO shall have no effect on the participant’s account or annuity.

ETF 20.35(2)(2) All QDRO divisions. Upon receipt of a QDRO, the department shall divide WRS accounts and annuities in accordance with the percentage awarded to the alternate payee in the QDRO, based on the date on which the marriage was terminated by a court judgment, decree or order or the domestic relationship was terminated as provided in s. ETF 20.10 (3) or s. 770.12, Stats., as follows:

ETF 20.35(2)(a)(a) Percentages. The percentage of the participant’s account or annuity that is awarded to the alternate payee by a QDRO is limited to a percentage between zero percent (0%) and fifty percent (50%) expressed to no more than 2 decimal places. A QDRO with a percentage awarded to the alternate payee expressed to more than 2 decimal places may not be rejected for that reason alone, but the department shall round the percentage to 2 decimal places.

ETF 20.35(2)(b)(b) Debts of the participant. Any debt, memorandum account or account receivable balance reflecting amounts owed by the participant to the department, the fund or any benefit plan, accrued as of the decree date and still outstanding at the time the account or annuity is divided, shall be divided between the participant and alternate payee in the same proportion as the participant’s account or annuity.

ETF 20.35(3)(a)(a) Creditable service. Creditable service which the participant has been granted as of the decree date is a part of the Wisconsin retirement system account of a participant and shall be divided in the same ratio as other account balances. The creditable service and amounts awarded to the alternate payee shall be in a separate account in the fund for the benefit of the alternate payee. After the division under this section, the alternate payee may apply for a separation benefit under s. 40.25 (2), Stats., provided the application is received by the department prior to the date on which the participant would have met the minimum age requirement for a retirement annuity under s. 40.23, Stats., or after the date on which the participant has met the minimum age requirement but is not vested, and payment of a separation benefit would comply with all provisions of the internal revenue code. After the date the participant reaches or would have reached the minimum retirement age, and is vested, the alternate payee may only apply for retirement benefits under s. 40.23, 40.24, or 40.25 (1), Stats.

ETF 20.35(3)(b)(b) DRO received after participant had become an annuitant. The participant shall retain the remainder in his or her separate account under s. 40.04 (4) (a), Stats., unless the participant is an annuitant at the time of the division. If the participant is an annuitant when the division occurs, the participant’s creditable service and account as of the decree date shall be reduced by the percentage awarded to the alternate payee. The balances shall then be brought forward to the effective date of the current annuity, including any contributions and service for periods after the decree date, and the annuity option chosen by the participant shall be recalculated. The amount by which the monthly annuity payments previously made to the participant exceed the participant’s recalculated monthly entitlement for the same period shall be a balance due from the participant. This balance due shall be due from the participant and may be collected as provided in s. 40.08 (4), Stats., including by a reduction of the present value of the participant’s annuity as reduced by the division, resulting in a recalculation and reduction of the participant’s monthly annuity.

ETF 20.35(3)(c)(c) Purchased service credits. Previously purchased service shall be divided in the same proportion as the other portions of the participant’s account and creditable service. If an application to purchase creditable service is received prior to the decree date, as defined by s. 40.02 (18f), Stats., then service for which payment is made shall be included in the division. The department shall pay any refund due only to the participant and shall bill only the participant for any supplemental payment due for such purchased service. No refund shall be due to the participant from the department for the portion of any excess payment withdrawn from the public employee trust fund by the alternate payee. Credit for service purchased by an application received after the decree date shall not be divided by the qualified domestic relations order regardless of the source of the funds for the purchase or when the services were actually rendered.

ETF 20.35(3)(d)(d) Creditable military service. If the participant has active military service, the alternate payee shall be granted the percentage specified in the QDRO of the military service for which the participant would be eligible as of the decree date, based on the participant’s total creditable service as of the decree date, regardless of when the participant requests the crediting or provides satisfactory documentation. If a participant does not provide to the department proof of active military service and the certification of active military service on the form prescribed by the department, the department shall nevertheless divide the participant’s account without the military service provided the court order is otherwise a QDRO.

ETF 20.35(3)(e)(e) Actuarial adjustment for early retirement.

ETF 20.35(3)(e)1.1. The actuarial reduction applied to the participant’s and alternate payee’s annuities as provided in s. 40.23 (2m) (f) and (fm), Stats., shall be calculated based on the participant’s and alternate payee’s actual ages on his or her respective annuity effective dates, using the creditable service that would otherwise have been credited to the participant’s account on the respective annuity effective dates if the participant’s creditable service had not been reduced per a QDRO.

