Wisconsin's 218 Agreement with Social Security

Employers with a FICA alternative plan are not eligible to join the WRS or the 218 Agreement. To join the 218 Agreement and the WRS, the employer must: 

1. End the FICA alternative/replacement plan; 
2. Begin deducting FICA taxes from its employees; and
3. Meet Wisconsin’s three-part test.

Under the Social Security Act, certain employee services must be excluded from Social Security coverage under a Section 218 agreement. If requested by the state (or local entity), certain services and positions may be excluded from Social Security coverage under the State’s Section 218 agreement.

Required exclusions include:

• Services performed by individuals hired to be relieved from unemployment.
• Services performed by an employee, that they wouldn’t otherwise be required to perform, on a temporary basis in case of fire, storm, snow, earthquake, flood, or another similar emergency.
• Services performed in a hospital, home, or other institution by a patient or inmate thereof as an employee of a state or local government employer.
   

Note: Wisconsin state law generally requires WRS employers to cover all their WRS-eligible employees for Social Security, apart from certain firefighters. State law also requires that all state employees and teachers be covered under the Section 218 Agreement.

An employer must give any employee taking a job that is not covered under Social Security the Social Security Statement SSA-1945. The statement explains how not being subject to Social Security may affect future benefits and must be signed by the employee.

The 1990 Omnibus Budget Reconciliation Act (OBRA) made Social Security coverage mandatory for state and local government employees who are not:

• Already covered under a Section 218 Agreement.
• Covered by an Internal Revenue Code Federal Insurance Contributions Act (FICA) replacement plan.
• Excluded from Social Security coverage under the terms of the Section 218 Agreement or the Social Security Act (See the question Some of our employee positions are excluded from Social Security. Can we join the 218 agreement? above).
   

These provisions were intended to give public employees some type of retirement protection, either from Social Security or through a plan offered by the employer.

Generally, creation documents establish:

• How an employer was created.
• When the employer was created.
• Legal authorities of the employer.
   

Creation documents may include a Wisconsin Territorial Act, State of Wisconsin Act, a citation in Wisconsin Statutes, or some other legal process, such as an ordinance or resolution that might have been used to create the employer.

If you need help locating creation documentation, several online resources exist to assist you.

The Wisconsin Legislative Documents Archive contains:

1. Wisconsin Constitution:  1989-90 to present
2. Statutes:  1941-42 to present
3. Statutes Index:  1989-90 to present
4. Acts: Wisconsin Acts 1848 to present (After Wisconsin became a state)
5. Territory Acts:  1836 to 1848 (prior to Wisconsin becoming a state on 5/29/1848)
6. Joint Resolutions:  1845 to 1933-34
    

The Municipal Data System (MDS) provides records of changes to Wisconsin municipal boundaries (e.g. incorporating, name changes and other legal procedures regarding towns, villages, cities, etc.) and a directory of municipal and county clerks.

The MDS contains:

1. Petitions:  Proposed Annexations from Towns to Cities & Villages
2. Ordinances:  Municipal Annexations, Attachments or Detachments
3. Boundary Agreements:  Land Exchange Agreements Between Municipalities
4. Corporate Boundaries:  Updated City/Village Boundaries
5. Supervisory Districts:  District Changes in Wisconsin Counties
6. Charter Ordinances:  Passed by Cities of Villages
7. Contiguity Reviews:  Contested Annexations Under DOA Review
8. Clerk Information:  A Directory of Municipal and County Clerks
9. Incorporations:  Recently Incorporated Municipalities
10. Historical Municipal Records from the Office of the Secretary of State
     

Counties have started sending their oldest paperwork to UW System Libraries for archiving. If the creation documentation is unavailable at the county or on the sites listed above, the employer may see if the county sent documents to UW Systems Libraries for archiving and if so which library. Documentation can be requested directly from the UW System Libraries.

Under Federal Internal Revenue Code (IRC Section 414 (d)), qualified government plans (like the WRS) can only cover employees of the state, its political subdivisions, agents, and instrumentalities. Eligibility under the 218 Agreement depends on whether the school is chartered through a public school district or if it is independent. Even when chartered through a public school, they still may not be eligible. 

The SSA has been reluctant to approve charter schools unless specific legislation grants them public institution status. Wisconsin does not have this type of legislation. 

In the 2011-12 session, the SSA reviewed WI SB22 as it applied to a charter school’s ability to join the 218 Agreement. They were not able to determine whether all charter schools qualify as separate political subdivisions.

If you’d like, we are happy to review any creation documents you may have. If you need help locating creation documentation, see the General Information section of this FAQ.

The Social Security Administration (SSA) does not generally consider nonprofit corporations under IRC Section 501(c)(3) (whether private or publicly supported foundations) to be governmental employers. As a result, nonprofits generally may not join the Section 218 Agreement.

Social Security benefits may be reduced in one of two ways:

1. Government Pension Offset:  may apply to the spousal or survivor benefit of an individual who receives a pension for work not covered by Social Security. For more information see the Government Pension Offset fact sheet.
2. Windfall Elimination Provision:  may apply to an individual whose employer does not withhold Social Security taxes from their salary. For more information see the Windfall Elimination Provision fact sheet.
    

Note:  ETF does not have access to specific individual information, such as information about an employee’s total work history, Social Security work credits, or any potential spousal or survivor benefits. For more information, please contact the Social Security Administration at 1-800-772-1213 or visit their website at www.ssa.gov.