40.05(2)(g)

(g)

40.05

40.05 Contributions and premiums.

40.05(1)

(1) Employee retirement contributions. For Wisconsin retirement system purposes employee contributions on earnings for service credited as creditable service shall be subject to the annual compensation limits under 26 USC 401 (a) (17) for a participating employee who first becomes a participating employee on or after January 1, 1996, and shall be made as follows:

40.05(1)(a)

(a) Subject to para. (b):

40.05(1)(a)1.

1. For each participating employee not otherwise specified, a percentage of each payment of earnings equal to one-half of the total actuarially required contribution rate, as approved by the board under § 40.03 (1)(e).

40.05(1)(a)2.

2. For each participating employee whose formula rate is determined under s. 40.23 (2m) (e) 2., a percentage of each payment of earnings equal to one-half of the total actuarially required contribution rate, as approved by the board under § 40.03 (1)(e).

40.05(1)(a)3.

3. For each participating employee whose formula rate is determined under s. 40.23 (2m) (e) 3., the percentage of earnings paid by a participating employee under subd. 1.

40.05(1)(a)4.

4. For each participating employee whose formula rate is determined under s. 40.23 (2m) (e) 4., the percentage of earnings paid by a participating employee under subd. 1.

40.05(1)(b)

(b)

40.05(1)(b)2.

2.

40.05(1)(a)5.

5. Additional contributions may be made by any participant by deduction from earnings or otherwise or may be provided on behalf of any participant in any calendar year in which the participant has earnings, subject to any limitations imposed on contributions by the internal revenue code, applicable regulations adopted under the internal revenue code and rules of the department.

40.05(1)(a)6.

6. Under the rules promulgated under § 40.03 (2)(r), additional contributions, other than the first $5,000 of contributions, or a beneficiary’s prorated share thereof, that are attributable to a death benefit paid under § 40.73, may be made to the core annuity division by any participant by rollover contribution of a payment or distribution from a pension or annuity qualified under section 401 of the Internal Revenue Code, subject to any limitations imposed on contributions by the Internal Revenue Code, applicable regulations adopted under the Internal Revenue Code, and rules of the department.

40.05(1)(b)1.

1. Except as otherwise provided in a collective bargaining agreement entered into under subch. IV or V of ch. 111 and except as provided in subd. 2., an employer may not pay, on behalf of a participating employee, any of the contributions required by para. (a). The contributions required by para. (a) shall be made by a reduction in salary and, for tax purposes, shall be considered employer contributions under section 414 (h) (2) of the Internal Revenue Code. A participating employee may not elect to have contributions required by para. (a) paid directly to the employee or make a cash or deferred election with respect to the contributions.

40.05(2)(ar)

(ar) Participating employers of employees subject to § 40.65 shall contribute an additional percentage or percentages of those employees’ earnings based on the experience rates determined to be appropriate by the board with the advice of the actuary.

40.05(2)(bg)

(bg) Contributions of amounts under para. (b) may be made in advance to reduce an employer’s existing unfunded prior service liability.

40.05(2)(bm)

(bm) Contributions under para. (b) for each category of employee shall be made until full payment of that employer’s unfunded prior service liability for all categories is made.

40.05(4)(a)

(a)

40.05(1)(b)2.a.

a. A municipal employer shall pay, on behalf of a nonrepresented law enforcement or fire fighting managerial employee or a nonrepresented managerial employee described in s. 111.70 (1) (mm) 2., who was initially employed by the municipal employer before July 1, 2011, the same contributions required by para. (a) that are paid by the municipal employer for represented law enforcement or fire fighting personnel or personnel described in s. 111.70 (1) (mm) 2. who were initially employed by the municipal employer before July 1, 2011.

40.05(1)(b)2.b.

b. An employer shall pay, on behalf of a nonrepresented managerial employee in a position described under s. 40.02 (48) (am) 7. or 8., who was initially employed by the state before July 1, 2011, in a position described under s. 40.02 (48) (am) 7. or 8. the same contributions required by para. (a) that are paid by the employer for represented employees in positions described under s. 40.02 (48) (am) 7. or 8. who were initially employed by the state before July 1, 2011.

40.05(2)

(2) Employer retirement contributions. For Wisconsin retirement system purposes and subject to the annual compensation limits under 26 USC 401 (a) (17) for a participating employee who first becomes a participating employee on or after January 1, 1996:

40.05(2)(a)

(a) Each participating employer shall make contributions for current service determined as a percentage of the earnings of each participating employee, determined as though all employees of all participating employers were employees of a single employer, but with a separate percentage rate determined for the employee occupational categories specified under § 40.23 (2m). A separate percentage shall also be determined for subcategories within each category determined by the department to be necessary for equity among employers.

