Rehired Annuitants

Fact Sheet on ETF 10.08, Wisconsin Administrative Code

This fact sheet is intended to help University employees understand the requirements of an administrative rule that took effect on July 1, 1998. This rule, promulgated by the Department of Employee Trust Funds (DETF), defines termination of employment and clarifies the waiting period required before a retiree can return to employment with the University or other participating employer in the Wisconsin Retirement System (WRS).

1. Does the rule on ternination of employment affect me?

This rule is important to you if you are covered under the WRS, are nearing retirement age (at least age 55, or age 50 if you are in a protective occupation), and are considering returning to public employment in Wisconsin after you retire.

No one is eligible to receive a WRS  retirement benefit until WRS-covered employment has ended. The new rule defines certain criteria to determine whether a termination of employment has occurred. If you do not meet these criteria, DETF is not permitted to pay you a retirement benefit.

The same rule applies to receipt of a separation benefit (withdrawal of employee contributions before minimum retirement age).

2. What does the rule require?

a) The rule offers some objective criteria to determine whether your employment has terminated:

  • You have ceased rendering services for which compensation is paid. and your employer has no right to any further services from you. The timing of your salary payments is irrelevant.
  • You no longer have the fringe benefits, supervisory responsibilities, grievance, transfer, and promotional rights, etc., that normally apply to active employees.
  • As of the last day of employment, you have no right to future employment that would normally be covered under the WRS. This includes both re-employment of any kind with your former employer and new employment with a different employer in a WRS-eligible position. A contract for future employment is considered to be such a right.

If the termination is voluntary, the employee must follow the employer's normal procedures for resignation (e.g., filing a letter of resignation). If involuntary, the rule provides guidelines to help the employer select the appropriate termination date. With rare exceptions, the date of termination can never be retroactive.

b)  The rule clarifies the required break in service. Once terminated, you must continue to be terminated from all WRS-eligible employment until the latest of the following dates.

  • The day after the effective date of your WRS annuity. Normally, your annuity effective date is the day after your termination date unless you delay filing your application for more than 90 days.
  • 31 days after the DETF receives your benefit application (thus it is advisable to file your application in advance of your retirement date).
  • 31 days after the date your employment terminated.

3. Give me an example.

Suppose that you are at least age 55 and your last day of work (including paid vacation or sick leave days) is May 18. You have notified your employer that you will resign effective May 18. As of the end of that day, you have completed all your responsibilities toward your employer and you have no right to future employment with your current employer or to WRS-eligible employment with any other employer.

Date ETF Receives Your Annuity Application

Annuity Effective Date

Earliest Date of Return to Work

April 10

May 19

June 19

June 21

May 19

July 22

August 25

June 1

September 25

4. Are these regulations new?

Yes and no. Wisconsin statutes have long required that an employee terminate WRS-covered employment before receiving a retirement or separation benefit. Federal tax rules also generally prohibit distributions of tax-qualified retirement moneys to employees who are still in service. It is important to maintain the WRS' tax-qualified status in order to protect the tax-deferred status of employee accounts.

Though required by state and federal law, termination of employment is not a clearly defined concept. DETF's new rule provides criteria to determine whether termination of employment has occurred.

Similarly, the 30-day break in service is a long-standing requirement in state statute for eligibility for WRS retirement or separation benefits. Between 1989 and 1996, this requirement was not applied to "rehired annuitants" because annuitants were thought to be automatically ineligible for future WRS coverage. In 1996, as part of a review of WRS compliance with federal tax law, the statutes were amended to clarify that the 30-day break provision applies to all applicants for WRS benefits. Though not specifically required under federal tax code, the break in service provides evidence that a termination of employment has occurred.

5.  I want to begin my WR5 benefit, but I would like to continue employment. How should I proceed?

First, you should contact DEFT to receive an estimate of your retirement benefits. Be sure you understand your options, including the option of receiving accelerated annuity payments before age 62. Review your state and University insurance coverages for any changes in eligibility and cost that may result from retiring.

If you decide to retire, you should follow your campus's normal procedures for resignation. Your application for retirement benefits should be filed with DETF 60-90 days in advance of your last day of work. Your payroll office will coordinate certification of your sick leave balance and transfer of your state insurances to DETF's annuitant accounts.

You may discuss with your appointing authority the possibility of returning to work after you retire. However, you may not form any enforceable contract,. whether written or verbal, that would guarantee you future employment until after your date of termination.

You may sign a contract for future employment during the required break in service after your termination date. However you may not return to work until the break in service has elapsed. Failure to observe the break will result in your reenrollment as an active WRS participant and cancellation of your benefit application.

Additional information for Principal Investigators with on-going grants: for purposes of this rule, DETF has determined that receipt of an on-going grant from non-University sources does not constitute a contract for or right to future University employment. Thus a Principal Investigator with two years left on a five-year grant may retire from the University, begin a WRS annuity, and then make an agreement with the University to return to work on the grant after the required break in service. The employee may not enter into the new employment contract until after the termination date, and the normal 30-day break in service is required. Compensation may not be paid for the period of the break in service.

Prepared by the Office of Staff Benefits and Payroll Policy
University of Wisconsin System Administration
8/17/98

For more information, contact Cedric Steine, UW-L Retirement Counselor, or visit the following site on the Department of Employee Trust Funds website:

Returning to Work After Retirement