Chapter 40

40.73(1)(b) (b) Upon the death of an annuitant, in addition to any amounts payable by virtue of the annuity option elected by an annuitant, the amount determined under par. (a) for contributions made under s. 40.05 (1) subsequent to the effective date of the annuity, or additional contributions not applied to provide an annuity, provided the amounts have not been previously paid out as a lump sum under s. 40.25.

40.73(1)(c) (c) Upon the death of a participating employee who, prior to death, met the applicable minimum age under s. 40.23 (1) (a) (intro.), if the beneficiary to whom a death benefit is payable is a natural person, or a trust in which the natural person has a beneficial interest, the present value on the day following the date of death of the life annuity to the beneficiary which would have been payable if the participating employee had been eligible to receive a retirement annuity, computed under s. 40.23 or 40.26, beginning on the date of death and had elected to receive the annuity in the form of a joint and survivor annuity providing the same amount of annuity to the surviving beneficiary as the reduced amount payable during the participant’s lifetime. If there is more than one beneficiary the amount of the annuity and its present value will be determined as if the oldest of the beneficiaries were the sole beneficiary. If the death benefit payable to the beneficiary under this paragraph would be less than the amount determined under par. (am) the death benefit shall be payable under par. (am) and this paragraph shall not be applicable to the beneficiary. An annuitant receiving an annuity only under s. 40.24 (1) (f), which annuity was an immediate annuity, shall be deemed a participating employee for purposes of this paragraph only, but the amount payable under s. 40.24 (1) (f) shall not be changed.

40.73(1)(d) (d) Increased, upon the death of a participant who had elected the additional benefit provided by s. 42.81 (14), 1979 stats., and continued making the contributions provided for in s. 42.81 (14), 1979 stats., and was eligible for the benefit on December 15, 1988, by an amount and for a period determined by the actuary and approved by the board as being appropriate to the level of contributions provided for in s. 42.81 (14), 1979 stats., or any lower level of contributions, as determined by the actuary and approved by the board. The board may require that the payment of benefits under an insurance contract be paid in lieu of any benefits provided under this paragraph, but only if the benefits under the insurance contract are at least equal to the benefits that would otherwise have been paid under this paragraph on the date on which the insurance contract went into effect.

40.73(2) (2) 

40.73(2)(a) (a) Upon the death, prior to the expiration of the guarantee period, of an annuitant receiving an annuity which provides a guaranteed number of monthly payments, monthly payments shall be continued until payments have been made for the guaranteed number of months. Any beneficiary under this paragraph may elect at any time to receive the then present value of the annuity, including monthly interest at the assumed benefit rate for each full month between the termination of annuity payments and the month in which the single sum payment is approved, in a single sum.

40.73(2)(b) (b) In lieu of the continuation of monthly payments under par. (a), the then present value of the annuity shall be paid as a death benefit under sub. (1) if:

40.73(2)(b)1. 1. The estate of the annuitant is the beneficiary;

40.73(2)(b)2. 2. No beneficiary of the annuitant survives;

40.73(2)(b)3. 3. The death of the beneficiary occurs after having become entitled to receive payments under par. (a), but prior to the end of the period guaranteed;

40.73(2)(b)4. 4. The amount of the monthly payments to the beneficiary, including any amount payable under s. 40.27, is less than the amount determined under s. 40.25 (1) (a); or

40.73(2)(b)5. 5. At the death of the annuitant the remainder of the period for which payments are guaranteed is less than 12 months.

40.73(3) (3) 

40.73(3)(a) (a) A death benefit may be paid as an annuity for the life of the beneficiary, if the amount of the death benefit is sufficient to provide a beneficiary annuity in the normal form at least equal to the amount determined under s. 40.25 (1) (a) and the beneficiary or the participant has elected to have the death benefit paid as a beneficiary annuity.