40.05(2)(am)

(am) The percentage of earnings under para. (a) shall be determined on the basis of the information available at the time the determinations are made and on the assumptions the actuary recommends and the board approves by dividing the amount determined by subtracting from the then present value of all future benefits to be paid or purchased from the employer accumulation reserve on behalf of the then participants the amount then credited to the reserve for the benefit of the members and the present value of future unfunded prior service liability contributions of the employers under para. (b) by the present value of the prospective future compensation of all participants.

40.05(2)(f)4.

4. The amount of the allocations to the respective employers shall be certified by the department to each employer.

40.05(1)(b)2.c.

c. A municipal employer shall pay, on behalf of a represented law enforcement or fire fighting employee or employee described in s. 111.70 (1) (mm) 2., who was initially employed by the municipal employer before July 1, 2011, and who on or after July 1, 2011, became employed in a nonrepresented law enforcement or fire fighting managerial position or nonrepresented managerial position described in s. 111.70 (1) (mm) 2. with the same municipal employer, or a successor municipal employer in the event of a combined department that is created on or after July 1, 2011, the same contributions required by para. (a) that are paid by the employer for represented law enforcement or fire fighting personnel or personnel described in s. 111.70 (1) (mm) 2. who were initially employed by a municipal employer before July 1, 2011.

40.05(2)(b)

(b) Contributions shall be made by each participating employer for unfunded prior service liability in a percentage of the earnings of each participating employee. A separate percentage rate shall be determined for the employee occupational categories under § 40.23 (2m) as of the employer’s effective date of participation. The rates shall be sufficient to amortize as a level percent of payroll over a period of 30 years from the later of that date or January 1, 1986, the unfunded prior service liability for the categories of employees of each employer determined under s. 40.05 (2) (b), 1981 stats., increased to reflect any creditable prior service granted on or after January 1, 1986, increased to reflect the effect of 1983 Wisconsin Act 141, increased at the end of each calendar year after January 1, 1986, by interest at the assumed rate on the unpaid balance at the end of the year and adjusted under pars. (bu), (bv) and (bw).

40.05(2)(br)

(br) The contribution under para. (b) by an employer in any calendar year before full payment of the unfunded prior service liability determined under para. (bm) may not be less than the dollar amount determined to be necessary in the first calendar year of the amortization schedule established by para. (b).

40.05(2)(bt)

(bt) The department may reallocate prior service liability from one employer to another and adjust as necessary the contribution rates established under para. (b) to reflect transfers of responsibilities and employees among different employers.

40.05(2)(bu)

(bu) The employer contribution rate determined under para. (b) for each employer shall be adjusted, if necessary, to reflect the added prior service liability of paying additional joint and survivor death benefits to beneficiaries of participating employees as a result of 1997 Wisconsin Act 58 and that rate shall be sufficient to amortize the unfunded prior service liability of the employers over the remainder of the 40-year amortization period under s. 40.05 (2) (b), 2005 stats.

40.05(2)(bv)

(bv) The employer contribution rate determined under para. (b) for participating employees who served in the U.S. maritime service shall be adjusted to reflect the cost of granting creditable service under s. 40.02 (15) (a) 7. and that rate shall be sufficient to amortize the unfunded prior service liability of the employers over the remainder of the 40-year amortization period under s. 40.05 (2) (b), 2005 stats.

40.05(2)(bw)

(bw) The employer contribution rate determined under para. (b) for the University of Wisconsin System shall be adjusted to reflect the cost of granting creditable service under § 40.285 (2)(e) and that rate shall be sufficient to amortize the unfunded prior service liability of the employers over the remainder of the 40-year amortization period under s. 40.05 (2) (b), 2005 stats.

40.05(2)(bz)

(bz) The employer contribution rate determined under para. (b) for the department of administration shall be adjusted to reflect the cost of granting creditable service under § 40.02 (17)(gm) and that rate shall be sufficient to amortize the unfunded prior service liability of the department of administration over the remainder of the 40-year amortization period under s. 40.05 (2) (b), 2005 stats.

40.05(2)(c)

(c) The percentage rates determined under this subsection shall become effective as of the beginning of the calendar year to which they are applicable and shall remain in effect during the calendar year, except that the secretary, upon the written certification of the actuary, may change any percentage determined under para. (b) during any calendar year for the purpose of reflecting any reduced obligation which results from any payment of advance contributions.

