Employment After Retirement – Employer Responsibilities

The employer must report all TRS retirees employed by that employer on the Employment After Retirement (ER) Report no matter how long ago the person retired. See the  TRS Payroll Manual for more information.   Effective with the report due for September 2017 and thereafter, an employer must report all employees, including all TRS retirees, to TRS without regard to their retirement date.  In addition, effective with the report due for January 2018 certain other work or business-related relationships with TRS retirees must also be reported for the first 12 months after the person retires.  The additional relationships include TRS retirees performing duties or providing services that an employee of the educational institution would otherwise perform or provide; and

• waiving, deferring, or forgoing compensation for the duties or services;
• performing the duties or providing the services as an independent contractor;
• or serving as a volunteer without compensation and performing the same duties or providing the same services that the retiree performed or provided immediately before retiring and the retiree has an agreement to perform those duties or provide those services after the first 12 full, consecutive calendar months after the retiree’s effective date of retirement. 

TRS retirees working in these types of relationships are subject to loss of annuities if their work exceeds the limits allowed for a retiree and the employer may also owe a surcharge for work that exceeds the limits.  The relationships identified in the three bullets above do not have to be reported after the first 12 complete months following the person’s retirement unless the relationship is mischaracterized and the retiree is actually an employee of the reporting entity.

For TRS retirees that retired after September 1, 2005, including those who are working for third party entities but performing duties or providing services that employees of the reporting entity would otherwise perform, employers are required to pay surcharges to TRS on the amount paid during the calendar month that a TRS retiree works more than one-half time. Note: The surcharge amount is calculated on the amount paid in the calendar month that work subject to the surcharge was performed, not necessarily on the amount earned in that calendar month. The requirement to pay a surcharge also applies to those retirees who are not subject to forfeiture of annuities when exceeding the employment after retirement limitations, i.e., those service retirees who retired after September 1, 2005 and before January 1, 2011. Work in excess of one-half time may include:

• working a total of more than the equivalent of four clock hours for each work day in the calendar month (the total number of hours that a retiree may work is calculated based on the number of work days in that calendar month, but the hours worked on any day – including Saturdays and Sundays must be included in the total of hours worked); and
• working more than half the number of work days in the calendar month when combining one-half time employment and substitute employment in the same calendar month (Note: Work for any part of a day is considered a full day when combining substitute and half-time or less employment and working any part of any day of the month, including working on a Saturday or Sunday counts as a day worked.)

Paid time off (sick leave, vacation, admin leave, etc.) is considered employment for the purpose of determining the amount of time worked in a calendar month.

The employer is responsible for reporting TRS retirees (and paying applicable surcharges) who are employed by a third-party entity retained by the TRS-covered employer to provide personnel that perform duties or provide services that employees of the employer would otherwise perform.

All TRS retirees must observe a break in service from employment with a TRS-covered employer of one complete calendar month after their retirement date in order to have an effective retirement. If an employee retires after January 1, 2011 and wishes to work full-time at a TRS-covered employer without loss of his or her monthly retirement annuity, the retiree must observe a break–in-service of 12 consecutive calendar months following retirement. The retirement date is always the last day of the month in which the employee retires. The 12 consecutive calendar month break in service does not have to be the first 12 calendar months after retirement but the 12 calendar month break in service must occur before the retiree works more than one-half time.

June 15th Rule

If a TRS retiree’s effective retirement date is May 31, but the retiree continues to work into June (but not later than June 15th), he or she may not return to work until August 1 or later. In this situation, July would be the first complete calendar month after the employee retires that the retiree does not work. Returning to any type of work for a TRS-covered employer, including substitute employment, during the required one full calendar month break in service revokes retirement.

Working for a Third-Party Entity

The limits on employment after retirement apply for TRS retirees who retired after January 1, 2011 and who return to work for a third-party entity that provides personnel to a TRS-covered employer to perform duties or provide services that employees of the TRS-covered employer would otherwise perform. In the absence of a full 12 full, consecutive-calendar-month break in service, the retiree will forfeit the annuity for each month that he or she works more than one-half time for the third-party entity. In addition, the TRS-covered employer will owe a surcharge on any retiree who retired after September 1, 2005 that works more than one-half time, even if the retiree does not forfeit an annuity because he or she retired before January 1, 2011 or because the retiree observed a 12 full calendar month break in service.

Also, the months of employment with a third-party entity as that term is defined for TRS purposes do not count toward the 12 full, consecutive-calendar-month break in service required to avoid losing annuities.