40.73(3)(c) (c) Whenever any death benefit is payable in the form of an annuity, the annuity may begin on the day following the date of death of the participant or annuitant if the department has received a copy of the death certificate of the participant or annuitant, and a written application of the beneficiary for the benefit, subject to the same restrictions on effective dates as set forth for retirement annuities.

40.73(3)(d) (d) The amount of any beneficiary annuity shall be that which can be provided from the death benefit, determined in accordance with the actuarial tables in effect on the effective date of the annuity.

40.73(3)(e) (e) Any beneficiary who is eligible to receive a beneficiary annuity may elect to receive the annuity in any of the optional annuity forms provided for retirement annuities, other than as an annuity payable over the joint life expectancies of the beneficiary and another person. The number of guaranteed monthly payments available to a beneficiary may not exceed the life expectancy of the beneficiary.

40.73(3)(f) (f) Any beneficiary between ages 18 and 21 or the legal or natural guardian of a minor beneficiary may, in lieu of a life annuity, elect that the death benefit be paid in the form of a temporary life annuity, beginning on the day following the date of death of the participant or annuitant and ending with the monthly payment immediately prior to the beneficiary’s 21st birthday, and a final payment, payable one month after the termination of the temporary annuity, in the amounts specified in the application, provided the amounts can be provided from the death benefit, on the basis of the actuarial tables in effect on the date of initial approval of the annuity. A beneficiary, prior to the final payment, may, if the amount of the final payment is sufficient to provide an immediate beneficiary annuity in the normal form of at least an amount equal to the amount determined under s. 40.25 (1) (a) monthly, elect to receive in lieu of the final payment an annuity commencing on the day following the date of termination of the temporary annuity, determined on the basis of the actuarial tables in effect on the date of initial approval of the annuity.

40.73 History History: 1981 c. 96; 1983 a. 141, 290; 1987 a. 309; 1989 a. 110, 166; 1995 a. 302, 414; 1997 a. 58; 1999 a. 11, 12; 2005 a. 154; 2007 a. 96, 131; 2013 a. 20; 2023 a. 4.

40.73 Annotation Whatever effect the Marital Property Act, ch. 766, may have with respect to property rights between spouses, it has no effect on the Board’s determination of a beneficiary under ch. 40. Jackson v. Employee Trust Funds Board, 230 Wis. 2d 677, 602 N.W.2d 543 (Ct. App. 1999), 98-3063.

40.73 Annotation The board’s consistent interpretation of “Mr. & Mrs.” beneficiary designations as relating to the identity of the beneficiaries on the date of the designation. was reasonable. Jackson v. Employee Trust Funds Board, 230 Wis. 2d 677, 602 N.W.2d 543 (Ct. App. 1999), 98-3063.

40.73 Annotation Nothing in s. 40.73 creates an entitlement in the beneficiary to the annuity-value single cash sum benefit as of the date of death even though the value of the single cash sum benefit is calculated as of the date of death. A beneficiary does not acquire a property interest in a single cash sum death benefit under sub. (1) (c) until the beneficiary applies for a death benefit as required by s. 40.71 (3). Fazio v. Department of Employee Trust Funds, 2006 WI 7, 287 Wis. 2d 106, 708 N.W.2d 326, 04-0064.

40.74 40.74 Beneficiaries.

40.74(1) (1) Payment to 2 or more persons as joint beneficiaries shall be equal unless the participant, employee or annuitant has designated otherwise in the written designation of beneficiary on file with the department.

40.74(2) (2) A beneficiary of a deceased participant, annuitant, alternate payee, beneficiary, or employee may waive absolutely and without right of reconsideration or recovery all or part of any benefit payable under this chapter. The beneficiary shall then be determined as if the waiving beneficiary had died prior to the decedent except that if the person was a beneficiary under group 2 under s. 40.02 (8) (a) 2., payment shall be made as if at least one child had survived the participant, alternate payee, beneficiary, employee, or annuitant. Unless the department receives the beneficiary’s written request to cancel the waiver before the date on which it would otherwise become effective, the waiver shall be effective 30 days after it is received by the department or the date specified in the waiver, if earlier. The waiver may be cancelled by the beneficiary in writing before the effective date. A waiver received after the effective date on which a beneficiary has commenced a monthly annuity under s. 40.73 (2) or (3) shall apply to monthly payments payable after the effective date of the waiver. Payment shall be subject to the restrictions specified in s. 40.73 (2) (b).

