Search UW System

UW System Home > Human Resources & Workforce Diversity

Returning to Work After Retirement - What is a Valid Termination?

How to Determine a Valid Break in Employment before Returning to Work after Retirement

In order to be eligible for a distribution of any Wisconsin Retirement System (WRS) benefit, including a retirement benefit, terminating employees must have a minimum break in employment as required by both State Statue and Administrative Code. This guide defines termination of employment and clarifies the waiting period required before a retiree can return to employment with the University or any other WRS-covered employer.  The rules regarding separation from employment and retirement are set forth in ETF 10.08, Wis. Admin. Code and §40.23(1)(a) Wis. Stats.

See ETF's educational bulletin about rehired annuitants for additional information about valid termination and return to work rules.

1. What are the criteria of a valid termination?

A valid termination must meet all of the following criteria:

• The employee ceases to render compensable services. The date of an employee’s final paycheck is irrelevant.
  
  
• The employee and employer comply with the employer’s policy for voluntary termination (e.g., filing a letter of resignation). If the termination is 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.
  
  
• As of the termination date, the employer has no “rights” to any future services rendered by the employee that meet the qualifications for WRS coverage for which compensation has or will be paid. The rule stipulates the following:
  
  
  • Prohibits an enforceable agreement/contract as of the termination date for any future WRS compensable employment with the same WRS employer, regardless of whether that employment would meet WRS participation standards.
    
    
  • Prohibits an enforceable agreement/contract as of the termination date for future employment with a different WRS employer that would meet WRS participation standards.
    
    
  • Note:  This rule does NOT prohibit an agreement as of the termination date for future employment with a different WRS employer that does NOT meet WRS participation standards nor prohibit an agreement prior to termination for purely voluntary future services for which no compensation has been or will be paid.
    
    
• The employee is treated consistently with the status of a former employee.  The employee no longer has fringe benefits, supervisory responsibilities, grievance, transfer, and promotional rights that normally apply to active employees.
  
  
• The terminated employee has no authority to act as a representative of the employer or exercise any authority/control over employees of the employer.
  
  
• The employer has paid the employee any accumulated benefits that are customarily paid to employees at the time of termination (e.g. unused vacation, sabbatical, ALRA…)

2. Is there a required break in employment before I can return to work after I retire?

Yes.  Employees who terminate WRS-covered employment are not eligible to receive any WRS benefit (retirement annuity, lump sum retirement payment, separation benefit) if they return to WRS eligible employment before the LATEST of the following dates:

• The day after the annuity effective date, or
• The 31st day after termination of WRS covered-employment, or
• The 31st day after ETF receives your benefit/retirement application

3. Can you give me an example of how to determine a valid break in employment?

The table below shows when the 30-day break in employment would be satisfied under different scenarios for an employee who terminates all WRS-covered employment on May 18th of a given year:

Termination Date	Date ETF Receives Annuity Application	Annuity Effective Date	Earliest Date of Return to Work
May 18	April 10	May 19	June 18
May 18	June 21	May 19	July 22
May 18	August 25	June 1	September 25

4. I want to receive my WRS annuity but I would like to continue working for the UW or another WRS-covered employer.  How should I proceed?

First, you should contact ETF to request your official retirement estimate and application.  You can contact ETF at 1-877-533-5020 to request your application.  You should also review your employee benefits to determine how retirement affects your eligibility to continue your benefits and the cost of benefits in retirement. 

If you decide to retire, you should follow your institution’s normal procedures for resignation. About 60 to 90 days before your termination date, you should also submit your completed retirement application directly to ETF.

Once you have satisfied the 30-day break in employment, you may return to WRS-covered employment.  If your new position is WRS eligible, you must complete a Rehired Annuitant Election (ET-2319) within seven calendar days of your hire date and indicate whether or not you want to stop your WRS annuity and re-enroll in the WRS.

5. Can I talk to my employer about returning to work after retirement either before retirement or during my 30-day break in employment? When can I sign a contract to return to work?

Prior to Your Retirement Date: Under no circumstances may you have an enforceable contract, whether written or verbal, that would guarantee future employment with your employer until after your retirement date. If you have a enforceable contract in place prior to your retirement date, your termination is not valid and you are not eligible to receive a retirement benefit.

After Your Retirement Date: You are not prohibited from talking to your employer about returning to work or signing an employment contract during the 30-day break in employment, but in order to ensure that there is not even the appearance of non-compliance with ETF rules surrounding a valid termination, any contract to rehire any individuals previously employed at any UW institution should not be discussed, negotiated or entered into prior to or during the required 30-day break in service. You may not return to work until the required 30-day break in employment is fulfilled.

6. I am a Principal Investigator with on-going grants.  How do these rules apply to me?

ETF 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.

7. What happens if ETF determines that I did not have a valid break in employment before returning to WRS-covered employment?

If ETF determines that the conditions of a valid termination have not been met, the following consequences will occur:

• The retirement benefit is considered paid in error.  If the employee is receiving an annuity, the monthly payments will stop and ETF will collect any monthly payments paid in error.  ETF will also collect any lump sum benefit paid in error.
• The employer will be required to report the hours and earnings that would have been reported had the termination not been reported. 
• Other benefits administered by ETF, such as State Group Health, State Group Life and Income Continuation Insurance may also be affected.  In some cases, coverage may be lost.
• When the employee reapplies for a subsequent WRS annuity, termination of the current employment is required and the employer must reapply for the retirement benefit.

8. Have these regulations always been in effect?

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 monies to employees who are still in service and have not had a “good-faith termination.” It is important to maintain the tax-qualified status of the WRS 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. ETF's administrative 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.

9. Where can I find more information about what it means to be a Rehired Annuitant and rules about returning to work after retirement?

For a detailed explanation about Rehired Annuitants, go to UW System’s website:  http://www.uwsa.edu/hr/benefits/lifevent/rehired.htm.  A Quick Guide to the Rehired Annuitant Program is also available on UW System's website. ETF developed a brochure entitled Information for Retirees that addresses returning to work after retirement.  Finally, you can contact your institution’s employee benefits office with questions.