Employee Matters
This column is prepared by staff of the Employee Compensation and Benefits Services office. You may e-mail us at Employee@bussvc.wisc.edu, or call Employee Services at 263-7556 or 262-5650.
Buying Wisconsin Retirement System (WRS) Creditable Service
The previous article dealt with how seniority and WRS creditable service impact your benefits. This article will focus on buying creditable service.
Who can buy creditable service?
If you left State of Wisconsin service and took your money out of the WRS, you forfeited your years of WRS creditable service. If you return to state service, you may be eligible to buy back the years of service that you forfeited. You must have three continuous years of service under WRS since your return to WRS covered employment. Your three years of continuous service do not have to be fulltime.
How many years can I buy?
The number of years you buy cannot be greater than the number of years of service you have earned since you returned to covered WRS employment. You may buy part or all of the forfeited service that you are eligible to buy.
What is the cost of forfeited service?
The cost is based on your three highest annual earnings for fiscal/calendar years completed at the time you apply to buy back service. The cost will increase proportionately as your earnings increase.
Example: If your average annual salary is $25,000, buying two years of service at the general employment category contribution rate of 5 percent would cost approximately $2,500.
$25,000 x 5 percent x 2 years = $2,500.
You also can complete the calculation by using the Department of Employee Trust Fund’s forfeited service cost calculator at http://etf.wi.gov/. In addition to estimating the cost to purchase forfeited service, the calculator will estimate the amount of your monthly retirement benefit increase.
How can I pay for my forfeited service?
You can pay for your service by sending a payment to Employee Trust Funds, by transferring funds from your WRS additional contributions account or through a plan-to-plan transfer of pre-tax money from your tax sheltered annuity or deferred compensation plans.
The Department of Employee Trust Funds must receive your application and payment to purchase service before you terminate WRS employment.
How will my retirement benefit be impacted if I purchase forfeited service?
Purchasing forfeited service will increase your total creditable service and the money balance in your account, either of which will result in higher retirement benefits. You will recover your investment sooner if your retirement benefit is based on the formula calculation.
When is the best time during my career to purchase service?
Employees generally wait until the year before retirement to purchase service. Even though the cost to purchase service may increase proportionately with your salary over the years, the money that you are going to use to buy the service could be invested and earn more interest than the higher cost due to salary increases.
What is qualifying service?
Prior to Jan. 1, 1973, employees in classified positions, paid biweekly, were not covered by the WRS during their first six months of employment. This was called a qualifying period.
Am I eligible to buy qualifying service?
If you served a qualifying period, you can purchase WRS creditable service for this period. If you took a separation benefit, you must purchase all of the WRS forfeited service you are eligible to buy before you can buy your qualifying service.
What if I want more information?
Visit the EC&BS Web site: http://www.bussvc.wisc.edu/ecbs/ecbs.html or e-mail employee@bussvc.wisc.edu.