LRB-3939/1
RAC:cjs:rs
2011 - 2012 LEGISLATURE
January 31, 2012 - Introduced by Senators Wanggaard, Moulton and Holperin,
cosponsored by Representatives Petryk, Wynn, Krug, Spanbauer, Kooyenga,
Endsley, Rivard, Ballweg
and A. Ott. Referred to Committee on Economic
Development and Veterans and Military Affairs.
SB413,1,5 1An Act to amend 40.02 (15) (b), 40.02 (15) (c) 3., 40.02 (22) (a), 40.02 (22) (e) and
240.02 (26) (intro.); and to create 40.02 (15) (d), 40.02 (15) (e), 40.02 (20m), 40.82
3(3) and 40.82 (4) of the statutes; relating to: calculation of creditable military
4service and treatment of differential wage payments for benefits purposes for
5participants in the Wisconsin Retirement System.
Analysis by the Legislative Reference Bureau
Under current law, some participating employees in the Wisconsin Retirement
System (WRS) receive differential wage payments from their employers while they
are on active duty in the uniformed services for any period of more than 30 days.
Currently, federal law requires that differential wage payments be treated as
covered earnings for fringe benefit purposes. This bill requires that under the WRS
differential wage payments must be treated as earnings for WRS purposes and that
individuals who receive differential wage payments must be treated as regular
employees for purposes of the WRS.
In addition, the bill provides that, for purposes of death or disability benefits,
a WRS participant who dies or becomes disabled while performing military service
is treated as though the person was a participating employee in the WRS. This new
provision of law applies retroactively to a participant who died or became disabled
on or after January 1, 2007.
Because this bill relates to public employee retirement or pensions, it may be
referred to the Joint Survey Committee on Retirement Systems for a report to be
printed as an appendix to the bill.

For further information see the state and local fiscal estimate, which will be
printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB413, s. 1 1Section 1. 40.02 (15) (b) of the statutes is amended to read:
SB413,2,42 40.02 (15) (b) The creditable military service under par. (a) shall be in the same
3type employment category, as set forth in s. 40.23 (2m) (e), as in which the participant
4was receiving employed immediately prior to entry into the U.S. armed forces.
SB413, s. 2 5Section 2. 40.02 (15) (c) 3. of the statutes is amended to read:
SB413,2,126 40.02 (15) (c) 3. Creditable military service under this paragraph shall be
7allocated at the time of retirement in proportion to the amount of the participant's
8creditable service for each of the types of creditable service employment categories
9as
set forth in s. 40.23 (2m) (e), unless a higher benefit would result from the prorated
10allocation of creditable military service based on the amount of the participant's
11creditable service for each of the types of creditable service
on the date the
12participant attains the greater of 5, 10, 15 or 20 years of creditable service.
SB413, s. 3 13Section 3. 40.02 (15) (d) of the statutes is created to read:
SB413,2,1714 40.02 (15) (d) Contributions, benefits, and service credit with respect to
15qualified military service, as defined in 38 USC 43, taken on or after December 12,
161994, are governed by section 414 (u) of the Internal Revenue Code and the federal
17Uniformed Services Employment and Reemployment Rights Act of 1994.
SB413, s. 4 18Section 4. 40.02 (15) (e) of the statutes is created to read:
SB413,3,319 40.02 (15) (e) 1. Effective with deaths occurring on or after January 1, 2007,
20while a participant is performing qualified military service, as defined in 38 USC 43,
21death benefits shall be calculated as though the participant was a participating

1employee subject to par. (d) during the period or periods of military service between
2the date that the participant left participating employment to enter active military
3service and the date of death.
SB413,3,124 2. Effective with disabilities occurring on or after January 1, 2007, if a
5participant becomes disabled while performing qualified military service, as defined
6in 38 USC 43, to the extent permitted by section 414 (u) (8) of the Internal Revenue
7Code, and is unable to return to participating employment due to the disability
8incurred while performing such military service, for benefit calculation purposes the
9participant shall be treated as though the participant was a participating employee
10subject to par. (d) during the period or periods of military service between the date
11that the participant left participating employment to enter active military service
12and the date of discharge from military service.
SB413,3,1913 3. Beginning January 1, 2009, an individual receiving differential wage
14payments while the individual is performing qualified military service, as defined in
1538 USC 43, from an employer shall be treated as employed by that employer, and the
16differential wage payment shall be treated as compensation for purposes of applying
17the limits on annual additions under section 415 (c) of the Internal Revenue Code.
18This provision shall be applied to all similarly situated individuals in a reasonably
19equivalent manner.
SB413, s. 5 20Section 5. 40.02 (20m) of the statutes is created to read:
SB413,3,2221 40.02 (20m) "Differential wage payment" means any payment, including
22specifically a payment under s. 230.315, that satisfies all of the following:
SB413,4,223 (a) The payment is made by an employer to a participating employee with
24respect to any period during which the participating employee is performing service

