105 KAR 1:390. Employment after retirement.

105 KAR 1:390. Employment after retirement.

RELATES TO: KRS 16.505(15), 61.510, 61.637, 78.510(3), (18), 26 U.S.C. 401(a), 26 C.F.R. 1.401-1, 1.401(a)-1

STATUTORY AUTHORITY: KRS 61.645(9)(g)

NECESSITY, FUNCTION, AND CONFORMITY: KRS 61.645(9)(g) authorizes the Board of Trustees of Kentucky Retirement Systems to promulgate administrative regulations necessary or proper in order to carry out the purposes and provisions of KRS 61.515 to 61.705, 16.510 to 16.652, and 78.520 to 78.852. This administrative regulation concerns the administration of KRS 61.637 in conjuction with federal law regarding bona fide separation from service and changes in employment relationship if a member returns to employment with a Kentucky Retirement Systems participating employer after retirement, whether in a Kentucky Retirement Systems Covered position or a noncovered position 26 C.F.R. 1.401-1(a)(2) requires that a qualified plan expressly provide in its statues and regulations (plan documents) how it shall administer its plan in accordance with federal law in order to maintain the tax-qualified status of the plan. This administrative regulation is necessary to maintain the tax qualified status of the Kentucky Employees Retirement System, the County Employees Retirement System, and the State Police Retirement System under 26 U.S.C. 401(a), and to comply with the provisions established in 26 C.F.R. 1.401-1(b)(1)(i) and 1.401(a)-1.

Section 1. Definitions. (1) "Bona fide separation from service" means a cessation of the employment relationship between the member and the member's employer without a prearranged agreement between the participating employer and the member upon retirement to return to work for the participating employer after retirement in any capacity, including an agreement to return as a leased employee.

(2) "Covered Position" means a position required to participate in the Kentucky Employees Retirement System, County Employees Retirement System, or State Police Retirement System.

(3) "Noncovered Position" means a position not required to participate in the Kentucky Employees Retirement System, County Employees Retirement System, or State Police Retirement System.

(4) "Normal retirement age" means:

(a) Age sixty-five (65) for a nonhazardous member, in accordance with KRS 61.510(18), and 78.510(18); or

(b) Age fifty-five (55) for a hazardous member as defined in KRS 16.505(15).

Section 2. Requirements for Commencing a Retirement Benefit. (1)(a) For purposes of commencing a retirement benefit, a member shall terminate employment with the participating employer and shall have a bona fide separation from service, except as provided in Section 9 of this administrative regulation.

(b) A prearranged agreement to be reemployed as a leased employee or as an independent shall be evaluated by the Kentucky Retirement Systems to determine if there is a continuing employment relationship.

(2)(a) In order to show compliance with this administrative regulation, the retiring member and the member’s last employer shall certify upon application for a retirement benefit that a prearranged agreement to reemploy the retiring member has not been made.

(b) The member and the member’s last employer shall complete and file at the retirement office the Form 6751, Member and Employer Certification Regarding Reemployment.

(c) The retired member shall report in writing to Kentucky Retirement Systems future employment in any capacity with the same employer from which the member retired or with an employer that participates in the retirement system from which the member retired.

(d) The retirement office shall not process a monthly retirement allowance until the member has filed the Form 6751, Member and Employer Certification Regarding Reemployment, at the retirement office.

Section 3. The Same Employer for Purposes of KERS and SPRS. For purposes of applying KRS 61.637, all participating employers in the Kentucky Employees Retirement System and the State Police Retirement System shall be treated as the same participating employer.

Section 4. The Same Employer for Purposes of CERS. For purposes of applying KRS 61.637, each county, as defined by KRS 78.510(3), shall be treated as a separate employer.

Section 5. Returning to work with the same participating employer. (1) Returning to work in a covered position in the same retirement system without a break in service or a bona fide separation from service.

(a) If the member does not have a one (1) calendar month break in service or does not have a bona fide separation from service, except as provided in Section 9 of this administrative regulation, and returns to work with the same participating employer, in a covered position in the same retirement system, the member’s retirement shall be voided.

(b) The member shall repay all retirement allowances, dependent child payments, and health plan premiums paid by the Kentucky Retirement Systems.

(2) Returning to work in a covered position in a different retirement system.

(a)1. If the member does not have a bona fide separation from service, except as provided in Section 9 of this administrative regulation, and returns to work with the same participating employer in a covered position in a different retirement system, the member's retirement shall be voided.

2. The member shall repay all retirement allowances, dependent child payments, and health plan premiums paid by the Kentucky Retirement Systems.

