Chapter 40

40.25 40.25 Lump sum payments.

40.25(1) (1) 

40.25(1)(a) (a) If all other requirements for payment of a retirement annuity are met and if the retirement annuity in the normal form which could be provided under s. 40.23 is equal to or less than $100 monthly for a benefit with an effective date that is on or after April 23, 1994, but before the end of the calendar year of 1993 or, for a benefit with an effective date in a subsequent calendar year, the monthly amount applied under this paragraph for the previous calendar year increased by the salary index and ignoring fractions of the dollar, the then present value, including additional contributions, of the annuity shall be paid in a single sum instead of as an annuity. The additional contribution accumulations shall not be included in determining whether a single sum should be paid if the optional form provided by s. 40.24 (1) (f) or a lump sum under sub. (4) is selected.

40.25(1)(b) (b) If all other requirements for payment of a retirement annuity are met and if the retirement annuity in the normal form which could be provided under s. 40.23 from all available accumulations and credits, other than accumulations from additional contributions, is more than $100 and less than $200 monthly for a benefit with an effective date that is on or after April 23, 1994, but before the end of the calendar year of 1993 or, for a benefit with an effective date in a subsequent calendar year, the monthly amounts applied under this paragraph for the previous calendar year increased by the salary index and ignoring fractions of the dollar, then any participant may elect to receive, in lieu of the annuity, the then present value, including additional contributions, of the annuity in a single sum.

40.25(2) (2) Subject to sub. (2t), if all requirements for payment of a retirement annuity are met except attainment of age 55 or age 50 for protective occupation participants, a separation benefit may be paid, if the participant’s written application for a separation benefit is received by the department prior to the participant’s 55th birthday or 50th birthday for protective occupation participants, in an amount equal to the additional and employee required contribution accumulations of the participant on the date the application for a separation benefit is approved.

40.25(2t) (2t) A protective occupation participant who is covered by the presumption under s. 891.455 and who applied for a duty disability benefit under s. 40.65 on or after May 12, 1998, may not be paid a separation benefit under sub. (2) during the period in which he or she is receiving the duty disability benefit.

40.25(3) (3) Upon administrative approval of payment of an amount under either sub. (1) or (2), the participant’s account shall be closed and there shall be no further right, interest or claim on the part of the former participant to any benefit from the Wisconsin retirement system except as provided by sub. (5) and s. 40.285 (2) (a). Any former participant who is subsequently employed by any participating employer shall be treated as a new participating employee for all purposes of this chapter. New accumulations of contributions and credits and the computation of any future benefits shall bear no relationship to any accumulations and credits paid as single sums under sub. (1) or (2).

40.25(3m) (3m) A participant’s application for a lump sum payment under sub. (1) (b) or (2), filed after May 7, 1994, shall be signed by both the participant and the participant’s spouse or domestic partner, if the participant has been married to that spouse, or in a domestic partnership with that domestic partner, for at least one year immediately preceding the date the application is filed. The department may promulgate rules that allow for the waiver of the requirements of this subsection for a situation in which, by reason of absence or incompetency, the spouse’s or domestic partner’s signature may not be obtained. This subsection does not apply to any benefits paid from accumulated additional contributions.

40.25(4) (4) If all the requirements for payment of a retirement annuity or a separation benefit are met, except filing of an application, a participant may elect that the accumulation from the participant’s additional contributions made under s. 40.05 (1) (a) 5. be paid as a lump sum in lieu of an annuity from those additional contributions.

40.25(5) (5) 

40.25(5)(a) (a) Rights and creditable service forfeited under sub. (3) or s. 40.04 (4) (a) 3. shall be reestablished if the participant receives the benefit resulting in the forfeiture after being discharged and is subsequently reinstated to a position with the participating employer by court order, arbitration award or compromise settlement as a result of an appeal of the discharge.

40.25(5)(b) (b) The full amount of the benefit paid, plus interest at the assumed rate, unless the department sets a different rate by rule, shall be repaid to the Wisconsin retirement system by the employer of an employee whose rights and creditable service are reestablished under par. (a) within 60 days after the effective date of the employee’s reinstatement. The amount repaid by the employer under this paragraph shall be deducted by the employer from any payment due the employee as a result of the resolution of the appeal or, if that amount is insufficient, the balance shall be deducted from the employee’s earnings except the amount deducted from each earnings payment shall be not less than 10 percent nor more than 25 percent of the earnings payment. If the employee terminates employment the employer shall notify the department of the amount not yet repaid, including any interest due, at the same time it notifies the department of the termination of employment, and the department shall repay to the employer the balance of the amount due from retentions made under s. 40.08 (4). The employer may charge interest at a rate not in excess of the current year’s assumed rate on any amount unpaid at the end of any calendar year after the year of reinstatement.

