Section 40.23. Retirement annuities.

 

(1)  

(a) Except as provided in par. (am) , any participant who has attained age 55, and any protective occupation participant who has attained age 50, on or before the annuity effective date shall be entitled to a retirement annuity in accordance with the actuarial tables in effect on the effective date of the annuity if the participant submits an application for a retirement annuity on a form furnished by the department and all of the following apply:

1. The participant is separated, regardless of cause, and continues to be separated until the annuity effective date, from all employment meeting the qualifications for inclusion specified in s. 40.22 for any participating employer.

2. The participant is not on authorized leave of absence from any participating employer.

(am)

1. In this paragraph “ part-time service" is service in a position normally requiring actual performance of duty during fewer than 1,044 hours per calendar year.

2. Any participant who has attained age 55 and who is a participant because of employment other than part-time service as an elected official and who is also a participating employee because of part-time service as an elected official may, after termination of all covered employment other than service as a part-time elected official, waive further participation under the fund for his or her current, and any future, part-time service as an elected official. Any election under this paragraph is irrevocable and is effective beginning the day after the date of election. Notwithstanding par. (a) , any participant who elects under this paragraph may receive a retirement annuity for all service under the fund credited to the participant to the date he or she elects. The date a participant elects under this paragraph is deemed to be the date of separation from the last participating employer by which that participant was employed.

3. No participant who elects under subd. 2. may have his or her annuity suspended under s. 40.26 (1) because of earnings received for any part-time services as an elected official.

(b) Except as provided in par. (bm) , all retirement annuities shall be effective on the day following, or on the first day of a month following, the date of separation from the last participating employer by which the participant was employed, as specified by the participant in the written application for the annuity. However, the date shall not be more than 90 days prior to the date of receipt of the application by the department. The participant may specify that additional contribution accumulations shall not be applied to provide an annuity until a subsequent application is filed for an annuity to be paid from the additional contribution accumulations. The subsequent application shall be made as specified under sub. (4) or the department shall automatically distribute the accumulated additional contribution accumulations as a lump sum.

(bm) If an application by a participant age 55 or over, or by a protective occupation participant age 50 or over, for long-term disability insurance benefits is disapproved under rules promulgated by the department, the date which would have been the effective date for the insurance benefits shall be the retirement annuity effective date if requested by the applicant within 60 days of the disapproval or, if the disapproval is appealed, within 60 days of the final disposition of the appeal.

(c) No application specifying an annuity effective date later than 60 days after the date of its receipt by the department shall be accepted, unless the participant files the application on or after January 1 of the calendar year in which the participant attains the age of 69.5 years specifying an annuity effective date that begins before April 1 of the calendar year following the calendar year in which the participant attains the age of 70.5 years.

(d) Notwithstanding par. (c) , an application for an annuity to be effective on the day following termination of employment may be filed prior to the employee's anticipated termination date. The anticipated termination date shall be stated in the application and the department shall not make an annuity payment until the employee has terminated.

(e) Whenever it is determined that an annuity effective date is incorrect, the annuity effective date shall be corrected and any related computational and payment adjustments shall be made.

(f) Any participating employee may be retired by the employer after attainment of the employee's normal retirement date, under policies established or agreed to by the employer, except:

1. As prohibited by federal law or by s. 111.33 .

2. Each elected official's and each sheriff's employment shall be continued to the end of the official's or sheriff's term of office and to the end of each subsequent term of office to which elected.

4. Any employer may, in a collective bargaining agreement, limit its right to require retirement.

(2)  Except as provided in s. 40.19 (2) , this subsection applies only to participants who are not participating employees after March 9, 1984. The retirement annuity in the normal form shall be an annuity payable for the life of the annuitant with a guarantee of 60 monthly payments. Except as provided in sub. (3) , the initial monthly amount of the normal form annuity shall be the amount which, when added to the OASDHI benefit, equals 85 percent of the participant's final average earnings plus the amount which can be provided under pars. (a) and (c) and adjusted under pars. (d) and (e) or, if less, shall be in the monthly amount equal to the sum of the amounts determined under pars. (a) , (b) and (c) as modified by pars. (d) and (e) and in accordance with the actuarial tables in effect on the annuity effective date.

(a) The annuity which can be provided from a sum equal to 200 percent of the excess accruing after June 30, 1966, for teacher participants, or December 31, 1965, for all other participants, of the participant's required contribution accumulation reserved for a variable annuity over the amount to which the contributions would have accumulated if not so reserved. If the participant's required contribution accumulation reserved for a variable annuity is less than the amount to which the contributions would have accumulated if not so reserved, the annuity shall be reduced by the amount which could be provided by a sum equal to 200 percent of the deficiency.

