Wis. Stat. § 40.05 — WI Code / Chapter 40 / Section 40.05
Contributions and premiums.
Status: in_force

(1) Employee retirement contributions. For Wisconsin retirement system purposes employee contributions on earnings for service credited as creditable service shall be subject to federal annual compensation limits and shall be made as follows:

(a) Subject to par. (b) :

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 s. 40.03 (1) (e) .

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 s. 40.03 (1) (e) .

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.

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.

5. Additional contributions may be made by any participating employee by deduction from earnings or otherwise or may be provided on behalf of any participating employee in any calendar year in which the participating employee 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.

6. Under the rules promulgated under s. 40.03 (2) (r) , additional contributions that are attributable to a death benefit paid under s. 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.

7. For a county jailer covered under subd. 3. , the percentage of earnings equal to the total actuarially required contribution rate, as approved by the board under s. 40.03 (1) (e) , for a participating employee whose formula rate is determined under s. 40.23 (2m) (e) 3. , less the contribution rate paid by the employer for a county jailer under sub. (2) (a) . Contributions under this section for an employee who first becomes a participating employee as a county jailer in a county that did not classify county jailers as protective occupation participants on January 1, 2024, and is certified as a protective occupation participant on or after January 1, 2024, shall be made by a reduction in salary and, for tax purposes, shall be treated as employer contributions under section 414 (h) (2) of the Internal Revenue Code. Such a participating employee may not elect to have contributions required by sub. (2) (a) paid directly to the employee or make a cash or deferred election with respect to the contributions. Employees who are participating employees on January 1, 2024, and who are first certified as protective occupation participants in a county jailer position on or after January 1, 2024, in a county that did not classify county jailers as protective occupation participants on January 1, 2024, shall make the contribution under this section on a post-tax basis. For employees who are employed as county jailers in a county that classified county jailers as protective occupation participants on January 1, 2024, the county may at a subsequent date determine to categorize county jailers as general participating employees. In such instance, a county jailer who is employed by the county on the date the county determines to categorize county jailers as general participating employees may make a onetime irrevocable election to not be a protective occupation participant. A county jailer in such a county who opts to remain a protective occupation participant shall make the contribution under this section on a post-tax basis. A county jailer who is first hired as a county jailer by such a county after the date the county determines to categorize county jailers as general participating employees may make a onetime irrevocable election to not become a protective occupation participant. A county jailer who is first hired as a county jailer by such a county after the date the county determines to categorize county jailers as general participating employees and who opts to become a protective occupation participant shall make the contribution under this section on a pre-tax basis.

(b)

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 par. (a) . Except as provided in subd. 1a. , the contributions required by par. (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 par. (a) paid directly to the employee or make a cash or deferred election with respect to the contributions.

1a. Contributions under par. (a) 7. that are made by county jailers who are first certified as protective occupation participants on or after January 1, 2024, and who are employed in a county that did not classify county jailers as protective occupation participants on January 1, 2024, shall be treated as employee contributions.

2.

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 par. (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.

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 par. (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.

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 par. (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.

(2) Employer retirement contributions. For Wisconsin retirement system purposes and subject to federal annual compensation limits:

(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 s. 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.

(am) The percentage of earnings under par. (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 par. (b) by the present value of the prospective future compensation of all participants.

(ap) The contributions under par. (a) that are required to be paid by a participating employer for a county jailer whose formula rate is determined under s. 40.23 (2m) (e) 3. shall be a percentage of earnings equal to one-half of the total actuarially required contribution rate, as approved by the board under s. 40.03 (1) (e) , for an employee whose formula rate is determined under s. 40.23 (2m) (e) 1. This paragraph applies only to contributions paid for a county jailer who becomes a protective occupation participant on or after January 1, 2024, and is one of the following:

1. Employed in a county that did not classify county jailers as protective occupation participants on January 1, 2024.

2. 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.