40.25 History History: 1981 c. 96, 201; 1981 c. 386 ss. 14 to 16, 19; 1983 a. 290; 1989 a. 13, 166; 1991 a. 152, 269; 1993 a. 229, 360, 426; 1995 a. 302; 1997 a. 69, 173, 237; 1999 a. 32; 2003 a. 33; 2007 a. 131; 2009 a. 28.

40.26 40.26 Reentry into service.

40.26(1) (1) Except as provided in sub. (1m) and ss. 40.05 (2) (g) 2. and 40.23 (1) (am), if a participant receiving a retirement annuity, or a disability annuitant who has attained his or her normal retirement date, receives earnings that are subject to s. 40.05 (1) or that would be subject to s. 40.05 (1) except for the exclusion specified in s. 40.22 (2) (L), the annuity shall be suspended, including any amount provided by additional contributions, and no annuity payment shall be payable after the month in which the participant files with the department a written election to be included within the provisions of the Wisconsin retirement system as a participating employee.

40.26(1m) (1m) 

40.26(1m)(a) (a) Except as otherwise provided in sub. (6), if a participant receiving a retirement annuity, or a disability annuitant who has attained his or her normal retirement date, is employed in a position in covered employment in which he or she is expected to work at least two-thirds of what is considered full-time employment by the department, as determined under s. 40.22 (2r), the participant’s annuity shall be suspended and no annuity payment shall be payable until after the participant terminates covered employment.

40.26(1m)(b) (b) Except as otherwise provided in sub. (6), if a participant receiving a retirement annuity, or a disability annuitant who has attained his or her normal retirement date, enters into a contract to provide employee services with a participating employer and he or she is expected to work at least two-thirds of what is considered full-time employment by the department, as determined under s. 40.22 (2r), the participant’s annuity shall be suspended and no annuity payment shall be payable until after the participant no longer provides employee services under the contract.

40.26(2) (2) Upon suspension of an annuity under sub. (1) or (1m), the retirement account of the participant whose annuity is so suspended shall be established on the following basis:

40.26(2)(b) (b) Crediting of amounts under suspended annuity. The amount of the annuity payments which would have been paid under the suspended annuity, from the original annuity suspension date to the subsequent retirement date, shall be credited to a memorandum account.

40.26(2)(c) (c) Establishment of subsequent retirement account. Upon becoming a participating employee, a subsequent retirement account shall be established, which includes crediting of interest and any contributions made and creditable service earned during the subsequent participating employment.

40.26(3) (3) Upon subsequent retirement, the suspended annuity shall be reinstated, including any amounts in a memorandum account under sub. (2) (b). Upon application, the subsequent annuity shall be computed as an original annuity, based upon the participant’s attained age on the effective date of the subsequent annuity, in an optional form as elected by the participant under s. 40.24.

40.26(5) (5) Except as otherwise provided in sub. (5m), if a participant applies for an annuity or lump sum payment during the period in which less than 75 days have elapsed between the termination of employment with a participating employer and becoming a participating employee with any participating employer, all of the following shall apply:

40.26(5)(a) (a) The participant shall not qualify for an annuity under s. 40.23 (1) (a) 1.

40.26(5)(b) (b) The participant may not receive any benefit under this chapter on which the receipt of an annuity is a condition.

40.26(5)(c) (c) Any annuity or lump sum payment made to the participant shall be considered to have been made in error and is subject to s. 40.08 (4). The sum of the payments made in error shall be credited to a memorandum account. The memorandum account is subject to s. 40.04 (4) (a) 2., 2g. and 2m. and (c). If the annuity was recomputed under s. 40.08 (1m), the memorandum account established under this paragraph shall be adjusted pursuant to s. 40.08 (1m) (f) 2. The retirement account of a participant paid in error, and whose annuity was terminated, shall be reestablished as if the terminated annuity had never been effective, including the crediting of interest.

40.26(5m) (5m) During the public health emergency declared on March 12, 2020, by executive order 72, sub. (5) does not apply if at least 15 days have elapsed between the termination of employment with a participating employer and becoming a participating employee if the position for which the participant is hired is a critical position, as determined by the secretary of health services under s. 323.19 (3).