(b)1. If a member does have a bona fide separation from service (unless a bona fide separation from service is not required by Section 9 of this administrative regulation) and returns to work with the same participating employer in a covered position in a different retirement system and if the member does not have a one (1) calendar month break in service, the member's benefit shall be suspended for the first month of the member's reemployment.

2. The member shall repay all retirement allowances, dependent child payments, and health plan premiums paid by the Kentucky Retirement Systems during the month.

(3)(a) Returning to work in a noncovered position. If the member does not have a one (1) calendar month break in service or does not have a bona fide separation from service, and returns to work with the same participating employer, in a noncovered position in any of the systems administered by Kentucky Retirement System, the member's retirement benefit shall be suspended for the duration of the employment.

(b) If the member received any retirement allowances, dependent child payments, or health plan premiums in error during the period of suspension, the member shall repay all retirement allowances, dependent child payments, and health plan premiums paid by the Kentucky Retirement Systems during the period of suspension.

(4)(a) Returning to work with the same principal duties. If the member has a one (1) calendar month break in service and if there was a bona fide separation from service, and the member returns to work with the same participating employer in a position, whether covered or noncovered, with the same principal duties, the member’s retirement benefit shall be suspended for a period beginning on the first of the month of the reemployment and ending on the first of the month following six (6) months from the member’s first employment termination date, unless the member had reached normal retirement age at the time of employment termination.

(5) Returning to work with different principal duties. If the member has a one (1) calendar month break in service and if there was a Bona Fide Separation from Service, and the member returns to work with the same participating employer in a position, whether covered or noncovered, with different principal duties, the member’s retirement benefit shall continue unaffected.

Section 6. Returning to Work for a Different Participating Employer. (1) bona fide separation from service not required.

(a) If the member returns to work in any position, whether covered or noncovered, with a different participating employer than the member’s last employer prior to retirement, a bona fide separation from service shall not be required.

(b) The requirement that there be at least a one (1) month break in service shall be applicable as established in subsection (5) of this section and in KRS 61.637.

(2) Returning to work in the same retirement system with a break in service. If the member has a one (1) calendar month break in service, and the member returns to work with a different participating employer in the same retirement system from which the member retired, in any position, whether covered or noncovered, the member's retirement benefit shall continue unaffected.

(3)(a) Returning to work in a covered position in the same retirement system without a break in service. If the member does not have a one (1) calendar month break in service, and returns to work with a different participating employer in a covered position in the same retirement system from which the member retired, the member's retirement shall be voided.

(b) The member shall repay all retirement allowances, dependent child payments, and health plan premiums paid by the Kentucky Retirement Systems.

(4) Returning to work in a noncovered position in the same retirement system without a break in service. If a member does not have a one (1) calendar month break in service, and returns to work with a different participating employer in the same retirement system in a noncovered position the member's retirement benefit shall continue unaffected.

(5) Returning to work in a different retirement system. If the member does not have a one (1) calendar month break in service, and returns to work with a different participating employer in a different retirement system, in any position, whether covered or noncovered, the member’s retirement benefit shall continue unaffected.

Section 7. Status as an Employee. (1) A member and a Kentucky Retirement Systems participating employer shall file written notice at the retirement office if the member has accepted employment with the participating employer under a personal services contract.

(2) If Kentucky Retirement Systems determines that the member is an employee of the participating employer, rather than an independent contractor, the member shall be subject to Sections 5 and 6 of this administrative regulation.

(3) Kentucky Retirement Systems shall take appropriate action to determine the individual's status as an independent contractor or employee.

Section 8. Leased Employees. (1) A member and a participating employer shall file at the retirement office written notice if the member is performing work for the participating employer through a private leasing company, a temporary staffing agency, or any other company.

(2) If the retirement system determines that the member is an employee of the participating employer, rather than the private leasing company, temporary staffing agency, or other company, the member shall be subject to the provisions of Sections 5 and 6 of this administrative regulation.

Section 9. A Member who has Reached the Member’s Normal Retirement Age. (1) For purposes of administering the provisions of KRS 61.637, a bona fide separation from service shall not be required if a member has attained normal retirement age at the time of termination of employment.

(2) The requirement that there be at least a one (1) month break in service shall be applicable as set forth in this administrative regulation and in KRS 61.637.

Section 10. Incorporation by Reference. (1) "Member and Employer Certification Regarding Reemployment", Form 6751, November 2007, is incorporated by reference.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Retirement Systems, Perimeter Park West, 1260 Louisville Road, Frankfort, Kentucky 40601, Monday through Friday, from 8 a.m. to 4:30 p.m. (34 Ky.R. 826; 1388; eff 1-4-2008.)