40.74(4) (4) If a participant, employee or annuitant fully terminates all coverage and closes all accounts to which a written beneficiary designation applies, the designation does not apply if the individual again becomes a participant, employee or annuitant.

40.74(5) (5) A designation of a testamentary trust as beneficiary shall satisfy the requirement of s. 40.02 (8) (a) 1. that a person or trust be specifically named in a written designation of beneficiary whether the will establishing the trust is written before or after the designation of beneficiary is received by the department. If, however, a designation specified the date or otherwise identified a specific will, the designation shall not apply if the will is not the last will and testament of the participant, employee or annuitant.

40.74(6) (6) Any potential primary beneficiary under s. 40.02 (8) who cannot be located by reasonable efforts within 12 months after the later of the date of death of the participant or the date on which the department determines the person, trust, or estate initially became a potential primary beneficiary may be treated as a beneficiary that predeceased the participant and all other potential beneficiaries.

40.74(7) (7) A trust that does not exist on the date of the participant’s death or an estate not opened or reopened within 12 months after the department determines the estate initially became a potential primary beneficiary under s. 40.02 (8) may be treated as a beneficiary that predeceased the participant and all other potential beneficiaries.

40.74 History History: 1981 c. 96; 1987 a. 309; 2005 a. 151; 2007 a. 131.

subch. VII of ch. 40 SUBCHAPTER VII

DEFERRED COMPENSATION PLANS

40.80 40.80 State deferred compensation plan.

40.80(1) (1) The deferred compensation board shall select and contract with deferred compensation plan providers to be used by state agencies for providing deferred compensation plans to state employees.

40.80(2) (2) The deferred compensation board shall:

40.80(2)(a) (a) Determine the requirements for and the qualifications of the deferred compensation plan providers.

40.80(2)(b) (b) Approve the terms and conditions of the proposed contracts for administrative and investment services.

40.80(2)(c) (c) Determine the procedure for the selection of the deferred compensation plan providers.

40.80(2)(d) (d) Approve the terms and conditions of model salary reduction agreements which shall be used by each state agency.

40.80(2)(e) (e) Require as a condition of the contractual agreements entered into under this section that approved deferred compensation plan providers shall provide service to state agencies only as approved by the deferred compensation board.

40.80(2)(f) (f) Require as a condition of the contractual agreements entered into under this section that the deferred compensation plan providers shall reimburse the department, to be credited to the administrative account of the public employee trust fund in s. 40.04 (2), for any costs incurred directly or indirectly by the department in soliciting, evaluating, monitoring and servicing deferred compensation plans.

40.80(2)(g) (g) Serve as trustee of any deferred compensation plan established under this section, hold the assets and income of the plan in trust for the exclusive benefit of the employees who participate in the plan and their beneficiaries, and maintain the plan as an eligible deferred compensation plan, as defined in section 457 (b) of the Internal Revenue Code, and as a governmental plan for eligible employers, as defined in section 457 (e) (1) (A) of the Internal Revenue Code.

40.80(2g) (2g) The deferred compensation board may accept timely appeals of determinations made by the department affecting any right or benefit under any deferred compensation plan provided for under this section.

40.80(2m) (2m) The deferred compensation board shall promulgate rules establishing procedures, requirements and qualifications for offering deferred compensation plans to state employees in addition to the deferred compensation plans offered by deferred compensation providers selected and contracted with under sub. (2).