40.26(6) (6) A participant who is hired during the public health emergency declared on March 12, 2020, by executive order 72, may elect to not suspend his or her retirement annuity or disability annuity under sub. (1m) for the duration of the state of emergency if all of the following conditions are met:

40.26(6)(a) (a) At the time the participant terminates his or her employment with a participating employer, the participant does not have an agreement with any participating employer to return to employment or enter into a contract to provide employee services for the employer.

40.26(6)(b) (b) The position for which the participant has been hired is a critical position, as determined under s. 323.19 (3).

40.26 History History: 1981 c. 96; 1983 a. 255, 267, 290, 538; 1987 a. 138, 372; 1989 a. 13, 218; 1991 a. 141, 152, 315; 1993 a. 213; 1995 a. 302; 1999 a. 11; 2013 a. 20; 2015 a. 187; 2019 a. 185.

40.27 40.27 Post-retirement adjustments.

40.27(1) (1) Supplemental benefits. Any person who received a supplemental benefit under s. 41.23, 1979 stats., s. 42.49 (10), 1979 stats., or s. 42.82, 1979 stats., is eligible to continue receiving a supplemental benefit in the amounts determined under s. 41.23, 1979 stats., s. 42.49 (10), 1979 stats., or s. 42.82, 1979 stats. Any portion of a benefit payable under s. 40.19 (4) (f) which was not granted in accordance with the law in effect at the time of the granting shall not be subject to this subsection and shall not be eligible for a supplemental benefit.

40.27(1)(a) (a) Any benefit payable by virtue of this subsection in excess of the amounts payable under other provisions of this chapter shall be paid from and shall be subject to the continuation of the appropriation made by s. 20.515 (1) (a).

40.27(1)(b) (b) Determinations of eligibility and the amount of any payment to be made under this subsection or sub. (1m) or (3) shall be made by the department, and shall be certified by the department for payment in the same manner as for payments from the Wisconsin retirement system.

40.27(1)(c) (c) No payment shall be made under this subsection or sub. (1m) or (3), nor shall any right accrue under this subsection or sub. (1m) or (3), for or after any month following termination of the annuity on which the supplement was based.

40.27(1)(d) (d) Benefits under this subsection and subs. (1m) and (3) shall be payable to the surviving beneficiary, who receives an annuity, of eligible persons.

40.27(1m) (1m) Additional supplemental benefits. Any person who received an annuity for September 1974 from the Wisconsin retirement system shall be eligible to receive all of the following:

40.27(1m)(a) (a) The monthly annuities for which that person was eligible and which that person received for September 1974.

40.27(1m)(b) (b) An amount to be paid from the appropriation account under s. 20.515 (1) (a), subject to the continuation of that appropriation, equal to 4 percent times 5 years times either $200 or the initial monthly annuity, excluding amounts provided from additional deposits, whichever is smaller.

40.27(1m)(c) (c) Any supplement for which that person is eligible under sub. (1) and s. 41.23, 1979 stats., s. 42.49 (10), 1979 stats., or s. 42.82, 1979 stats.

40.27(2) (2) Core annuity reserve surplus distributions. Surpluses in the core annuity reserve established under s. 40.04 (6) and (7) shall be distributed by the board if the distribution will result in at least a 0.5 percent increase in the amount of annuities in force, except as otherwise provided by the department by rule, on recommendation of the actuary, as follows:

40.27(2)(a) (a) The distributions shall be expressed as percentage increases in the amount of the monthly annuity in force, including prior distributions of surpluses but not including any amount paid from funds other than the core annuity reserve fund, preceding the effective date of the distribution. For purposes of this subsection, annuities in force include any disability annuity suspended because the earnings limitation had been exceeded by that annuitant in that year.

40.27(2)(b) (b) Prorated percentages based on the annuity effective date may be applied to annuities with effective dates during the calendar year preceding the effective date of the distribution, as provided by rule, but no other distinction may be made among the various types of annuities payable from the core annuity reserve.

40.27(2)(c) (c) The distributions shall not be offset against any other benefit being received but shall be paid in full, nor shall any other benefit being received be reduced by the distributions. The annuity reserve surplus distributions authorized under this subsection may be revoked by the board in part or in total as to future payments upon recommendation of the actuary if a deficit occurs in the core annuity reserves and such deficit would result in a 0.5 percent or greater decrease in the amount of annuities in force, except as otherwise provided by the department by rule.

40.27(2)(d) (d) Notwithstanding s. 40.03 (2) (i), (7) (d), and (8) (d), the department may promulgate rules under this subsection without the approval of the teachers retirement board and the Wisconsin retirement board.