(b) A monthly annuity in the normal form computed on the basis of the participant's final average earnings and creditable service, if the annuity becomes effective on or after the normal retirement date of the participant, determined by multiplying the participant's final average earnings by the participant's creditable service and the following applicable percentage:

1. For each participant for creditable service of a type not otherwise specified in this paragraph, 1.3 percent.

2. For each participant for creditable service as an elected official and for executive service, as defined under s. 40.02 (31) , 1985 stats., 1.8 percent.

3. For each participant, subject to Titles II and XVIII of the federal social security act, for service as a protective occupation participant, 1.8 percent.

4. For each participant not subject to Titles II and XVIII of the federal social security act, for service as a protective occupation participant, 2.3 percent.

(c) The amount, if any, which can be provided by accumulated employee and employer additional contributions credited to the participant's account.

(d) If the annuity effective date is prior to the normal retirement date of the participant, the annuity amount computed under par. (b) shall be reduced, as recommended by the actuary and approved by the board, by a percentage or percentages of the amount of the annuity for each month and any major portion of a month between the effective date of the annuity and the participant's normal retirement date.

(e) The amount of the annuity computed under par. (b) shall be reduced by the amounts, determined under s. 42.244 (4) (b) and (c) , 1979 stats., s. 42.246 (1) (e) , 1979 stats., s. 42.77 (3) (b) and (c) , 1979 stats., and s. 42.79 (1) (e) , 1979 stats., for those teacher participants specified in those sections.

(2m)  The following provisions apply only to participants who are participating employees after March 9, 1984:

(a) The retirement annuity in the normal form is a straight life annuity payable for the life of the annuitant.

(b) Except as provided in s. 40.26 , subject to the limitations under section 415 of the Internal Revenue Code, the initial amount of the normal form annuity shall be an amount equal to 70 percent, or 65 percent for participants whose formula rate is determined under par. (e) 3. or 85 percent for participants whose formula rate is determined under par. (e) 4. , of the participant's final average earnings plus the amount which can be provided under pars. (c) and (d) or, if less, shall be in the monthly amount equal to the sum of the amounts determined under pars. (c) , (d) and (e) as modified by par. (f) and in accordance with the actuarial tables in effect on the annuity effective date. If the participant has creditable service under both par. (e) 4. and another category under par. (e) , the percent applied under this paragraph shall be determined by multiplying the percent that each type of creditable service is of the participant's total creditable service by 85 percent and 65 percent or 70 percent, respectively, and adding the results, except that the resulting benefit may not be less than the amount of the normal form annuity that could be paid based solely on the creditable service under par. (e) 4.

(c) The annuity which can be provided from a sum equal to 200 percent of the excess accruing after June 30, 1966, for teacher participants, or December 31, 1965, for all other participants, of the participant's required contribution accumulation reserved for a variable annuity over the amount to which the contributions would have accumulated at the core annuity division effective rate if not so reserved. If the participant's required contribution accumulation reserved for a variable annuity is less than the amount to which the contributions would have accumulated at the core annuity division effective rate if not reserved, the annuity shall be reduced by the amount which could be provided by a sum equal to 200 percent of the deficiency.

(d) The amount, if any, which can be provided by accumulated employee and employer additional contributions credited to the participant's account.

(e) A monthly annuity in the normal form computed on the basis of the participant's final average earnings and creditable service, if the annuity becomes effective on or after the normal retirement date of the participant, determined by multiplying the participant's final average earnings by the participant's creditable service and the following applicable percentage:

1. For each participant for creditable service of a type not otherwise specified in this paragraph that is performed before January 1, 2000, 1.765 percent; for such creditable service that is performed on or after January 1, 2000, 1.6 percent.

2. For each participant for creditable service as an elected official or as an executive participating employee that is performed before January 1, 2000, 2.165 percent; for such creditable service that is performed on or after January 1, 2000, but before June 29, 2011, 2 percent; and for such creditable service that is performed on or after June 29, 2011, 1.6 percent.

3. For each participant subject to titles II and XVIII of the federal Social Security Act, for service as a protective occupation participant that is performed before January 1, 2000, 2.165 percent; for such creditable service that is performed on or after January 1, 2000, 2 percent.

4. For each participant not subject to titles II and XVIII of the federal Social Security Act, for service as a protective occupation participant that is performed before January 1, 2000, 2.665 percent; for such creditable service that is performed on or after January 1, 2000, 2.5 percent.

