SB326,9,6
140.08 (4) Reimbursements of moneys paid as a result of misrepresentation,
2fraud or error.
(a) If the department has paid any money to a person or estate as
3a result of misrepresentation, fraud or error, the department shall determine the
4amount of such payment and shall require that the person or estate reimburse the
5department for this amount, plus interest at the effective rate of the fixed annuity
6division.
SB326,9,157 (b) If the department determines that any money has been paid to a person or
8estate as a result of misrepresentation, fraud or error, the department shall notify
9the person or the personal representative or special administrator of the person's
10estate by certified mail of this determination. The department shall send the notice
11to the last-known address of the person or the personal representative or special
12administrator of the person's estate. The notice shall inform the person of his or her
13right to a timely appeal. The notice must be sent within 7 years from the date that
14the department first acquires actual notice of the alleged misrepresentation, fraud
15or error.
SB326,9,2316 (c) The sending of the notice by the department under par. (b) shall constitute
17a lien against the person's separate account under s. 40.04 (4) (a) and any annuity,
18benefit or obligation of the employe trust fund that is payable or will become payable
19to the person or the person's beneficiaries. This lien takes precedence over all other
20withholdings, liens or encumbrances, whenever perfected, against the person's
21separate account under s. 40.04 (4) (a) and any annuity, benefit or obligation of the
22employe trust fund that is payable or will become payable to the person or the
23person's beneficiaries.
SB326,9,2524 (d) Subject to sub. (10), the department may do any of the following to provide
25for reimbursement of the amount or any portion of the amount due under par. (a):
SB326,10,2
11. Obtain voluntary repayment from the person or estate within a reasonable
2period, as determined by the department.
SB326,10,123 2. Foreclose on the lien against the person's separate account under s. 40.04 (4)
4(a) or any annuity, benefit or obligation of the employe trust fund that is payable or
5will become payable to the person or the person's beneficiaries. In foreclosing on this
6lien, the department may retain the amount or portion of the amount out of any
7annuity, benefit or obligation of the employe trust fund that is payable or will become
8payable to the person or the person's beneficiaries or may permanently reduce the
9person's annuity by the actuarial present value of the amount or portion of the
10amount that is due under par. (a). If the department forecloses on the lien, the
11department shall notify, by regular mail, the person or personal representative or
12special administrator of the person's estate of the foreclosure as soon as practical.
SB326,10,1613 3. Request that an employer withhold the amount or any portion of the amount
14from any sum payable by the employer to any person or estate. If an employer
15receives such a request, the employer shall withhold and remit the amount to the
16department.
SB326,10,1817 4. Bring a civil action against the person or estate for the amount or any portion
18of the amount that is not otherwise recovered by the department.
SB326,10,2019 (e) Any amount that is reimbursed to the department under par. (d) shall be
20credited to the appropriate benefit plan accounts.
Note: This provision repeals and recreates a provision that allows the department
of employe trust funds to collect any amount owed for benefits paid through
misrepresentation or fraud or error. The current provisions does not provide that the
amounts owed become a statutory lien. Therefore, any debts to the trust fund are
unsecured and can be discharged in bankruptcy. The amended provision will provide the
department with a mechanism to secure obligations to the trust fund with a lien against
other benefits also administered by the department, if the department has paid the
money to a person or an estate as a result of misrepresentation, fraud or error. A notice
of the fact that money has been paid to a person or an estate as a result of
misrepresentation, fraud or error, constitutes a lien against the person's account and any

annuity, benefit or obligation that the trust fund pays or will pay to the person or the
person's beneficiary.
SB326, s. 15 1Section 15. 40.08 (7) (a) of the statutes is amended to read:
SB326,11,112 40.08 (7) (a) Any overpayment or underpayment of a lump-sum payment
3under s. 40.25 or a death benefit which is less than 60% of the amount specified in
4s. 40.25 (1) (a) rounded to the next highest dollar amount, and any annuity payment
5error which is less than $2 per month may not be corrected but shall be credited or
6debited to the employer accumulation reserve or the appropriate insurance account.
7However, if the amount of unapplied additional contributions or tax-deferred
8additional contributions
would increase an annuity payment by less than $2 but is
9more than 60% of the amount specified in s. 40.25 (1) (a) rounded to the next highest
10dollar amount, the unapplied additional contributions or tax-deferred additional
11contributions
shall be paid to the annuitant as a lump sum.
Note: This provision, relating to overpayments and underpayments, is amended
to recognize that the provisions apply to both categories of additional contributions.