40.27(3) (3) Additional supplemental benefit adjustment. Beginning on November 1, 1997, any person who is eligible to receive supplemental benefits under subs. (1) and (1m) shall be eligible to receive an additional supplemental benefit, to be paid from the appropriation account under s. 20.515 (1) (a), in an amount equal to the amount by which the supplemental benefits paid under subs. (1) and (1m) are exceeded by the supplemental benefit that the person was eligible to receive on October 1, 1997, from the distribution paid under s. 40.04 (3) (e) 1. c., 1995 stats., as affected by adjustments under sub. (2) made after 1987, less any increase to the person’s base annuity under this chapter that results from any equitable distribution made by the board under the judgment in Wisconsin Retired Teachers Ass’n v. Employee Trust Funds Bd., 207 Wis. 2d 1 (1997), without regard to adjustments to sub. (2).

40.27 History History: 1981 c. 96; 1983 a. 290, 394; 1987 a. 27, 43; 1995 a. 302; 1997 a. 26; 2003 a. 153; 2005 a. 153.

40.27 Cross-reference Cross-reference: See also s. ETF 20.25, Wis. adm. code.

40.28 40.28 Variable benefits.

40.28(1) (1) Any annuity provided to a participant whose accounts include credits segregated for a variable annuity shall consist of a core annuity and a variable annuity.

40.28(1)(a) (a) The initial amount of the variable annuity shall be the amount which can be provided on the basis of the actuarial tables in effect on the effective date of the annuity by the following amounts, if otherwise available:

40.28(1)(a)1. 1. The amount of the additional contribution accumulations reserved for a variable annuity as of the date the annuity begins;

40.28(1)(a)2. 2. The amount equal to 200 percent of employee required contribution accumulations reserved for a variable annuity as of the date the annuity begins. Except, for a county jailer described in s. 40.02 (48) (am) 23., the amount equal to the employee required contributions and the employer required contributions paid for a county jailer under s. 40.05 (2) (a), including interest, reserved for a variable annuity on the date the annuity begins. The amount applicable for a county jailer applies only to a county jailer who becomes a protective occupation participant on or after January 1, 2024, and who is either employed in a county that did not classify county jailers as protective occupation participants on January 1, 2024, or employed in a county that classified county jailers as protective occupation participants on January 1, 2024, and the county subsequently determines to not classify county jailers as protective occupation participants and instead classify county jailers as general participating employees; and

40.28(1)(a)3. 3. The amount equal, as of the date the annuity begins, to the accumulated prior service credits reserved for the participant for a variable annuity within the employer accumulation account, together with the net gain or loss credited to the accumulations.

40.28(1)(b) (b) The initial amount of the core annuity shall be the excess of the total annuity payable, as determined under s. 40.23, over the amount of the variable annuity.

40.28(2) (2) Whenever the balance in the variable annuity reserve, as of December 31 of any year, exceeds or is less than the then present value of all variable annuities in force, determined in accordance with the rate of interest and approved actuarial tables then in effect, by at least 2 percent of the present value of all variable annuities in force, the amount of each variable annuity payment shall be proportionately increased or decreased, disregarding fractional percentages, and effective on a date determined by rule, so as to reduce the variance between the balance of the variable annuity reserve and the present value of variable annuities to less than one percent.

40.28(3) (3) Except as otherwise specifically provided, benefits based on variable accumulations shall be determined on the same basis and paid in the same manner and at the same time as benefits based on accumulations not so segregated insofar as practicable considering the nature of variable annuities.

40.28 History History: 1981 c. 96; 2005 a. 153; 2023 a. 4.

40.28 Cross-reference Cross-reference: See also s. ETF 20.25, Wis. adm. code.

40.285 40.285 Purchase of creditable service.

40.285(1) (1) General requirements.

40.285(1)(a) (a) Deadline for purchase of creditable service. An application to purchase creditable service must be received by the department, on a form provided by the department, from an applicant who is a participating employee on the day that the department receives the application.

40.285(1)(b) (b) Calculation of creditable service. Creditable service purchased under this section shall be calculated in an amount equal to the year and fractions of a year to the nearest one-hundredth of a year.

40.285(1)(c) (c) Use of creditable service. Credit for service purchased under this section is added to a participant’s total creditable service, but may not be treated as service for a particular annual earnings period and does not confer any other rights or benefits.

40.285(1)(d) (d) Applicability of Internal Revenue Code. The crediting of service under this section is subject to any applicable limit or requirement under the Internal Revenue Code.

40.285(2) (2) Conditions for the purchase of different types of creditable service.

40.285(2)(a) (a) Forfeited service.