1in the uniformed services, as defined in 38 USC 4303, while on active duty for a
2period of more than 30 days.
SB413,4,53 (b) The payment represents all or part of the earnings the participating
4employee would have received from the employer if the participating employee were
5performing services for the employer.
SB413, s. 6 6Section 6. 40.02 (22) (a) of the statutes is amended to read:
SB413,4,207 40.02 (22) (a) Except as provided in pars. (b) to (f) and s. 40.63 (1) (c), means
8the gross amount paid to an employee by a participating employer as salary or wages,
9including amounts provided through deferred compensation or tax shelter
10agreements, for personal services rendered to or for an employer, or which would
11have been available for payment to the employee except for the employee's election
12that part or all of the amount be used for other purposes; any amount considered
13earnings under sub. (15) (d) and (e):
and also includes the money value, as
14determined by the employer, of any board, lodging, fuel, laundry and other
15allowances provided for the employee in lieu of money. For purposes of this
16paragraph, the gross amount shall be determined prior to deductions for taxes,
17insurance premiums, retirement contributions or deposits, charitable contributions
18or similar amounts and shall be considered received as of the date when the earnings
19would normally be payable by the employer. For reporting and computation
20purposes, fractions of a dollar shall be disregarded in determining annual earnings.
SB413, s. 7 21Section 7. 40.02 (22) (e) of the statutes is amended to read:
SB413,5,822 40.02 (22) (e) For an employee serving in a position covered under and meeting
23the requirements of 38 USC 4301, et. seq., except
purposes of the Wisconsin
24retirement system, but not
for OASDHI purposes, means compensation determined
25as required under 38 USC 4318 (b) (3) and regulations adopted thereunder with

1respect to a person who has actually returned to employment under section 414 (u)
2(9) (A) of the Internal Revenue Code, 38 USC 4312, or any predecessor veteran's
3reemployment rights provision under federal law
, provided contributions and
4premiums on the compensation are paid as required under s. 40.05. If the participant
5does not pay any portion of the employee contributions that the participant would
6have paid if the participant had not left employment to enter military service, the
7value of the benefits payable from the participant's account shall be reduced by the
8value of the unpaid contributions plus interest as provided by rule.
SB413, s. 8 9Section 8. 40.02 (26) (intro.) of the statutes is amended to read:
SB413,5,1910 40.02 (26) (intro.) "Employee" means any person who receives earnings as
11payment for personal services rendered for the benefit of any employer including
12officers of the employer. An employee is deemed to have separated from the service
13of an employer at the end of the day on which the employee last performed services
14for the employer, or, if later, the day on which the employee-employer relationship
15is terminated because of the expiration or termination of leave without pay, sick
16leave, vacation or other leave of absence. Except as provided in s. 40.82 (4), a
17participant receiving a differential wage payment or earnings, contributions, or
18service credit under sub. (15) (e) is considered an employee of the employer making
19the payment.
A person shall not be considered an employee if a person:
SB413, s. 9 20Section 9. 40.82 (3) of the statutes is created to read:
SB413,5,2421 40.82 (3) Each deferred compensation plan under this subchapter shall be
22maintained and administered as an eligible deferred compensation plan, as defined
23in section 457 of the Internal Revenue Code, and shall meet the requirements of
24section 401 (a) (37) of the Internal Revenue Code.
SB413, s. 10 25Section 10. 40.82 (4) of the statutes is created to read:
SB413,6,6
140.82 (4) (a) Beginning on December 31, 2008, a participating employee who
2is receiving differential wage payments shall be considered as having terminated
3covered employment during any period in which the person is performing service in
4the uniformed services, as defined in 38 USC 4303, on active duty for a period of more
5than 30 days, for purposes of receiving a distribution under section 457 (d) (1) (A) (ii)
6of the Internal Revenue Code.
SB413,6,107 (b) A person who is described under par. (a) and who elects to receive a
8distribution may not subsequently make an elective deferral or employee
9contribution into a deferred compensation plan during the 6-month period following
10the distribution.
SB413, s. 11 11Section 11. Nonstatutory provisions.
SB413,6,1612 (1) Death benefits. The department of employee trust funds shall review and
13recalculate, as necessary, death benefits under section 40.73 of the statutes paid to
14any participant who died between January 1, 2007, and the effective date of this
15subsection, while performing qualified military service, as defined in section 414 (u)
16(5) of the Internal Revenue Code.
SB413, s. 12 17Section 12. Initial applicability.
SB413,6,2018 (1) Death and disability benefits. The treatment of section 40.02 (15) (e) 1. and
192. of the statutes applies retroactively to a participant in the Wisconsin retirement
20system who died or became disabled on or after January 1, 2007.
SB413,6,2321 (2) Creditable military service. The treatment of section 40.02 (15) (c) 3. of the
22statutes first applies to individuals who are participating employees in the
23Wisconsin retirement system on the effective date of this subsection.
SB413,6,2424 (End)
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