SB326, s. 16 12Section 16. 40.23 (1) (b) of the statutes is amended to read:
SB326,12,213 40.23 (1) (b) Except as provided in par. (bm), all retirement annuities shall be
14effective on the day following, or on the first day of a month following, the date of
15separation from the last participating employer by which the participant was
16employed, as specified by the participant in the written application for the annuity.
17However, the date shall not be more than 90 days prior to the date of receipt of the
18application by the department. The participant may specify that additional and
19tax-deferred additional
contribution accumulations shall not be applied to provide
20an annuity until a subsequent application is filed for an annuity to be paid from the
21additional and tax-deferred additional contribution accumulations. The
22subsequent application shall be made as specified under sub. (4) or the department

1shall automatically distribute the accumulated additional and tax-deferred
2additional
contribution accumulations as a lump sum.
Note: This provision is amended to clarify that the treatment of retirement
annuities applies to both categories of additional contributions.
SB326, s. 17 3Section 17 . 40.24 (1) (f) of the statutes is amended to read:
SB326,12,194 40.24 (1) (f) From accumulated additional contributions made under s. 40.05
5(1) (a) 5. and tax-deferred additional contribution accumulations made under s.
640.05 (1) (a) 5m.
only, an annuity certain payable for and terminating after the
7number of months specified by the applicant, regardless of whether the applicant
8dies before or after the number of months specified, provided that the monthly
9amount of the annuity certain is at least equal to the minimum amount established
10under s. 40.25 (1) (a). Subject to the period of distribution required under s. 40.23
11(4) (b) 2., the number of months specified shall not exceed 180 and shall not be less
12than 24. At any time before the expiration of the certain period, the annuitant may
13elect to receive a lump-sum payment equal to the present value of the remaining
14monthly payments.
If the death of the annuitant occurs prior to the expiration of the
15certain period, the remaining payments shall be made in accordance with s. 40.73
16(2) without regard to any other annuity payments payable to the beneficiary. An
17annuity under this paragraph may be initiated prior to any other annuity amount
18provided under this subchapter and prior to age 55 if all other qualifications for
19receiving an annuity payment are met.
SB326, s. 18 20Section 18. 40.24 (3) of the statutes is amended to read:
SB326,12,2321 40.24 (3) Any participant specified under sub. (1) (intro.) may elect to receive
22the amount provided by accumulated additional contributions and tax-deferred
23additional contributions
in a different optional form than the balance of the annuity.
SB326, s. 19
1Section 19 . 40.24 (7) (a) 4. of the statutes is amended to read:
SB326,13,32 40.24 (7) (a) 4. Benefits paid from accumulated additional contributions and
3tax-deferred additional contributions
.
Note: The changes made by Sections 17 to 19 to provisions relating to annuity
options, clarify that these provisions apply to both categories of additional contributions.
SB326, s. 20 4Section 20 . 40.25 (1) (a) of the statutes is amended to read:
SB326,13,165 40.25 (1) (a) If all other requirements for payment of a retirement annuity are
6met and if the retirement annuity in the normal form which could be provided under
7s. 40.23 is equal to or less than $100 monthly for a benefit with an effective date that
8is on or after April 23, 1994, but before the end of the calendar year of 1993 or, for
9a benefit with an effective date in a subsequent calendar year, the monthly amount
10applied under this paragraph for the previous calendar year increased by the salary
11index and ignoring fractions of the dollar, the then present value, including
12additional contributions and tax-deferred additional contributions, of the annuity
13shall be paid in a single sum instead of as an annuity. The additional contribution
14accumulations and tax-deferred additional contribution accumulations shall not be
15included in determining whether a single sum should be paid if the optional form
16provided by s. 40.24 (1) (f) or a lump sum under sub. (4) is selected.
SB326, s. 21 17Section 21. 40.25 (1) (b) of the statutes is amended to read:
SB326,14,518 40.25 (1) (b) If all other requirements for payment of a retirement annuity are
19met and if the retirement annuity in the normal form which could be provided under
20s. 40.23 from all available accumulations and credits, other than accumulations from
21additional contributions and tax-deferred additional contributions, is more than
22$100 and less than $200 monthly for a benefit with an effective date that is on or after
23April 23, 1994, but before the end of the calendar year of 1993 or, for a benefit with

1an effective date in a subsequent calendar year, the monthly amounts applied under
2this paragraph for the previous calendar year increased by the salary index and
3ignoring fractions of the dollar, then any participant may elect to receive, in lieu of
4the annuity, the then present value, including additional contributions and
5tax-deferred additional contributions
, of the annuity in a single sum.
