Chapter ETF 10

ETF 10.12(3) (3) Reports. The department shall provide, at least quarterly, each separate retirement system a report showing all transactions in its account during the preceding quarter and the current value of the system’s investment.

ETF 10.12(4) (4) Withdrawals.

ETF 10.12(4)(a) (a) Requests for withdrawal of funds shall be on a form prescribed by and in accordance with instructions issued by the department.

ETF 10.12(4)(b) (b) The separate retirement system shall provide the secretary no less than 21 days advance notice of any withdrawal.

ETF 10.12(4)(c) (c) Withdrawals by a separate retirement system shall be limited in any calendar month to one withdrawal paid on the last working day of the month of the greater of:

ETF 10.12(4)(c)1. 1. 5% of the system’s balance on deposit or as was last calculated by the department,

ETF 10.12(4)(c)2. 2. $2 million, or

ETF 10.12(4)(c)3. 3. Such other amount as the secretary, after consulting with respect to each withdrawal with the executive director of the state of Wisconsin investment board, determines may be withdrawn without necessitating the premature liquidation of any investment or imprudently reducing cash holdings of the trust fund or otherwise causing actual harm to the participants of the Wisconsin retirement system who have a beneficial interest in the trust fund and its earnings.

ETF 10.12(4)(d) (d) For investment valuation purposes, withdrawals shall be treated as if effective at the close of the last calendar day of the month.

ETF 10.12(4)(e) (e) If a separate retirement system’s balance on deposit drops below $2 million, that system’s investment shall be refunded and the account closed.

ETF 10.12(5) (5) Participating employers eligible.

ETF 10.12(5)(a) (a) “Separate retirement system” for purpose of this section and s. 40.03 (1) (n) and (2) (q), Stats., means a pension benefit plan which is all of the following:

ETF 10.12(5)(a)1. 1. Established by the state or a political subdivision of the state which is also a participating employer subject to the provisions of the Wisconsin retirement system under s. 40.21, Stats.

ETF 10.12(5)(a)2. 2. A governmental plan as defined by 26 USC 414 (d) and 29 USC 1003 (32).

ETF 10.12(5)(a)3. 3. Qualified for federal tax purposes under the applicable provisions of the internal revenue code.

ETF 10.12(5)(a)4. 4. Maintained and administered for the exclusive benefit of the employees of that employer and their beneficiaries.

ETF 10.12(5)(b) (b) Any separate retirement system that fails to certify upon the department’s request, and at least annually, that it continues to meet the criteria of par. (a), and any separate retirement system that the department determines does not meet the criteria of par. (a), shall be compelled to withdraw its entire investment as rapidly as permitted under sub. (4).

ETF 10.12(6) (6) Termination of program. The employee trust funds board or the secretary of the department may close the investment option under s. 40.03 (1) (n), Stats., to any or all separate retirement systems and compel withdrawal of investments under sub. (4) if the board or the secretary determines that the separate retirement system investment interferes with the duty to manage, administer, invest and otherwise deal with the public employee trust fund solely for the benefit of the participants in the benefits plans under ch. 40, Stats., and their beneficiaries as provided in that chapter.

ETF 10.12 Note Note: This rule requires a form which is available at no charge. The form can be obtained by writing to: department of employee trust funds, P.O. Box 7931, Madison, WI 53707-7931, or by calling: [phone] or toll free at [phone].

ETF 10.12 History History: Cr. Register, October, 1985, No. 358, eff. 11-1-85; am. (2) (e) and (f), Register, December, 1990, No. 420, eff. 1-1-91; am. (4) (b) and (c) and r. (4) (d), Register, June, 1998, No. 510, eff. 7-1-98; CR 05-114: renum. (intro.) to be (1g) and am., renum. (1) (a), (b) and (c) to be (1r) (a), (b) and (c), r. (1) (d), cr. (1r) (d), (4) (d), (5) and (6), r. and recr. (2), am. (4) (c) (intro.) Register September 2006 No. 609, eff. 10-1-06; CR 09-057: am. (1r) (b), (d), (2) (a), (b) and (e) Register May 2010 No. 653, eff. 6-1-10.

ETF 10.15 ETF 10.15 Annuity reserves. The amounts credited to and the liabilities of the reserves for annuities granted shall be determined by the actuary on the basis of separate male-female experience with adjustments as necessary to reflect actual and projected experience of participants under the retirement system and not on the basis of the combined male-female experience used in individual benefit computations.

ETF 10.15 History History: Renum. from ETF 7.07 and am. Register, December, 1983, No. 336, eff. 1-1-84.

