The Wisconsin Retirement System (WRS) provides retirement benefits to UW–Madison employees and to most public employees across the State of Wisconsin. Participation is automatic for all eligible employees, with coverage beginning on the first day an employee is eligible. The required employee and employer WRS Contribution Rates are updated annually. The employee share is deducted on a pre-tax basis. You may not opt out of the WRS.
Your retirement income will be based on your years of WRS service, your age at retirement, and the average of your highest three years of earnings or based on the total cash value of your account, whichever is greater.
WRS also provides death, permanent disability, and separation benefits. The WRS is administered by the Department of Employee Trust Funds (ETF).
You must meet the following requirements to be eligible for coverage under the WRS:
Must be in a University Staff, Faculty, Academic Staff, or Limited appointment; and
- If you first became a WRS participating employee on or after July 1, 2011, you must be expected to work at least 2/3 of full-time for at least one year*.
- University Staff: 2/3 of full-time is equal to 1,200 hours worked per year (58% appointment);
- Faculty, Academic Staff, and Limited Appointees: 2/3 of full-time is equal to 880 hours worked per year (42% appointment for twelve-month employees and 56% appointment for nine-month employees); or
- If you first became a WRS participating employee prior to July 1, 2011, you must be expected to work at least 1/3 of full-time for at least one year*.
- University Staff: 1/3 of full-time is equal to 600 hours worked per year (29% appointment);
- Faculty, Academic Staff, and Limited Appointees: 1/3 of full-time is equal to 440 hours worked per year (21% appointment for twelve-month employees and 28% appointment for nine-month employees);
*For nine-month employees, one year is considered the academic year and an expectation to return the following academic year.
Not Eligible at Time of Hire
Employees who do not meet the WRS eligibility requirements on their date of hire can subsequently become eligible and must be enrolled. If your expectation of hours worked and/or the duration of your employment changes to the extent that you now meet the WRS eligibility criteria, you will be enrolled in the WRS. Also, at your one-year anniversary your employment will be evaluated and if you did work the minimum amount of hours to be eligible (see above based on your hire date) you will be enrolled in the WRS. If it is determined that you are not be WRS eligible as of your one-year anniversary, eligibility monitoring on a rolling 12-month basis will begin. Employees who work the required hours in any 12 consecutive months will be enrolled in the WRS on the day after they have worked the required number of hours.
Returning to WRS-Covered Employment within Twelve Months
If you are a WRS-covered employee and you terminate and are subsequently rehired in less than 12 months by the same employer (this includes all UW System employment), you will be re-enrolled in the WRS immediately upon rehire, regardless of whether or not the new employment period is expected to meet the WRS eligibility criteria.
You are vested when you have met the minimum number of years of covered WRS employment needed to qualify for a retirement benefit. Some participants must meet one of two vesting laws based on when they first began WRS employment.
- Participants who first began WRS employment after 1989 and terminated employment before April 24, 1998 must have some WRS creditable service in five calendar years.
- Participants who first began WRS employment on or after July 1, 2011 must have five years of WRS creditable service.
If neither vesting law applies, participants were vested when they first began WRS employment. Vested participants may receive a retirement benefit at age 55 (age 50 for protective category participants) once they terminate all WRS employment. Participants who are not vested may only receive a separation benefit. For more information, refer to Your Benefit Handbook.
If you leave UW employment prior to being vested or if you are vested and you take your funds out of the WRS prior to minimum retirement age, you are only eligible for a separation benefit and will lose the employer matching amount.
The WRS consists of two fund options, the Core Fund (which is the default fund) and the Variable Fund. Your contributions will go into the Core Fund unless you elect to participate in the Variable Fund. If you elect to participate in the Variable Fund, 50% of your future WRS contributions will be deposited in the Variable Fund and 50% will be deposited in the Core Fund. You are able to cancel your Variable Fund participation effective December 31 of the year the cancellation form is received. Please refer to the cancellation form for more information on the consequences of cancellation.
WRS Retirement Benefits
In order to retire from the WRS, you must terminate all WRS-covered employment.
Age and Years of Service
If you have no protective category (typically law enforcement, firefighters, etc.) service and you are vested, you may begin a retirement benefit any time after you reach age 55. If you have protective category service and you are vested, you can begin a retirement benefit as early as age 50. However, if you retire before reaching your normal retirement age, your monthly annuity payment will be reduced to reflect the longer period over which your monthly annuity payments will be made. See Your Benefit Handbook and Calculating Your Retirement Benefits.
