Terminating Pre-Retirement Employment
IRS rules state that retirement systems must require a clear separation of service between the end of pre-retirement employment and the start of post-retirement work for covered employers. PSRS requires a separation period of one month from your PSRS retirement date.
In order for your employment to be considered terminated and meet eligibility requirements to retire, you must:
- End all employment with all PSRS-covered employers,
- Not return to work for a PSRS-covered employer in any capacity for a period of one month after your PSRS retirement date, including volunteer work if you later become a paid employee with the same employer in the same, or a similar position, and
- Not be under contract for employment at a PSRS-covered employer in any capacity until after receiving your first retirement benefit payment. A contract includes any type of early retirement incentive or separation agreement that requires you to return to work or volunteer in any capacity after retirement in return for any type of compensation, including health insurance benefits.
If Jane retires July 1, she can begin working August 1 for a PSRS-covered employer in a part-time or temporary-substitute position up to the hourly and earnings limits, and continue receiving monthly retirement benefits. She cannot sign a contract for employment or work in any capacity (including teaching summer school, working under the “Critical Shortage” Full-Time Employment Exception, and possibly volunteering) until August 1.
If you violate these rules, you are not considered terminated and are not eligible to retire and receive benefits. Therefore, you are not eligible to work at a covered employer as a retiree. In addition, you are required to repay any benefits received while ineligible, including a Partial Lump Sum Option (PLSO) payment, and may be required to pay contributions on earnings until you properly terminate your employment.