ETF 10.20 ETF 10.20 Approval of group insurance plans for state employees.

ETF 10.20(1) (1) In addition to group insurance plans specifically provided in ch. 40, Stats., and pursuant to s. 20.921 (1) (a) 3., Stats., the group insurance board shall approve or disapprove group insurance plans for which payment of premiums is made through payroll deductions.

ETF 10.20(1)(a) (a) The group insurance board shall determine, after notice and hearing, whether the group insurance plan fulfills an important coverage need through consideration of, but not limited to, the following factors:

ETF 10.20(1)(a)1. 1. Number of employees affected.

ETF 10.20(1)(a)2. 2. Amount and variation in premiums.

ETF 10.20(1)(a)3. 3. Adequacy of other approved coverage providing the same or similar protection.

ETF 10.20(1)(a)4. 4. Duration of contract.

ETF 10.20(1)(a)5. 5. History, performance and acceptance of the plan by the employees.

ETF 10.20(1)(a)6. 6. New or additional coverage provided.

ETF 10.20(1)(b) (b) The group insurance board shall determine whether the plan is adequately supervised through consideration of, but not limited to, the following factors:

ETF 10.20(1)(b)1. 1. Continuing representation of employee participants with professional insurance guidance.

ETF 10.20(1)(b)2. 2. Maintenance of adequate statistical records relating to retentions, experience, premiums, participants and other data necessary for actuarial computations.

ETF 10.20(1)(b)3. 3. Procedures for negotiating coverage.

ETF 10.20(2) (2) Notwithstanding approval granted to any plan under sub. (1), the group insurance board may subsequently withdraw its approval, after notice and hearing, upon finding that the plan does not meet the criteria established by sub. (1) (a). Withdrawal of approval shall be effective, at the discretion of the group insurance board, on the first day of the month subsequent to issuance of a finding that the plan does not meet the criteria pursuant to sub. (1) (a) or on the anniversary date of the contract under which the plan is provided.

ETF 10.20 History History: Renum. from ch. Grp 26 and am. Register, December, 1983, No. 336, eff. 1-1-84.

ETF 10.25 ETF 10.25 Core retirement investment trust participation in the variable retirement investment trust. The core retirement investment trust may invest in the variable retirement investment trust subject to the following:

ETF 10.25(1) (1) Combined stock fund. A combined stock fund shall be established and shall operate as a separate account within the variable retirement investment trust as follows:

ETF 10.25(1)(a) (a) All investments in common and preferred stock by the core retirement investment trust and the variable retirement investment trust shall be made through the combined stock fund account.

ETF 10.25(1)(b) (b) The trusts shall transfer funds to be invested in common and preferred stocks to the combined stock fund account. In exchange, the core retirement investment trust and variable retirement investment trust shall receive shares in the combined stock fund.

ETF 10.25(1)(c) (c) Shares in the combined stock fund may be purchased only as of the first day of each month.

ETF 10.25(1)(d) (d) All shares purchased in the combined stock fund shall, at the time of purchase, have a book value of one dollar per share.

ETF 10.25(2) (2) Investment of combined stocks. All funds received in the combined stock fund from the core retirement investment trust and the variable retirement investment trust shall be used to invest in common or preferred stocks or the state investment fund.

ETF 10.25(3) (3) Earnings distributions. Earnings shall be distributed from the combined stock fund to the core retirement investment trust and the variable retirement investment trust according to the following:

ETF 10.25(3)(a) (a) The book value of all investments in the combined stock fund shall be adjusted to current market value as of the last day of each month. The appraisal gain or loss shall be recognized in the month incurred.

ETF 10.25(3)(b) (b) As of the last day of each month the combined stock fund shall distribute to the core retirement investment trust and the variable retirement investment trust all income recorded for that month including interest received, dividends received, gain or loss realized on the sale of investments and the unrealized gain or loss recognized on the adjustment of investment book value to market value. Following these distributions the unit value of shares in the combined stock fund shall be one dollar.

ETF 10.25(3)(c) (c) For any month, the distribution of income between the core retirement investment trust and the variable retirement investment trust shall be based on the ratio of the relative number of combined stock fund shares held by each trust as of the first day of that month to the total number of combined stock fund shares outstanding.

ETF 10.25(3)(d) (d) Monthly distributions from the combined stock fund to the core retirement investment trust resulting from gains or losses realized on the sale of investments or unrealized appraisal gains or losses shall be transferred to the transaction amortization account. Distributions resulting from all other sources shall be recognized as current income to the core retirement investment trust in the month of distribution.