Use of Sick Leave in Retirement
Upon retirement, your accrued sick leave is converted to a dollar value to pay for health insurance premiums in retirement. This is done by multiplying your highest hourly rate by your earned sick leave hours. This account may only be used to pay for health insurance premiums in retirement and does not have any other cash value. Please use the Sick Leave Estimator to estimate your sick leave balance. If you have other comparable health coverage available to you during retirement, you are able to escrow your sick leave account for future use.
Your sick leave cannot be certified to ETF unless you are covered by State Group Health (SGH) Insurance at the time of retirement, as either an employee or through your spouse. If you are not covered, you may enroll in SGH during the month prior to your retirement date. Contact email@example.com for assistance.
Supplemental Sick Leave Conversion Credits
When you have reached 15 years of continuous service, you are eligible for matching sick leave hours. Additional matching hours are available after 24 full years of continuous service. See the Sick Leave Conversion Credit Program for details.
How Benefits Are Calculated
There are two methods used to calculate annuity benefits, the formula method and the money purchase method. To learn more about how your annuity is calculated, see Calculating Your Retirement Benefits.
Participation in the Variable Fund also has an impact on your annuity. See How Participation in the Variable Trust Fund Affects Your WRS Benefits.
The IRS issues benefit/compensation limitations for highly compensated employees. Per 415(b)(1)(A) and 401(a)(17).
Annuity Effective Date
You may want to know whether your WRS annuity would be higher if your annuity begins in late December, just before the end of the year, or at the beginning of the new year. One key factor is whether your annuity amount is calculated under the money purchase or formula calculation. If your benefit is calculated under the money purchase calculation, your annuity may be affected by what month you retire. For more information, see When Should I Retire?
All options pay for the duration of the employee’s/annuitant’s life. See Choosing an Annuity Option.
What happens to the annuity if you die?
- Annuity stops and no death benefits are payable OR
- Annuity is payable for a guaranteed period, and remaining payments are made to a beneficiary OR
- If joint survivorship was selected, payments continue at a specified percentage as long as the named survivor is living (can also be paid to a joint survivor and over a guaranteed period in the case of the joint survivors death)
If you retire under age 62, you will be eligible for an Accelerated Payment, which provides a higher monthly annuity until age 62. At age 62, the WRS annuity decreases by the anticipated monthly amount payable from Social Security. Use the Accelerated Payment Cost Calculator to estimate the cost.
Annuity payments can change from year to year depending on the funds’ performance. Annuity payments related to the Core Fund will not reduce below the initial annuity amount. Interest credited to the Core Fund is averaged over five years to reduce the impact of large market fluctuations. Annuity payments related to the Variable Fund may reduce below the initial annuity amount. Interest credited is not averaged over five years, and this may result in greater variations to Variable Fund payments. See the Investment Earnings Distribution Report.
You have 60 days from the date of your first payment or the date your lump sum payment was issued to change your annuity option. After 60 days, your selection is final.
Payments are made on the first of the month for the month that has just passed. For example, if you retire on September 1, the first payment is made October 1 for the month of September. If you retire in the middle of the month, your first payment will be prorated based on your termination date.
Your annuity will begin based on an estimated payment amount. ETF estimates the amount, as they do not always have the final information about earnings, service and contributions by the time a retirement benefit begins. ETF will recalculate your annuity benefit between six and 12 months after retirement, based on the final information submitted to ETF. ETF will send you a Notice of Final Calculation. If your annuity was underestimated, you will receive a lump sum for the difference. If your annuity was overestimated, your annuity will be permanently reduced by an amount that results in recovering the overpayment during the life of your annuity (this is a present value offset). To avoid the permanent reduction, you can send a check to ETF for the overpayment.
Tax Liability on WRS Benefits
Your retirement benefit is taxable as income. The tax treatment is generally similar for federal and Wisconsin income tax purposes. Benefits are not subject to Social Security or Medicare taxes.
By January 31 of each year, ETF will send you a 1099-R form showing the amount of income tax withheld, the total amount of your benefit, and the taxable portion of your benefit for the prior year. You will need to file the 1099-R form with your income tax return.