SB326, s. 22 6Section 22 . 40.25 (3m) of the statutes is amended to read:
SB326,14,147 40.25 (3m) A participant's application for a lump sum payment under sub. (1)
8(b) or (2), filed after May 7, 1994, shall be signed by both the participant and the
9participant's spouse, if the participant has been married to that spouse for at least
10one year immediately preceding the date the application is filed. The department
11may promulgate rules that allow for the waiver of the requirements of this subsection
12for a situation in which, by reason of absence or incompetency, the spouse's signature
13may not be obtained. This subsection does not apply to any benefits paid from
14accumulated additional contributions and tax-deferred additional contributions.
SB326, s. 23 15Section 23 . 40.25 (4) of the statutes is amended to read:
SB326,14,2116 40.25 (4) If all the requirements for payment of a retirement annuity or a
17separation benefit are met, except filing of an application, a participant may elect
18that the accumulation from the participant's additional contributions made under
19s. 40.05 (1) (a) 5. and tax-deferred additional contributions made under s. 40.05 (1)
20(a) 5m.
be paid as a lump sum in lieu of an annuity from those additional
21contributions.
Note: Sections 20 to 23 amend provisions relating to lump-sum payments to
clarify that the provisions apply to both categories of additional contributions.
SB326, s. 24 22Section 24 . 40.25 (6) (a) 1. of the statutes is amended to read:
SB326,15,3
140.25 (6) (a) 1. The participating employe must have at least 3 continuous years
2of creditable current service under the fund at the time of application for
3reestablishment of creditable service under this subsection.
Note: This provision is amended to clarify that a participating employe must have
at least three continuous years of creditable current service at the time of application for
purchasing forfeited service.
SB326, s. 25 4Section 25. 40.25 (6) (a) 2. of the statutes is amended to read:
SB326,15,115 40.25 (6) (a) 2. Applications for reestablishment of creditable service must
6include all creditable service that has been forfeited except that the number of years
7which may be reestablished under this subsection may not be greater than the
8creditable service of the participating employe at the date of application, or 10 years,
9whichever is smaller. Creditable service previously purchased under this chapter
10may not be used to determine the maximum amount of service that may be purchased
11under this subsection.
Note: This provision is amended to clarify that the total number of years of
forfeited service that the person can purchase is the lesser of ten years, or a number of
years equal to the current creditable service of the employe at the date of application.
SB326, s. 26 12Section 26. 40.25 (7) (a) 2. of the statutes is amended to read:
SB326,15,1413 40.25 (7) (a) 2. The participant has at least 3 continuous years of creditable
14current service under the fund at the time of application under subd. 1.
Note: This provision is amended to clarify that the participant must have had at
least three continuous years of creditable current service at the time of applying to
purchase creditable service for service as an employe of the federal government or for
service with an employer that was not covered by the Wisconsin Retirement System
during the period in which the service was performed but subsequently became a
participating employer.
SB326, s. 27 15Section 27. 40.25 (7) (a) 3. of the statutes is amended to read:
SB326,16,216 40.25 (7) (a) 3. The number of years of creditable service applied for under this
17paragraph does not exceed the number of years of creditable service that the
18participant has at the date of application or 10 years, whichever is less. Creditable

1service previously purchased under this chapter may not be used to determine the
2maximum amount of service that may be purchased under this subsection.
Note: This clarifies that the number of years of creditable service for service with
the federal government or an employer that previously did not participate in the
Wisconsin Retirement System, that the person can purchase may not exceed the lesser
of ten years or a number of years equal to the current creditable service that the
participant has, of the date of application.
SB326, s. 28 3Section 28 . 40.26 (2) (a) of the statutes is amended to read:
SB326,16,74 40.26 (2) (a) The then present value of any portion of the terminated annuity
5which was originally provided by employe or employer additional contributions or
6tax-deferred additional contributions
shall be credited to the corresponding
7additional contribution account or tax-deferred additional contribution account.
SB326, s. 29 8Section 29 . 40.26 (2) (b) of the statutes, as affected by 1999 Wisconsin Act 11,
9is amended to read:
SB326,16,1810 40.26 (2) (b) The amount of the annuity payments, excluding any portion
11originally provided by additional contributions or tax-deferred additional
12contributions
, which would have been paid under the terminated annuity, if the
13annuity had been a straight life annuity, prior to the participant's normal retirement
14date or prior to the annuity termination date, whichever would first occur, shall be
15credited to a memorandum account which is subject to s. 40.04 (4) (a) 2., 2g. and 2m.