ETF 10.25(3)(e) (e) All distribution to the variable retirement investment trust shall be treated as current income in the month of distribution.

ETF 10.25(4) (4) Withdrawals. The core retirement investment trust or the variable retirement investment trust may withdraw funds from the combined stock fund as of the first day of any month. The withdrawal shall be accomplished by selling combined stock fund shares to the combined stock fund. Withdrawals made after the first day of any month shall be deemed to have been made on the first day of that month for purposes of distributing income at the end of that month.

ETF 10.25 History History: Cr. Register, October, 1985, No. 358, eff. 11-1-85; r. and recr. (1), r. (2) and (4) (a), renum. (3), (4) (intro.), (b) to (f) and (5) to be (2) to (4), Register, December, 1990, No. 420, eff. 1-1-91; CR 09-057: am. (intro.), (1) (a), (b), (2), (3) (intro.), (b), (c), (d) and (4) Register May 2010 No. 653, eff. 6-1-10.

ETF 10.30 ETF 10.30 Variable division participation.

ETF 10.30(1) (1) Purpose. The purpose of this section is to interpret s. 40.04 (7), Stats. This section establishes the procedures for electing to participate, participating and electing to terminate participation in the variable division of the trust fund.

ETF 10.30(1m) (1m) Definitions. In this section, “new participant” means any of the following:

ETF 10.30(1m)(a) (a) A person initially qualifying as a participant as defined by s. 40.02 (45), Stats., who has never previously been a participant in the Wisconsin retirement system or Wisconsin retirement fund or a member of the state teachers retirement system or Milwaukee teacher retirement fund.

ETF 10.30(1m)(b) (b) A person who was previously a participant but whose Wisconsin retirement system account was closed because of payment of a lump sum benefit under s. 40.25, Stats., and who returns to covered employment for the first time since the account closure. The term “new participant” does not include a person whose closed account is reestablished under s. 40.25 (5), Stats.

ETF 10.30(2) (2) Eligibility for and effective dates of participation in the variable division.

ETF 10.30(2)(a) (a) An election to participate, or terminate participation, in the variable division shall be made on a form provided by the department. Except as provided in sub. (3), an election to participate in the variable division shall become effective for future contributions on the January 1 following receipt of the form by the department.

ETF 10.30(2)(b) (b) Participants who elected to terminate participation in the variable division effective before December 31, 1999 may elect to participate in the variable division as provided in this section.

ETF 10.30(2)(c) (c) Except as provided in par. (d), pursuant to s. 40.04 (7) (b), Stats., participants who elected to terminate participation in the variable division effective on or after December 31, 1999 may not re-elect to participate in the variable division.

ETF 10.30(2)(d) (d) A participant who elects to terminate participation in the variable division effective on or after December 31, 1999 may re-elect to participate in the variable division only if the participant ceases to be a participant by closing the participant’s account through taking a benefit under s. 40.25, Stats., and subsequently becoming a new participating employee.

ETF 10.30(2)(e) (e) An election to participate in the variable division received by the department from a participant who is not a participating employee, and who ceased to be a participating employee before January 1, 2001, shall become effective on the January 1 on or after the date on which the participant again becomes a participating employee.

ETF 10.30(2)(f) (f) An election to participate in the variable division received by the department after the participant’s date of death is invalid.

ETF 10.30 Note Note: The form for electing to participate in the variable division, “Election to Participate in the Variable Trust Fund,” ET-2356, 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: [phone] or toll free at [phone]. The form is also available on the department’s website: etf.wi.gov.

ETF 10.30(3) (3) Variable division participation for new participants.

ETF 10.30(3)(a) (a) An election to participate in the variable division filed by a person who becomes a new participant on or after January 1, 2001 shall become effective as follows:

ETF 10.30(3)(a)1. 1. Retroactive to the date on which the person becomes a participant, providing that the department receives the form no later than 30 calendar days after the date on which the person became a participant.

ETF 10.30(3)(a)2. 2. Elections to participate in the variable division that are received by the department more than 30 calendar days after the date on which the person becomes a participant shall become effective on the January 1 following receipt of the form by the department.

ETF 10.30(3)(b) (b) The department shall accept elections to participate in the variable division up to 90 calendar days before the date on which a participant becomes a participating employee. Elections received by the department within this 90-day period or within the next 30 days after the person becomes a participating employee shall become effective on the date on which the person becomes a participating employee. Elections to participate in the variable division received by the department more than 90 calendar days before the date on which a person becomes a participant are invalid.

