Working as an Independent Contractor or Consultant after Retirement
Employees can be covered by PSRS, independent contractors cannot. Therefore, work done as an independent contractor does not count toward the PSRS working after retirement limits. However, you must meet the requirements for an independent contractor as defined by the IRS.
Corporations Working as Independent Contractors
- Whether or not an individual is incorporated does not, by itself, ensure that an individual is considered an independent contractor with respect to post-retirement employment.
- If an individual is merely performing a role that ordinarily would be considered an employee, the corporation will likely be considered an alter ego of the person, and the PSRS working after retirement limits will apply.
What is the difference between an employee and an independent contractor?
In general, the common law standard dictates that if your employer has the right to control the manner and means of accomplishing the work you are responsible for performing, then you are an employee, not an independent contractor.
Working as a Consultant
Whether a position is referred to as “consulting” does not determine whether PSRS covers that person. The critical distinction between being an employee and being an independent contractor is based on IRS definitions.
Determining Your Status
If you have questions about how to tell if your post-retirement work status is one of an employee or an independent contractor, you can find IRS guidance on the subject by visiting the IRS website www.irs.gov, by calling your local IRS office, or calling the IRS toll free at (800) 829-1040. You may also refer to IRS Publication 15-A, Employer’s Supplemental Tax Guide.
You might also be interested in ...
- Working after retirement for employers not covered by PSRS
- Working after retirement full-time for PSRS-covered employers
- Working after retirement part-time or as a temporary-substitute for PSRS-covered employers
- Limits on working after retirement
- The Critical Shortage Full-Time Employment Exception
- Volunteering after retirement
- Working after retirement record-keeping
- The PSRS brochure on Working After Retirement