40.285(2)(a)1. 1. A participating employee may purchase creditable service forfeited in the manner specified in subd. 2., subject to all of the following:

40.285(2)(a)1.a. a. The participating employee must have at least 3 continuous years of creditable service at the time of application to purchase the creditable service.

40.285(2)(a)1.b. b. The number of years that may be purchased may not be greater than the accumulated current creditable service of the participating employee at the date of application, excluding all creditable service purchased under this section or s. 40.02 (17) (b), 1981, 1983, 1985, 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (e), 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (i), 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (k), 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.25 (6), 1981, 1983, 1985, 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., or s. 40.25 (7), 1991, 1993, 1995, 1997, 1999, and 2001 stats., less the number of years of creditable service previously purchased under this paragraph or s. 40.25 (6), 1981, 1983, 1985, 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats.

40.285(2)(a)1.c. c. The participating employee pays to the fund an amount equal to the employee’s statutory contribution on earnings under s. 40.05 (1) (a) for each year of forfeited service to be purchased, based upon the participating employee’s final average earnings, determined as if the employee had retired on the first day of the annual earnings period during which the department receives the application. The amount payable shall be paid in a lump sum payment, except as provided in sub. (4) (b), and no employer may pay any amount payable on behalf of a participating employee.

40.285(2)(a)1.d. d. Upon receipt by the fund of the total payment required under this subdivision, the creditable service meeting the conditions and requirements of this paragraph shall be credited to the account of the participating employee making the payment.

40.285(2)(a)2. 2. Creditable service may be purchased under this paragraph if it was forfeited as a result of any of the following:

40.285(2)(a)2.a. a. Payment of an amount under s. 40.25 (2).

40.285(2)(a)2.b. b. The receipt of a separation or withdrawal benefit under the applicable laws and rules in effect prior to January 1, 1982.

40.285(2)(a)2.c. c. Payment of an amount under s. 40.25 (2m), 1991, 1993, 1995, and 1997 stats.

40.285(2)(a)3. 3. Unless otherwise provided by the department by rule, a participating employee may not purchase creditable service under this paragraph more than 2 times in any calendar year.

40.285(2)(b) (b) Other governmental service.

40.285(2)(b)1. 1. Each participating employee who has performed service as an employee of the federal government or a state or local governmental entity in the United States, other than a participating employer, that is located within or outside of this state, or each participating employee whose creditable service terminates on or after May 4, 1994, and who has performed service as an employee for an employer who was not at the time a participating employer but who subsequently became a participating employer, may receive creditable service for such service if all of the following occur:

40.285(2)(b)1.a. a. The participating employee has at least 3 continuous years of creditable service at the time of application.

40.285(2)(b)1.b. b. The number of years of creditable service applied for under this paragraph does not exceed the number of years of creditable service that the participating employee has at the date of application, excluding all creditable service purchased under this section or s. 40.02 (17) (b), 1981, 1983, 1985, 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (e), 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (i), 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.02 (17) (k), 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., s. 40.25 (6), 1981, 1983, 1985, 1987, 1989, 1991, 1993, 1995, 1997, 1999, and 2001 stats., or s. 40.25 (7), 1991, 1993, 1995, 1997, 1999, and 2001 stats., less the number of years of creditable service previously purchased under this paragraph or s. 40.25 (7), 1991, 1993, 1995, 1997, 1999, and 2001 stats.

40.285(2)(b)1.c. c. At the time of application, the participating employee furnishes evidence of such service that is acceptable to the department.

40.285(2)(b)1.d. d. Except as provided in sub. (4) (b), at the time of application, the participating employee pays to the department a lump sum equal to the present value of the creditable service applied for under this paragraph, in accordance with rates actuarially determined to be sufficient to fund the cost of the increased benefits that will result from granting the creditable service under this paragraph. The department shall by rule establish different rates for different categories of participating employees, based on factors recommended by the actuary.

40.285(2)(b)1.e. e. If the participating employee is applying to receive creditable service for service in the U.S. armed forces or national guard, the participating employee must have been discharged from the U.S. armed forces or national guard under honorable or general conditions.

40.285(2)(b)2. 2. The creditable service granted under this paragraph shall be the same type of creditable service as the type that is granted to participants who are not executive participating employees, elected officials, or protective occupation participants.

40.285(2)(b)3. 3. A participating employee may apply to receive part or all of the creditable service that he or she is eligible to receive under this paragraph.

40.285(2)(b)4. 4. A participating employee may not receive creditable service under this paragraph for service that is used for the purpose of establishing entitlement to, or the amount of, any other benefit to be paid by any federal, state, or local government entity, except for the following:

40.285(2)(b)4.a. a. A disability or OASDHI benefit.