(em)

1. For the purpose of determining the applicable percentage rate under par. (e) , all of the following shall apply:

a. Any creditable service forfeited by a participating employee before January 1, 2000, and which is subsequently reestablished by the participating employee under s. 40.285 (2) (a) , shall be considered to have been performed before January 1, 2000.

b. Any creditable service received under s. 40.285 (2) (b) , which is based on service performed before January 1, 2000, shall be considered to have been performed before January 1, 2000.

c. Any creditable military service received under s. 40.02 (15) (c) , which is based on creditable service performed before January 1, 2000, shall be considered to have been performed before January 1, 2000.

2. This paragraph shall only apply to participants who are participating employees on or after January 1, 2000.

(er) For a participant who initially becomes a participating employee on or after July 1, 2011, the following shall apply:

5. If the participant has less than 5 years of creditable service, the annuity amount under par. (e) shall be 0.

(f)

1. If the annuity effective date is before the normal retirement date of the participant, the annuity amount computed under par. (e) shall be reduced by 0.4 percent for each full month, and for each partial month including at least 15 days, before the participant's normal retirement date, except as provided in subds. 2. to 4.

2. For a participant who terminates covered employment on or after July 1, 1990, and whose annuity is computed under par. (e) 1. or 2. , the 0.4 percent reduction of the annuity amount under subd. 1. shall be reduced by subtracting from the 0.4 percent an amount equal to 0.001111 percent for each month of creditable service, except as provided in subds. 3. and 4.

3. Subdivision 2. shall not apply to those months specified in subd. 1. that precede the date on which the participant attains the age of 57.

4. The resulting percentage by which the annuity amount is reduced under subd. 2. may not be less than zero.

(fm) Notwithstanding s. 40.02 (17) (intro.) , for purposes of determining creditable service under par. (f) 2. , a participant's amount of creditable service in any annual earnings period shall be treated as the amount of creditable service that a teacher would earn for that annual earnings period. To be eligible for the treatment provided by this paragraph, the participant must have earned only a partial year of creditable service in at least 5 of the 10 annual earnings periods immediately preceding the annual earnings period in which the participant terminated covered employment. This paragraph does not apply to service credited under s. 40.02 (15) .

(g) The employer may pay to the department part or all of the costs of the actuarial reduction applicable to a participating employee under par. (f) , and the actuarial reduction for the amount paid may not be applied under par. (f) , if all of the following conditions are met:

1. The employer has elected to pay part or all of the costs of the required actuarial reduction, the action is effective after June 30, 1990, and the employer has not taken any action to rescind the election.

2. The participant voluntarily terminates employment with the employer after June 30, 1990, and after the employer elects under subd. 1.

3. The employer pays to the department the difference, as determined by the department, between the actuarial cost of the annuity which would have been paid if the employer had not elected under subd. 1. and the actuarial cost of the annuity payable. The amount so paid shall be credited as employer current service contributions under s. 40.05 (2) (a) , and shall be included with the first payment made under s. 40.05 (2) after the department notifies the employer of the amount due.

(3)  

(a) Except as provided in par. (b) , the initial monthly amount of any retirement annuity in the normal form shall not be less than the money purchase annuity which can be provided by applying the sum of the participant's accumulated additional and required contributions, including interest credited to the accumulations, plus an amount from the employer accumulation reserve equal to the participant's accumulated required contributions, less any accumulated contributions to purchase other governmental service under s. 40.25 (7) , 2001 stats., or s. 40.285 (2) (b) to fund the annuity in accordance with the actuarial tables in effect on the annuity effective date.

(b) For a participant who initially becomes a participating employee on or after July 1, 2011, the following shall apply for purposes of calculating a money purchase annuity under par. (a) :

5. If the participant has less than 5 years of creditable service, the amount from the employer accumulation reserve shall equal 0.

(4)  

(a) Subject to all requirements under section 401 (a) (9) of the Internal Revenue Code and federal regulations applicable to that section, which relate to a governmental plan, as defined in section 414 (d) of the Internal Revenue Code, the department shall distribute to the participant the entire amount that is credited to the account of a participant under the Wisconsin retirement system no later than the required beginning date, unless the department distributes this amount as an annuity or in more than one payment. If the department distributes this amount as an annuity or in more than one payment, the department shall begin the distribution no later than the required beginning date.

