Employment After Information for - New Jersey

1 Employment After Information for: Public Employees' retirement System (PERS). Teachers' Pension and Annuity Fund (TPAF). Police and Firemen's retirement System (PFRS). retirement Restrictions State Police retirement System (SPRS). Judicial retirement System (JRS). If you are considering working After retirement , you for the refund of overpaid benefits and the payment If you want to supplement your retirement income af- should be aware of the restrictions imposed by laws of pension contributions based on the violation of the ter you retire, Employment with a private company, and regulations governing post- retirement employ- law. Your prospective employer should be able to tell the federal government, or another state will not af- ment.

2 It is your responsibility to inform your prospec- you if the Employment you are considering would not fect your right to receive your New Jersey retirement tive employer that you are receiving retirement bene- be permissible, due to the restrictions imposed by benefits, with the following exceptions: fits from a New Jersey public retirement system, and laws and regulations governing post- retirement pub- Retirees who are receiving a disability retirement to understand the impact Employment will have on lic Employment in New Jersey . However, if there is allowance from either the PERS or TPAF may those retirement benefits. In some instances your any doubt, you should have the prospective employ- have their retirement allowance adjusted if they retirement benefits may be suspended or even can- er contact the NJDPB prior to your accepting public have earnings from any occupation or employ- celed entirely; if this occurs, you will be responsi- Employment After retirement .

3 If you have additional ment (public or non-public) After retirement (see ble for the repayment of any benefits you were questions regarding the content of this publication, also Special Provisions for Disability Retirees . not entitled to receive. You may also be required to contact the NJDPB prior to accepting Employment . on page 5).1. re-enroll in your former retirement system or a differ- Failure to understand these restrictions may result in ent retirement system, and make pension contribu- suspension and repayment of your retirement bene- Members of the JRS who are collecting JRS re- tions into that system. fits, and payment of pension contributions. tirement benefits are restricted from the practice of law before the courts of this The New Jersey Division of Pensions & Benefits Your retirement benefits are governed by New Jer- (NJDPB), and the Boards of Trustees of the various sey statutes as well as the Internal Revenue Code RETURN TO WORK WITH.

4 retirement systems, have a responsibility to preserve (IRC). The PERS, TPAF, PFRS, SPRS, and JRS are YOUR FORMER EMPLOYER. the fiscal integrity of the retirement systems and to established as qualified governmental defined bene- guard them against abuse. Opportunities for retired fit plans in accordance with IRC Sections 401(a) and If you are considering returning to work with your for- employees to resume public Employment while con- 414(d). New Jersey State-administered retirement mer employer, you must first determine if you have tinuing to collect retirement benefits could be viewed systems generally do not permit the payment of re- already met the requirements of a bona fide sev- in certain circumstances as abusive.

5 Tirement benefits without a complete severance from erance of Employment as defined under your employer. In order to preserve the qualified sta- 17 (a)2. Bona fide severance of employ- This fact sheet provides general Information con- ment means there was a complete termination of cerning Employment restrictions for retired members tus of these plans and to protect retirees from a 10. percent early distribution tax penalty on their monthly the employer/employee relationship for a period of at of the New Jersey defined benefit retirement systems least 180 days from the date of your The (PERS, TPAF, PFRS, SPRS, and JRS). It is not intend- pensions, the NJDPB was required to adopt and to enforce regulations to ensure compliance with the following does not qualify as a complete severance ed to address every situation; you will be responsible of your Employment relationship within the 180-day IRC requirements.

6 1. Please see the Disability retirement Benefits Fact Sheets for more Information . 2. Contact the Administrative Office of the Courts if you require additional Information regarding this restriction. Page 1 October 2017 Fact Sheet #86. This fact sheet is a summary and not intended to provide all Information . Although every attempt at accuracy is made, it cannot be guaranteed. Employment After retirement Restrictions period: nate from both positions in order to qualify for sequences of Returning to Work with your Former re- Employment in a part-time position; retirement benefits from the PFRS. The individ- Employer within 180 Days of retirement ). ual must be separated from both positions for The IRS guidance on bona fide severance of em- re- Employment in a position that is covered by a at least 180 days prior to any consideration of different retirement system; ployment requires a complete termination of the em- return to Employment in the non-PFRS position ployment relationship.

7 The cessation of compensa- a change in title; (including the previously-held PERS position). tion alone, where services continue to be provided re- Employment as a contract employee, a leased Example 4 A building inspector enrolled in the as a volunteer, does not automatically satisfy this employee, or an independent contractor; or PERS works part-time for several municipalities. requirement. Therefore, if volunteer service (a) is ren- This individual must terminate from all PERS-el- dered by a retired member to the former employer termination of Employment with a pre-arranged igible positions in order to qualify for retirement during the 180-day period and (b) that service sat- agreement for benefits from the PERS (including any additional isfies the IRS definition of Employment , then a bona Re- Employment by a different unit of the same public positions acquired After May 21, 2010, for which fide severance of Employment has not occurred.)

8 Employer within 180 days of retirement , whether in he or she may not currently be PERS-eligible). This rule applies where the volunteer service con- a position covered by the same retirement system The individual must be separated from all posi- tinued or undertaken by the retired member within or a different retirement system, is considered to be tions for at least 180 days After retirement prior the 180-day period is for the same employer which Employment by the same employer. to any consideration of return to Employment the retired member worked for before retirement . A. Example 1 a State employee retires and re- with any of these municipalities. retiree who seeks to become a volunteer must as- turns to work as a full- or part-time employee or certain whether the volunteer services are being pro- Volunteer Service independent contractor at any State agency, in- vided to the same employer from whom he retired or cluding a State university, within 180 days of the It remains the policy of the State to encourage vol- to a different entity.

9 For example, many volunteer fire retirement date. A bona fide severance of em- unteering for community service. The bona fide sev- companies and rescue squads are organized sepa- ployment has not occurred. erance of Employment requirement, however, does rately from the municipal government as non-profit raise significant questions regarding eligibility to pro- entities, perhaps with a different federal ID number. Example 2 a TPAF member retires from a vide service to a former employer as a volunteer, It is likely that such non-profit entities and the munic- school district and returns as a part-time teacher without compensation for service. A bona fide sever- ipal government would not be considered the same in the same district within 180 days following re- ance of Employment for a member to be eligible for re- employer.

10 Tirement. A bona fide severance of Employment tirement benefits is required by the Internal Revenue has not occurred. In cases where the volunteer services are to be pro- Service (IRS) to maintain the tax-qualified status of Further, if an employee holds more than one position vided to the same employer, an issue also arises the pension plans. Failure to have plan requirements with the employer, he or she must separate for a peri- whether the volunteer services constitute employ- for a bona fide severance of Employment , or failure to od of 180 days from all Employment in order to retire, ment under the IRS rules. There are a number of apply those plan provisions uniformly once they are even if the positions are covered by different retire- factors which must be considered in determining in place, could result in the pension plans losing their ment systems, or the second position is not subject whether or not Employment exists for purposes of tax-qualified status.