A common question we receive from members this time of year centers on Wisconsin Retirement System separation benefits. This type of benefit is a one-time, lump-sum payment of employee-required contributions, additional contributions (if made), and accumulated earned interest. A separation benefit does not include employer contributions and interest – these are forfeited. This means the person taking a separation benefit is forfeiting half the value of their WRS account.
If you were to take a separation benefit, your WRS account will be closed and you will:
- Lose all employer contributions and interest
- Lose (forfeit) the creditable service you earned prior to taking the separation benefit, and the benefit rights associated with that service
- Lose eligibility for future health insurance coverage
- Be subject to tax penalties that may significantly reduce the amount of your separation payment
Before making a decision on whether to take a separation benefit, review our education resources or contact ETF to discuss.
For More Information
Webpage: Leaving WRS Employment
Brochure: Separation Benefits (ET-3101)
Brochure: Tax Liability on WRS Benefits (ET-4125)