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Employers

Options for Dividing WRS Contribution Rates Between Employers and Employees

The Department of Employee Trust Funds (ETF) has received inquiries from employers regarding the option of having employees pay some or all of the Wisconsin Retirement System (WRS) Contribution Rate and the tax implications of this decision. WRS contributions are divided between the employer-required and the employee-required portion of the total rate.

Employer-Required Contribution (ERC) rates are a percentage of the earnings of each participating employee and must be paid by the employer. Under no circumstance may an employee be required to pay any portion of the ERC. ERCs are taxable to the employee when a benefit is taken.

Employee-Required Contribution (EERC) rates are established by state statute. The employer may pay all or a portion of the EERC, and may choose to pay all or a portion of the rate for all their employees, a group of employees or a single employee. These options are typically the subjects of collective bargaining or other agreements. ETF has no role or authority in these decisions. When paid by the employee, the EERC is post tax. When paid by the employer, the EERC is taxable to the employee when a benefit is taken.

The Benefit Adjustment Contribution (BAC) rate is considered an employee rate but is not credited to the employee’s WRS account and is not included in a separation benefit. BAC is used to fund overall system benefit liabilities. Again, the employer may pay all or a portion of the BAC, and may choose to pay all or a portion of the rate for all of their employees, a group of employees or a single employee. These options are typically the subjects of collective bargaining or other agreements. ETF has no role or authority in these decisions.

Contact the Employer Communication Center at (888) 681-3952 if you have additional questions regarding the calculation or reporting of WRS required contributions.

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