(b) In the calendar year immediately preceding the calendar year of a participant's required beginning date, if the department distributes the amount that is credited to the account of a participant under the Wisconsin retirement system in a form other than as a lump sum payment, the department, subject to all requirements under the Internal Revenue Code, shall calculate the distribution to the participant according to one of the following:

1. The life of a participant or, if the annuity is in the form of a joint and survivor annuity, the joint lives of the participant and the named survivor.

2. For an annuity authorized under s. 40.24 (1) (f) , a term certain not to exceed the life expectancy of the participant or, if the annuity is in the form of a joint and survivor annuity, the joint life expectancies of the participant and the named survivor.

(c) If a participant during the calendar year in which he or she attains 69.5 years, or the alternate payee during the calendar year in which the participant attains 69.5 years, does not apply before December 31 in that year for a distribution of the amount that is credited to the account of a participant under the Wisconsin retirement system, the department shall begin, effective the following January 1, an automatic distribution to the participant or alternate payee in the form of an annuity specified under s. 40.24 (1) (c) or as determined by the department by rule. If the department makes an automatic distribution under this paragraph, the beneficiary designation filed with the department before the date on which the department begins the automatic distribution is no longer applicable under ss. 40.71 and 40.73 . Unless the participant or alternate payee files a subsequent beneficiary designation with the department after the date on which the department begins the automatic distribution, the department shall pay any death benefit as provided under s. 40.02 (8) (a) 2.

(d) If a participant dies after the department begins to distribute the amount that is credited to the account of a participant under the Wisconsin retirement system, but before the entire amount in the account has been distributed, the department shall distribute the remaining portion of the account at least as rapidly as is provided in the manner of distribution selected by the participant. If the beneficiary does not apply to the department to continue the distribution, within a period specified by rule, the department shall pay the remaining distribution to the beneficiary as a lump sum.

(e)

1. Subject to subds. 2. to 4. and section 401 (a) (9) of the Internal Revenue Code, if a participant dies before the distribution of benefits has commenced and the participant's beneficiary is the spouse or domestic partner, the department shall begin the distribution within 5 years after the date of the participant's death.

2. Subject to section 401 (a) (9) of the Internal Revenue Code, if the spouse or domestic partner files a subsequent beneficiary designation with the department, the payment of the distribution may be deferred until the January 1 of the year in which the participant would have attained the age of 70.5 years.

3. Subject to section 401 (a) (9) of the Internal Revenue Code, if the spouse or domestic partner does not apply for a distribution, the distribution shall begin as an automatic distribution as provided under subd. 1. or under par. (c) , whichever distribution date is earlier.

4. Subject to section 401 (a) (9) of the Internal Revenue Code, if the spouse or domestic partner dies, but has designated a new beneficiary, the birth date of the spouse or domestic partner shall be used for the purposes of determining the required beginning date.

5. The department shall specify by rule all procedures relating to an automatic distribution to the spouse or domestic partner. These rules shall comply with the Internal Revenue Code.

(f) If a participant dies before the distribution of benefits has commenced and the beneficiary cannot delay the automatic payment of benefits under section 401 (a) (9) of the Internal Revenue Code, the beneficiary shall do one of the following:

1. Elect a lump sum payment by December 31 of the 5th calendar year after the date of the participant's death.

2. Elect an annuity benefit, not to exceed his or her life expectancy, by December 31 of the calendar year after the date of the participant's death.

(g) Nothing in this subsection shall be construed to create any benefit, lump sum payment option or form of annuity not otherwise expressly provided for in this subchapter.

(h) Death and disability benefits provided under this chapter are limited by the incidental benefit rule under section 401 (a) (9) (G) of the Internal Revenue Code and applicable federal regulations and guidance adopted under the Internal Revenue Code.

(i) Distributions of benefits shall conform to a reasonable and good faith interpretation of section 401 (a) (9) of the Internal Revenue Code.

(j) Pursuant to a qualified domestic relations order, the department may establish separate benefits for a participant and an alternate payee.

1981 c. 96 , 386 ; 1983 a. 141 , 267 , 391 ; 1987 a. 309 , 372 ; 1987 a. 403 s. 256 ; 1989 a. 13 ; 1989 a. 56 s. 259 ; 1991 a. 152 ; 1995 a. 225 , 302 , 414 ; 1997 a. 35 , 69 ; 1999 a. 11 ; 2003 a. 33 ; 2005 a. 153 , 154 ; 2007 a. 96 ; 2009 a. 28 ; 2011 a. 10 , 32 ; 2013 a. 20 ; 2015 a. 187 . Cross-reference: See also ch. ETF 20 , Wis. adm. code.