ETF 20.35(3)(e)2.2. For the purposes of determining the amount of service used to calculate the alternate payee’s actuarial reduction for early retirement under the provisions of s. 40.23 (2m) (fm), Stats., if the participant has part-time service in at least five of the ten annual earnings periods immediately preceding the annual earnings period in which the alternate payee’s retirement benefit becomes effective or the date on which the participant terminated covered employment, whichever is earlier, the provisions of s. 40.23 (2m) (fm), Stats., shall apply. If the decree date is prior to July 1, 2009, the provisions of s. 40.23 (2m) (fm), Stats., in effect prior to that date shall apply.

ETF 20.35(4)(a)(a) Annuity division. Except as provided in par. (b), if the participant was an annuitant on the decree date, the department shall divide the present value of the annuity as provided in s. 40.08 (1m) (b) 2., (c), (d) and (f) 2., Stats., and sub. (3) (e), and as follows, and pay separate annuities to the participant and alternate payee, respectively. An annuity shall be divided so that the actuarial present value of the undivided annuity is equal to the aggregate actuarial present values of the 2 separate annuities resulting from the division as of the effective date of the division.

ETF 20.35(4)(b)(b) Zero percent QDRO. If the participant’s annuity is a joint and survivor annuity with the alternate payee as the named survivor, and the percentage awarded to the alternate payee in the QDRO is zero percent (0%), then the alternate payee may not receive any Wisconsin retirement system annuity based on the QDRO and the participant’s annuity shall be recalculated as a straight life annuity payable to the participant, with no change in the remaining guarantee period, if any.

ETF 20.35(4)(c)(c) Division of accelerated annuity option. If the participant selected an accelerated payment option as provided in s. 40.24 (1) (e), Stats., or s. ETF 20.04 (3), and the participant’s temporary annuity is still in force as of the effective date of the annuity division, then the department shall calculate the present value of both the temporary and life annuities using the actuarial tables in effect on the effective date of the annuity division. The department shall then divide the total present value based on the percentages specified in the QDRO and calculate separate annuities for the participant and alternate payee as specified in s. 40.08 (1m) (f) 2., Stats. If the participant or alternate payee provides a projection of his or her social security benefits at age 62 from the social security administration, the department shall use that projected social security amount to calculate the amount of the temporary annuity for that person. If no projection is supplied, then notwithstanding s. ETF 20.03 (2), the department shall assume that person’s projected social security benefits at age 62 equals that person’s prorated portion of the participant’s temporary annuity amount as of the effective date of the annuity division, calculated based on the respective percentages of the annuity being awarded to the participant and alternate payee. If the reduced annuity payable for life to the alternate payee or participant is below the threshold specified by s. ETF 20.05 (1), then that person shall receive an annuity in the same optional form originally selected by the participant, except that the temporary annuity option provided in s. 40.24 (1) (e), Stats., or s. ETF 20.04 (3) is not available.

ETF 20.35(4)(d)(d) Disability annuities. Upon division of a disability annuity calculated under the provisions of s. 40.63 (1) or (4), Stats., the alternate payee’s annuity shall consist of a portion based on the participant’s actual service and a portion based on the assumed service used to calculate the participant’s disability annuity. The portion of the alternate payee’s annuity based on the participant’s assumed service and age shall cease upon the death of the alternate payee. Benefits payable upon the death of the alternate payee shall be based on the guaranteed portion of the alternate payee’s annuity only. Once the participant’s disability annuity has been divided, the termination or suspension of the participant’s disability annuity or the death of the participant has no effect on the alternate payee’s annuity. If the participant’s disability annuity is subsequently terminated and the participant’s account restored under the provisions of s. 40.63 (9) and (10), Stats., the contributions and service credited to the restored account shall be reduced by the same percentage awarded to the alternate payee by the QDRO.

ETF 20.35(4)(e)(e) Rehired annuitant with suspended account. The suspended payments in the participant’s memorandum account are converted into a monthly annuity as of the decree date. This monthly amount consists of the increase that is attributable to the suspended payments from the participant’s original annuity. This increase is added to the monthly annuity as of the decree date, and the annuity division is based on this amount.

ETF 20.35(5)(a)(a) Rejection and notice. The department may not honor any order to divide Wisconsin retirement system benefits which it determines is not a QDRO as defined in s. 40.02 (48m), Stats. The department shall send written notice of its rejection of an order to the person submitting the order and to the participant and alternate payee if those persons’ current names and addresses are stated in the order or are readily determinable from department records.