40.80(2r) (2r) 

40.80(2r)(a) (a) In this subsection, “domestic relations order” means a judgment, decree, or order issued by a court pursuant to a domestic relations law of any state or territory of the United States that does all of the following:

40.80(2r)(a)1. 1. Relates to a marriage that terminated after December 1, 2001.

40.80(2r)(a)2. 2. Assigns all or part of a participant’s accumulated assets held in a deferred compensation plan under this subchapter to a spouse, former spouse, child, or other dependent to satisfy a family support or marital property obligation.

40.80(2r)(a)3. 3. Names the deferred compensation plan established under this subchapter and is submitted to the deferred compensation plan provider selected under sub. (1).

40.80(2r)(a)4. 4. Satisfies the requirements established by the deferred compensation board under par. (c).

40.80(2r)(c) (c) The deferred compensation board shall prescribe the requirements for a domestic relations order and the administrative procedure for dividing an account in the deferred compensation plan established under this subchapter. The requirements shall be included in any deferred compensation plan and trust document approved by the deferred compensation board.

40.80(2r)(d) (d) The deferred compensation board and any member or agent thereof, the department and any employee or agent thereof, and the deferred compensation plan provider selected under sub. (1) are immune from civil liability for all of the following:

40.80(2r)(d)1. 1. Any act or omission while performing official duties relating to implementing a domestic relations order under this subsection.

40.80(2r)(d)2. 2. Any act or omission of a participant with respect to the participant’s account under a deferred compensation plan, including specifically any deferral or investment election or distribution, during the period that begins on the day on which the participant’s marriage is terminated by a court and ends on the day on which his or her account is divided pursuant to a domestic relations order.

40.80(2t) (2t) The deferred compensation board may require a deferred compensation plan under this subchapter, upon election by a participant who is an eligible retired public safety officer, to allow for the deduction of insurance premiums for health or long-term care insurance coverage from an amount distributed from a participant’s account and for the payment of the premiums directly to an insurer.

40.80(3) (3) Any action taken under this section shall apply to employees covered by a collective bargaining agreement under subch. V of ch. 111.

40.80 History History: 1981 c. 187; 1989 a. 13, 31, 336; 1991 a. 152; 1995 a. 27; 2003 a. 160; 2005 a. 150; 2007 a. 131, 226; 2009 a. 28; 2011 a. 10; 2013 a. 20; 2017 a. 59.

40.80 Cross-reference Cross-reference: See also s. ETF 70.01, Wis. adm. code.

40.80 Annotation Sub. (2m) requires the establishment of rules for alternative or supplemental deferred compensation plans, but does not require that any such plans be offered. 79 Atty. Gen. 168.

40.81 40.81 Deferred compensation plan authorization.

40.81(1) (1) An employer other than the state or the University of Wisconsin Hospitals and Clinics Authority may provide for its employees the deferred compensation plan established under s. 40.80. Any employer, including this state and the University of Wisconsin Hospitals and Clinics Authority, who makes the plan under s. 40.80 available to any of its employees shall make it available to all of its employees under procedures established by the department under this subchapter.

40.81(2) (2) Any local government employer, or 2 or more employers acting jointly, may also elect under procedures established by the employer or employers to contract directly with a deferred compensation plan provider to administer a deferred compensation plan or to manage any compensation deferred under the plan and may also provide a plan under section 403 (b) of the Internal Revenue Code under procedures established by the local government employer or employers.

40.81(3) (3) Any action taken under this section shall apply to employees covered by a collective bargaining agreement under subch. IV or V of ch. 111.

40.81 History History: 1981 c. 187, 391; 1983 a. 290; 1991 a. 39; 1995 a. 27; 2009 a. 28; 2011 a. 10; 2013 a. 20.

40.82 40.82 General provisions.

40.82(1) (1) Any part of gross compensation deferred under a deferred compensation plan established under this subchapter which would have been treated as current earnings or wages if paid immediately to the employee shall be treated as current earnings or wages for purposes of the federal social security act or any retirement, pension, or group insurance benefit plan provided by the department.

