The 30Day Break in Service Rule

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The 30-Day Break in Service Rule
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RETURN TO WORK AFTER RETIREMENT

• Overview
• Why is the rule needed?
• What is the legal basis for the rule?
• What does the rule require?
• What criteria are used to determine termination
  of employment?
• How is the 30-day break defined?
• Examples
• What are the consequences for non-compliance?

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Why is the ETF rule needed?

• WRS a tax qualified pension plan under IRC
• Employee retirement account tax deferred
• IRC rules prohibit in service distributions

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What is the legal basis for the rule?

• ETF 10.08, Wi. Admin. Code
• Termination of employment
• Determining the date of termination

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What does the ETF rule do?

• Objective criteria to determine whether
  employment has terminated
• Clarifies the required break in service

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Termination of employment criteria

• Employee has ceased to render paid services
• Employer has no right to any future service from
  the employee
• Employee no longer has fringe benefits rights
  available to active employees
• Accumulated benefits have been paid out
• As of the last day of employment the employee has
  no right to future employment

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Does the 30-day break apply to all rehired
annuitants?

• The UWS is one employer for WRS
• Rehiring from within the UWS requires the 30-day
  break, even if the new employment is part-time
  and would not qualify for WRS

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Rehiring from outside the UWS

• Most Wisconsin public employers (cities school
  districts counties) participate in the WRS
• Hiring a WRS annuitant into a UWS position that
  would qualify for WRS coverage requires a 30-day
  break
• If the UWS position would not qualify for WRS,
  the 30-day break does not apply

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What is the minimum break in service required?

• A minimum 30-day break in service is required
  without impacting WRS benefits
• (annuity payments or lump sum benefits)

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How to count the 30-day break

• The break in service begins on the termination
  date and ends on the latest of
• 31 days after the termination date
• The day after the effective date of the
  retirement benefit
• 31 days after DETF receives the retirement
  application

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POP QUIZ

• Last day of work is May 18th
• Date EFT Receives Annuity Application April 10
• Annuity Effective Date May 19
• Earliest Date of Return to Work June 19
• Date EFT Receives Annuity Application June 21
• Annuity Effective Date May 19
• Earliest Date of Return to Work July 22
• Date EFT Receives Annuity Application August 25
• Annuity Effective Date June 1
• Earliest Date of Return to Work September 25

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How to comply with the 30 -day break rule

• Discussions about potential return to work
  positions are O.K., BUT
• No employment contract (verbal or written) until
  AFTER the termination date
• During the 30 day break an individual may sign a
  contract for future employment, BUT
• May not return to work until the break in service
  has elapsed

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Consequences for not adhering to the rule?

• Employee not eligible to begin WRS benefits
• Any WRS payments received must be paid back
• Jeopardizes the tax qualified status of the WRS

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QUESTIONS ?

• Additional information re-hired annuitants
• http//www.uwsa.edu/hr/benfits/lifevent/rehired.ht
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