ETF 10.30(4) (4) Retroactive contributions.

ETF 10.30(4)(a) (a) Retroactive interest credited to contributions for late-paid earnings shall be credited at the core effective rates as provided in s. 40.06 (5), Stats.

ETF 10.30(4)(b) (b) Late-paid and other retroactive contributions shall be deposited in the core and variable trust accounts according to the participant’s variable participation status at the time the contributions are deposited, regardless of the participant’s variable participation status in the annual earnings period to which the contributions may be attributed for other purposes.

ETF 10.30(5) (5) Terminating participation in the variable division.

ETF 10.30(5)(a) (a) A participant may elect to terminate participation in the variable division and transfer the participant’s variable division contributions to the core division on one of the following bases:

ETF 10.30(5)(a)1. 1. For future contributions only: Effective as of the December 31 after the date on which the department receives an election to terminate participation in the variable division, all future contributions shall be deposited in the core division.

ETF 10.30(5)(a)2. 2. An unconditional basis: Effective as of the December 31 after the date on which the department receives an election to terminate participation in the variable division, all future contributions shall be deposited in the core division and all variable contributions and accrued gain or loss shall be transferred to the core division.

ETF 10.30(5)(a)3. 3. A conditional basis:

ETF 10.30(5)(a)3.a. a. For annuities, effective on the first January 1 after the department receives the election when the condition under s. 40.04 (7) (a) 1., Stats., is satisfied.

ETF 10.30(5)(a)3.b. b. For all accounts from which an annuity is not being paid, effective on the first January 1 after the department receives the election when the condition under s. 40.04 (7) (a) 2., Stats., is satisfied. As of the first January 1 after the Department receives the election, all future contributions shall be deposited in the core division. As of the first January 1 when the condition under s. 40.04 (7) (a) 2., Stats., is satisfied, all variable contributions and accrued gain or loss shall be transferred to the core division.

ETF 10.30 Note Example 1: A participant, alternate payee, named survivor or beneficiary who is receiving an annuity from the Wisconsin retirement system, and who also has an account from voluntary additional contributions from which no annuity is being paid, is not an annuitant under s. 40.04 (7) (a) with respect to the additional contributions.

ETF 10.30 Note Example 2: An alternate payee who was also a participating employee in the Wisconsin retirement system and who is receiving an annuity only from the alternate payee account is not an annuitant with respect to the separate account established as a participating employee.

ETF 10.30 Note Note: The form for electing to terminate participation in the variable division, “Election to Cancel Variable Participation,” ET-2313, 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: [phone] or toll free at [phone]. The form also is available on the department’s website: etf.wi.gov.

ETF 10.30(5)(b) (b) Except as provided in par. (c), an election to terminate participation in the variable division may be rescinded if the department receives a written request to rescind the election from an alternate payee, beneficiary, named survivor, or participant as defined in s. 40.02 (2m), (8), (41r) and (45), Stats., before the December 31 following the date on which the election to terminate participation in the variable division was received.

ETF 10.30 Note Note: No specific form exists for rescinding an election to terminate participation in the variable division. The written request must be dated and must make clear your intent and by including words to the effect of “I want to rescind my election to terminate participation in the variable division.” Participants may send a letter or fax with this request to the following address: department of employee trust funds, P.O. Box 7931, Madison, WI 53707-7931 or fax [phone].

ETF 10.30(5)(c) (c) An election to terminate participation in the variable division received within 30 days after the date on which the person became a participant may be rescinded if the department receives the participant’s written request to rescind the election no later than 30 days after the date on which the person became a new variable division participant as provided in sub. (3).

ETF 10.30(5)(d) (d) A rescinded election to terminate participation in the variable division shall be treated as if the election never existed.

ETF 10.30(5)(e) (e) When the department receives an election to terminate participation in the variable division more than 30 calendar days after the date on which a person became a new variable division participant as defined in sub. (3), the participant shall not be eligible to re-elect to participate in the variable division without meeting the requirements of sub. (2) (d).

ETF 10.30(5)(f) (f) For an account or annuity that includes additional contribution, when an election to terminate participation in the variable division pursuant to s. 40.04 (7) (a) 1. or 2., Stats., is made by an alternate payee, beneficiary, named survivor, or participant as defined in s. 40.02 (2m), (8), (41r) and (45), Stats., the determination of whether the variable contributions and accrued gain or loss shall be transferred to the core division shall be based on an evaluation of the combined total of the required and additional contributions and shall be effective as prescribed in this section.