16and (c). If the annuity was recomputed under s. 40.08 (1m) because of a qualified
17domestic relations order, the memorandum account established under this
18paragraph shall be adjusted as provided under s. 40.08 (1m) (f) 2.
Note: The changes made by Section 28 and 29 in provisions on reentry into
covered service, clarify that the provisions apply to both categories of additional
contributions.
SB326, s. 30 19Section 30. 40.28 (1) (a) 1. of the statutes is amended to read:
SB326,17,3
140.28 (1) (a) 1. The amount of the additional contribution accumulations and
2tax-deferred additional contribution accumulations
reserved for a variable annuity
3as of the date the annuity begins;
Note: This change clarifies that the provision, relating to variable benefits, applies
to both categories of additional contributions.
SB326, s. 31 4Section 31. 40.63 (9) (b) of the statutes is amended to read:
SB326,17,225 40.63 (9) (b) If a disability annuitant, prior to attaining the normal retirement
6date for the annuitant's former participant classification, receives earnings or other
7earned income from any source whatsoever for personal services, including services
8performed on a contractual basis, the annuity shall be suspended, except for any
9amount provided by additional contributions or tax-deferred additional
10contributions
, and no payment shall be payable after the first of the month in which
11the earnings or earned income received during any calendar year exceed the amount
12established under sub. (11), except that if payment was being made under sub. (4)
13the annuity may only be suspended if the annuitant is employed in a law
14enforcement or fire fighting capacity and then the suspension shall be effective
15immediately. The suspended amount shall be reinstated on January 1 following the
16date of suspension, or, if earlier, on the first day of the 2nd month following the
17termination of personal services. An amount, which is reinstated in any calendar
18year, other than on January 1 of the calendar year, shall again be suspended for any
19subsequent month in the calendar year following a month in which the disability
20annuitant receives any amount of earnings or earned income for personal services.
21The department may request any earnings or compensation information as it deems
22necessary to implement the provisions of this paragraph and par. (c).
Note: The change clarifies that provisions relating to suspension of disability
annuities of persons who receive earnings from personal services do not apply to either
category of additions contributions.
SB326, s. 32
1Section 32. 40.63 (10) of the statutes is amended to read:
SB326,18,112 40.63 (10) Upon termination of an annuity in accordance with sub. (9), each
3participant whose annuity is so terminated shall, as of the beginning of the calendar
4month following termination, be credited with additional contributions and
5tax-deferred additional contributions
equal to the then present value of the portion
6of the terminated annuity which was originally provided by the corresponding type
7of additional contributions. Except for additional contributions and tax-deferred
8additional contributions
, the retirement account of the participant shall be
9reestablished as if the terminated annuity had never been effective, including
10crediting of interest and of any contributions and creditable service earned during
11the period the annuity was in force.
Note: The change to this provision, relating to disability annuities, clarifies that
it applies to both categories of additional contributions.
SB326, s. 33 12Section 33. 40.73 (1) (b) of the statutes is amended to read:
SB326,18,1813 40.73 (1) (b) Upon the death of an annuitant, in addition to any amounts
14payable by virtue of the annuity option elected by an annuitant, the amount
15determined under par. (a) for contributions made under s. 40.05 (1) subsequent to the
16effective date of the annuity, or additional contributions and tax-deferred additional
17contributions
not applied to provide an annuity, provided the amounts have not been
18previously paid out as a lump sum under s. 40.25.
Note: This provision, relating to death benefits, is amended to provide that it
applies to both categories of additional contributions.
SB326, s. 34 19Section 34. 40.80 (2) (g) of the statutes is created to read:
SB326,18,2220 40.80 (2) (g) Serve as trustee of any deferred compensation plan established
21under this section and hold the assets and income of the plan in trust for the exclusive
22benefit of the employes who participate in the plan and their beneficiaries.

Note: This provision clarifies that the Wisconsin deferred compensation program
is a trust and deferred compensation board members are its trustees.
SB326, s. 35 1Section 35. Initial applicability.
SB326,19,52 (1) The treatment of section 40.25 (6) (a) 1. and 2. and (7) (a) 2. and 3. of the
3statutes first applies to applications for the purchase of creditable service under
4section 40.25 (6) and (7) of the statutes submitted to the department of employe trust
5funds on the effective date of this subsection.
SB326,19,66 (End)
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