40.82(2) (2) Compensation that is withheld under a deferred compensation plan contract between an employer and an employee may be invested by the employer or a person other than the employer who is authorized by contract to administer the funds. The employer may determine the types of investments in which the deferred compensation funds may be invested. The deferred compensation funds may be invested and reinvested in the same manner provided for investments under s. 881.01.

40.82(3) (3) Each deferred compensation plan under this subchapter shall be maintained and administered as an eligible deferred compensation plan, as defined in section 457 of the Internal Revenue Code, and shall meet the requirements of section 401 (a) (37) of the Internal Revenue Code.

40.82(4) (4) 

40.82(4)(a) (a) Beginning on December 31, 2008, a participating employee who is receiving differential wage payments shall be considered as having terminated covered employment during any period in which the person is performing service in the uniformed services, as defined in 38 USC 4303, on active duty for a period of more than 30 days, for purposes of receiving a distribution under section 457 (d) (1) (A) (ii) of the Internal Revenue Code.

40.82(4)(b) (b) A person who is described under par. (a) and who elects to receive a distribution may not subsequently make an elective deferral or employee contribution into a deferred compensation plan during the 6-month period following the distribution.

40.82 History History: 1981 c. 187; 2003 a. 264; 2011 a. 116.

40.82 Annotation Section 40.08 (1) does not permit the division of a deferred compensation account pursuant to a qualified domestic relations order. Preiss v. Preiss, 2000 WI App 185, 238 Wis. 2d 368, 617 N.W.2d 514, 99-3261.

subch. VIII of ch. 40 SUBCHAPTER VIII

EMPLOYEE-FUNDED REIMBURSEMENT
ACCOUNTS

40.85 40.85 Employee-funded reimbursement account plan.

40.85(1) (1) The board shall select and contract with employee-funded reimbursement account plan providers to be used by state agencies.

40.85(2) (2) The board shall do all of the following:

40.85(2)(a) (a) Determine the requirements for and the qualifications of the employee-funded reimbursement account plan providers.

40.85(2)(b) (b) Approve the terms and conditions of the proposed contracts for administrative and related services.

40.85(2)(c) (c) Determine the procedure for the selection of the employee-funded reimbursement account plan providers in accordance with s. 16.705.

40.85(2)(d) (d) Approve the terms and conditions of model agreements which shall be used by each state employee to establish an employee-funded reimbursement account.

40.85(2)(e) (e) Require as a condition of the contractual agreements entered into under this section that approved employee-funded reimbursement account plan providers may provide service to state agencies only as approved by the board.

40.85(2)(f) (f) Require as a condition of the contracts entered into under sub. (1) that the employee-funded reimbursement account plan providers reimburse the department, to be credited to the administrative account of the public employee trust fund under s. 40.04 (2) (c), for administrative costs incurred by the department in connection with employee-funded reimbursement account plans.

40.85(2)(g) (g) Deposit into the appropriate accounts established under s. 40.04 (9m) (a) that part of an employee’s gross compensation that the employee wants placed in each employee-funded reimbursement account.

40.85 History History: 1987 a. 399; 1989 a. 14; 2001 a. 16.

40.86 40.86 Covered expenses. An employee-funded reimbursement account plan may provide reimbursement to an employee for only the following expenses that are actually incurred and paid by an employee and that the board determines are consistent with the applicable requirements of the Internal Revenue Code:

40.86(1) (1) Expenses authorized under section 125 of the Internal Revenue Code, which may include any of the following:

40.86(1)(a) (a) Dependent care assistance for a person who is dependent on the employee.

40.86(1)(b) (b) The employee’s share of premiums for any group insurance benefit plan provided by the department under this chapter, or any other group insurance benefit plan approved under s. 20.921 (1) (a) 3., except premiums for income continuation benefits under s. 40.62.