40.05(2)(cm)

(cm) The department may adjust the unfunded prior service liability balance of the Wisconsin retirement system under para. (b) and of each employer that makes contributions under para. (b) to reflect any changes in the assumed rate and the assumption for across-the-board salary increases specified in § 40.02 (7) and any other factor specified by the actuary if the actuary recommends and the board approves the changes or if otherwise provided by law.

40.05(2)(d)

(d) The amount of each employer’s monthly contribution shall be the sum of the amounts determined by applying the proper percentage rates as determined in accordance with pars. (a) and (b) to the total of all earnings paid to participating employees on each payday.

40.05(2)(f)

(f) Whenever the existence of any participating employer is terminated because of consolidation or for any other reason, the employer who thereafter has responsibility for the governmental functions of the previous employer shall be liable for all contributions payable by the previous employer in the following manner:

40.05(2)(f)1.

1. If the territory of the previous employer is attached to 2 or more employers, the total liability of the previous employer shall be allocated to the new employers in proportion to the equalized valuation of each area so attached.

40.05(2)(f)2.

2. Whenever the existence of any participating employer, who was an instrumentality of 2 or more employers, is terminated for any reason and there is no territory to be divided, the liability for contributions of the previous employer shall be divided between the sponsoring employers in the same proportion as the net assets of the terminating employer are divided.

40.05(2)(f)3.

3. If the department determines that it is not feasible to allocate the liability as provided in subd. 1. or 2., then the liability shall be allocated in proportion to the equalized valuation of the remaining employers.

40.05(2)(f)5.

5. If the employer to whom such an allocation is made is or becomes a participating employer the allocations so certified shall be added to the liability otherwise determined for the employer and the amortization schedule provided for under para. (b) adjusted so that the required annual amount shall approximate the sum of the annual amounts otherwise required.

40.05(2)(f)6.

6. If the employer who becomes responsible for any part of the liability of the previous employer is not a participating employer the contributions required to liquidate the allocated liability shall be made by the successor employer in equal quarterly payments sufficient to liquidate the allocated liability over the remainder of the amortization period.

40.05(2)(f)7.

7. If an allocation based on equalized valuation is required by this paragraph, the equalized valuations used shall be the valuation determined for the calendar year immediately preceding the calendar year in which the allocation is required to be made by this paragraph.

40.05(2)(f)8.

8. If it is not possible to apply the procedures under this paragraph, the terminating employer and any successor employer shall immediately pay the full outstanding prior service liability balance unless an agreement for a different procedure is approved by the department.

40.05(2r)(a)

(a) Contributions made under this section are subject to the limitations under § 40.32 and the internal revenue code.

40.05(2)(g)1.

1. A participating employer may make contributions as provided in its compensation agreements for any participating employee in addition to the employer contributions required by this subsection. The additional employer contributions made under this paragraph shall be available for all benefit purposes and shall be administered and invested on the same basis as employee additional contributions made under sub. (1) (a) 5., except that ss. 40.24 (1) (f), 40.25 (4), and 40.285 (2) (a) 1. c. do not apply to additional employer contributions made under this paragraph.

40.05(2)(g)2.

2. Under the rules promulgated under § 40.03 (2)(r), a participant may, as a payout option for the deferred compensation plan established under subch. VII, elect to have the entire balance in the participant’s account under subch. VII treated as an additional contribution to the core annuity division, subject to any limitations imposed on contributions by the Internal Revenue Code, applicable regulations adopted under the Internal Revenue Code, and rules of the department. Additional contributions under this subdivision shall be available for all benefit purposes and shall be administered and invested on the same basis as employee additional contributions, except that ss. 40.24 (1) (f) and 40.25 (4) do not apply to additional contributions under this subdivision and § 40.26 does not apply to an annuity received from additional contributions under this subdivision.

40.05(2)(i)

(i) If an annuity is calculated under s. 40.02 (42) (f), 1987 stats., the employer shall pay 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 s. 42.245 (2) (bm), 1979 stats., or s. 42.78 (2) (bm), 1979 stats., or s. 40.02 (42) (f) 2., 1987 stats., and the actual cost of the annuity payable. The amount payable shall be paid to the department in 3 equal annual payments, plus interest at the effective rate unless the employer pays the full amount due. Each annual payment is due and shall be included with the first payment made under § 40.06 (1) in each fiscal year after the annuity effective date. The amount so paid shall be credited as employer required contributions.

40.05(2r)

(2r) Annual contributions limitations; disqualification procedure.

40.05(2r)(b)1.