(ar)

1. Except as provided in subd. 2. , participating employers of employees subject to s. 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.

2. County jailers who are first hired as protective occupation participants on or after January 1, 2024, in a county that did not classify county jailers as protective occupation participants on January 1, 2024, may make the contribution under subd. 1. on a pre-tax basis, in lieu of their employers making the contribution. County jailers who are first certified as protective occupation participants on or after January 1, 2024, in a county that did not classify county jailers as protective occupation participants on January 1, 2024, shall make the contribution under subd. 1. on a post-tax basis, in lieu of their employers making the contribution. For employees who are employed as county jailers in a county that classified county jailers as protective occupation participants on January 1, 2024, the county may at a subsequent date determine to categorize county jailers as general participating employees. In such instance, a county jailer who is employed by the county on the date the county determines to categorize county jailers as general participating employees may make a onetime irrevocable election to not be a protective occupation participant. A county jailer in such a county who opts to remain a protective occupation participant shall make the contribution under subd. 1. on a post-tax basis. A county jailer who is first hired as a county jailer by such a county after the date the county determines to categorize county jailers as general participating employees may make a onetime irrevocable election to not become a protective occupation participant. A county jailer who is first hired as a county jailer by such a county after the date the county determines to categorize county jailers as general participating employees and who opts to become a protective occupation participant shall make the contribution under subd. 1. on a pre-tax basis.

(aw) For purposes of this subsection, the participating employer of an employee subject to s. 40.65 who is on a deployment, training, or readiness exercise as the member of an urban search and rescue task force under a contract under s. 323.72 (1) is the local agency, and the local agency shall contribute any additional percentage or percentages related to the deployment, training, or readiness exercises under a contract under s. 323.72 (1) as calculated by the actuary under s. 40.03 (5) (c) . A local agency may seek reimbursement from the department of military affairs under s. 323.72 (2m) .

(ax) For purposes of this subsection, the participating employer of an employee subject to s. 40.65 who is responding to an emergency involving a level A release, or a potential level A release, as a member of a regional emergency response team under a contract under s. 323.70 (2) is the local agency, and the local agency shall contribute any additional percentage or percentages related to response to an emergency involving a level A release, or a potential level A release, under a contract under s. 323.70 (2) as calculated by the actuary under s. 40.03 (5) (c) . A local agency may seek reimbursement from the department of military affairs under s. 323.70 (3m) .

(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 s. 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) .

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

(bm) Contributions under par. (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.

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

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

(bu) The employer contribution rate determined under par. (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.

(bv) The employer contribution rate determined under par. (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.

(bw) The employer contribution rate determined under par. (b) for the University of Wisconsin System shall be adjusted to reflect the cost of granting creditable service under s. 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.

(bz) The employer contribution rate determined under par. (b) for the department of administration shall be adjusted to reflect the cost of granting creditable service under s. 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.

(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 par. (b) during any calendar year for the purpose of reflecting any reduced obligation which results from any payment of advance contributions.

(cm) The department may adjust the unfunded prior service liability balance of the Wisconsin retirement system under par. (b) and of each employer that makes contributions under par. (b) to reflect any changes in the assumed rate and the assumption for across-the-board salary increases specified in s. 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.

(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.

(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:

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.

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.

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.

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

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 par. (b) adjusted so that the required annual amount shall approximate the sum of the annual amounts otherwise required.

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.

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.

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.

(g)

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.

2. Under the rules promulgated under s. 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 s. 40.26 does not apply to an annuity received from additional contributions under this subdivision.

(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 s. 40.06 (1) in each fiscal year after the annuity effective date. The amount so paid shall be credited as employer required contributions.

(2r) Annual contributions limitations; disqualification procedure.

(a) Contributions made under this section are subject to the limitations under s. 40.32 and the Internal Revenue Code.

(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:

1. Retirement plans offered and administered by the employer.

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

3. The Wisconsin retirement system.

(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.