1. Retirement plans offered and administered by the employer.

40.05(2r)(b)2.

2. Retirement plans offered by the employer, but administered by the department.

40.05(2r)(b)3.

3. The Wisconsin retirement system.

40.05(4)

(4) Health insurance premiums.

40.05(2r)(b)

(b) If a participant in the Wisconsin retirement system also participates in a different retirement plan offered by an employer that is subject to section 401 of the internal revenue code and the internal revenue service seeks to disqualify one or more of the plans because the aggregate contributions to the plans exceed the contribution limits under section 415 of the internal revenue code, the internal revenue service, if it permits state law to determine the order of disqualification of such retirement plans, shall disqualify the retirement plans in the following order:

40.05(6)(a)

(a) Except as otherwise provided in accordance with a collective bargaining agreement under subch. V of ch. 111 or § 230.12 or 233.10, each insured employee under the age of 70 and annuitant under the age of 65 shall pay for group life insurance coverage a sum, approved by the group insurance board, which shall not exceed 60 cents monthly for each $1,000 of group life insurance, based upon the last amount of insurance in force during the month for which earnings are paid. The equivalent premium may be fixed by the group insurance board if the annual compensation is paid in other than 12 monthly installments.

40.05(3)

(3) Social security contributions. Each employer included under an agreement made under subch. III shall make the contributions required under federal regulations and shall also withhold from the wages of each of its employees who are covered by the state-federal agreement provided for by subch. III the amount required to be withheld under federal regulations. The state shall be liable for all remittances due from employers in conformity with agreements under subch. III and shall make payment of all sums which are due under this subsection and become delinquent.

40.05(4)(a)1.

1. For health insurance, each insured employee and insured retired employee shall contribute the balance of the required premium amounts after applying required employer contributions, if any.

40.05(4)(a)2.

2. For an insured employee who is an eligible employee under s. 40.02 (25) (a) 2. or (b) 1m. or 2c., the employer shall pay required employer contributions toward the health insurance premium of the insured employee beginning on the date on which the employee becomes insured. For an insured state employee who is currently employed, but who is not a limited term appointment under § 230.26 or an eligible employee under s. 40.02 (25) (a) 2. or (b) 1m. or 2c., the employer shall pay required employer contributions toward the health insurance premium of the insured employee beginning on the first day of the 3rd month beginning after the date on which the employee begins employment with the state, not including any leave of absence. For an insured employee who has a limited term appointment under § 230.26, the employer shall pay required employer contributions toward the health insurance premium of the insured employee beginning on the first day of the 7th month beginning after the date on which the employee first becomes a participating employee.

40.05(4)(a)3.

3. The employer shall continue to pay required employer contributions toward the health insurance premium of an insured employee while the insured employee is on a leave of absence, as follows:

40.05(4)(a)3.a.

a. Only for the first 3 months of the leave of absence, except as provided in subd. 3. b.

40.05(4)(a)3.b.

b. Unless otherwise provided in the compensation plan under § 230.12, for the entire leave of absence if the insured employee is receiving temporary disability compensation under § 102.43.

40.05(4)(ad)

(ad) For health insurance, each insured retired employee who elects coverage under § 40.51 (10), (10m) or (16) shall pay the entire amount of the required premiums, except as provided in para. (bc).

40.05(4)(ag)

(ag) Except as otherwise provided in a collective bargaining agreement under subch. V of ch. 111, the employer shall pay for its currently employed insured employees:

40.05(4)(ag)1.

1. For insured part-time employees other than employees specified in s. 40.02 (25) (b) 2., including those in project positions as defined in § 230.27 (1), who are appointed to work less than 1,044 hours per year, an amount determined annually by the director of the office of state employment relations under para. (ah).

40.05(4)(ah)

(ah) Annually, the director of the office of state employment relations shall establish the amount that employees are required to pay for health insurance premiums in accordance with the maximum employer payments under para. (ag).

40.05(4)(bp)

(bp)

40.05(4)(bp)2.

2. The limits on conversion of accumulated unused sick leave which are specified under subd. 1. may be waived for nonteaching faculty who are appointed to work 52 weeks per year and nonteaching academic staff personnel if the secretary of administration determines that a sick leave accounting system comparable to the system used by the state for employees in the classified service is in effect at the institution, as defined in § 36.05 (9), and if the institution regularly reports on the operation of its sick leave accounting system to the board of regents of the University of Wisconsin System.

40.05(4)(br)

(br)

40.05(4)(ag)2.

2. For eligible employees not specified in subd. 1. and s. 40.02 (25) (b) 2., an amount not more than 88 percent of the average premium cost of plans offered in the tier with the lowest employee premium cost under § 40.51 (6), as determined annually by the director of the office of state employment relations under para. (ah).

40.05(4)(at)

(at) An employer shall pay, on behalf of a nonrepresented managerial employee in a position described under s. 40.02 (48) (am) 7. or 8., who was initially employed by the state before July 1, 2011, the same premium contribution rates required by para. (ag) that are paid by the employer for represented employees in positions described under s. 40.02 (48) (am) 7. or 8. who were initially employed by the state before July 1, 2011.

40.05(4)(bc)

(bc) The accumulated unused sick leave of an eligible employee under s. 40.02 (25) (b) 6e. or 6g. shall be converted to credits for the payment of health insurance premiums on behalf of the employee on the date on which the department receives the employee’s application for a retirement annuity or for lump sum payment under § 40.25 (1). The employee’s unused sick leave shall be converted at the eligible employee’s highest basic pay rate he or she received while employed by the state. The full premium for the employee, or for the surviving insured dependents of the employee if the employee later becomes deceased, shall be deducted from the credits until the credits are exhausted and paid from the account under § 40.04 (10), and then deducted from annuity payments, if the annuity is sufficient. The department shall provide for the direct payment of premiums by the insured to the insurer if the premium to be withheld exceeds the annuity payment.

40.05(4)(c)

(c) The employer shall contribute toward the payment of premiums for the plan established under § 40.52 (3) the amount established under § 40.52 (3).

40.05(4)(b)

(b) Except as provided under pars. (bc) and (bp), accumulated unused sick leave under ss. 13.121 (4), 36.30, 230.35 (2), 233.10, 238.04 (8), and 757.02 (5) and subch. V of ch. 111 of any eligible employee shall, at the time of death, upon qualifying for an immediate annuity or for a lump sum payment under § 40.25 (1) or upon termination of creditable service and qualifying as an eligible employee under s. 40.02 (25) (b) 6. or 10., be converted, at the employee’s highest basic pay rate he or she received while employed by the state, to credits for payment of health insurance premiums on behalf of the employee or the employee’s surviving insured dependents. Any supplemental compensation that is paid to a state employee who is classified under the state classified civil service as a teacher, teacher supervisor, or education director for the employee’s completion of educational courses that have been approved by the employee’s employer is considered as part of the employee’s basic pay for purposes of this paragraph. The full premium for any eligible employee who is insured at the time of retirement, or for the surviving insured dependents of an eligible employee who is deceased, shall be deducted from the credits until the credits are exhausted and paid from the account under § 40.04 (10), and then deducted from annuity payments, if the annuity is sufficient. The department shall provide for the direct payment of premiums by the insured to the insurer if the premium to be withheld exceeds the annuity payment. Upon conversion of an employee’s unused sick leave to credits under this paragraph or para. (bf), the employee or, if the employee is deceased, the employee’s surviving insured dependents may initiate deductions from those credits or may elect to delay initiation of deductions from those credits, but only if the employee or surviving insured dependents are covered by a comparable health insurance plan or policy during the period beginning on the date of the conversion and ending on the date on which the employee or surviving insured dependents later elect to initiate deductions from those credits. If an employee or an employee’s surviving insured dependents elect to delay initiation of deductions from those credits, an employee or the employee’s surviving insured dependents may only later elect to initiate deductions from those credits during the annual enrollment period under para. (be). A health insurance plan or policy is considered comparable if it provides hospital and medical benefits that are substantially equivalent to the standard health insurance plan established under § 40.52 (1).

40.05(4)(be)

(be) The department shall establish an annual enrollment period during which an employee or, if the employee is deceased, an employee’s surviving insured dependents may elect to initiate or delay continuation of deductions from the employee’s sick leave credits under para. (b). An employee or surviving insured dependent may elect to continue or delay continuation of such deductions any number of times. If an employee or surviving insured dependent has initiated the deductions but later elects to delay continuation of the deductions, the employee or surviving insured dependent must be covered by a comparable health insurance plan or policy during the period beginning on the date on which the employee or surviving insured dependent delays continuation of the deductions and ending on the date on which the employee or surviving insured dependent later elects to continue the deductions. A health insurance plan or policy is considered comparable if it provides hospital and medical benefits that are substantially equivalent to the standard health insurance plan established under § 40.52 (1).

40.05(4)(bf)

(bf) Any eligible employee who was granted credit under § 230.35 (1)(gm) for service as a national guard technician, who, on December 31, 19