Chapter 5: Special Conditions - Employing Retirees

Summary

This section provides information about the special rules that apply to retirees who return to work in a position covered by a DRS plan; except at an institution of higher education—the rules for employing a retiree at an institution of higher education are addressed in the Reporting in Higher Education section.

Employer Responsibilities

Retirement Status Form

RCW 41.50.139 requires an employer to obtain a written form from all new employees indicating whether they have ever been retired from a Washington State retirement system. The information should be obtained each time an employee begins working for you. The Retirement Status Form can be used to document this information. After the form has been completed it should be filed in the employee's permanent record.

Reporting Retirees Returning to Work

If you hire a retiree, you must report the employment on the transmittal report, along with your active members. Retirees must be reported on the applicable system's transmittal report based on the position in which the retiree is working, not the system from which the employee is retired. You must indicate the employment begin date, and type code to indicate position status as defined in each Washington State retirement system. When the position status changes for a retiree (ineligible to eligible or vice-versa), you must submit an end date for the previous position, along with a begin date and position type code for the new position. When the retiree ends employment, you must report the end date, along with the appropriate type code.

Additional requirement for person who retired using the 2008 Early Reduction Factors (ERF)

A person who retired under the 2008 ERFs must be reported to DRS as a retiree returning to work if employed as an independent contractor or under a Personal Service Contract and are under 65 years of age.

See the section Reporting Retirees on the Transmittal for information on how to correctly report a retiree.

Employer Is Liable for Failure to Report

If you fail to report the employment of the retiree, you will be liable for any pension overpayments made to the retiree. In addition, if you report incorrect information that results in a retiree receiving a pension benefit in violation of the retirement rules, you are liable for any resulting overpayment.

Employer Contributions and Retirees

Effective January 1, 2012 per ESHB 1981, employers will no longer be invoiced for employer contributions for compensation earned by a retiree returning to work.

Please note that the rules shown below are still valid for work performed through December 31, 2011.

PERS Plan 1

When a PERS Plan 1 retiree works more than 867 hours in a calendar year, while employed in an eligible position, the employer will receive an invoice for the applicable employer retirement contributions for the entire duration of the retiree's employment during that calendar year.

TRS Plan 1

When a TRS Plan 1 retiree works more than 867 hours in a fiscal year, while employed by a public education employer, the employer will receive an invoice for the applicable employer retirement contributions for the entire duration of the retiree's employment during that fiscal year.

Service and Disability Retirees

Most individuals retire on a service retirement. The individual's retirement benefit is based upon the number of years of eligible service in a retirement system. Some individuals retire on a disability retirement. An individual who becomes disabled as a result of an injury on the job may be eligible to retire on a duty disability. An individual who is disabled as a result of an illness or injury off the job may be eligible to retire on a non-duty disability.

When the term retiree is used on the following pages, it applies to both service and disability retirees unless otherwise noted. Disability retirees should be aware that they might lose their right to disability benefits by returning to employment. A disability retiree can be asked to undergo a medical examination at any time. If the medical examination shows the individual has recovered from the disability, the disability benefit may stop.

Disability retirees should contact the retirement system from which they retired for information about how returning to employment may affect their retirement benefit.

Reporting Retirees on the Transmittal

These charts provide the information for correctly reporting a retiree, such as type codes, system and plans, when to report contributions, wait periods, etc. These charts do not apply to institutions of higher education.

The RRTW Higher Education Reporting Chart provides the information needed to correctly report a retiree employed by an institution of higher education.

Thinking about Working after Retirement

These publications provide detailed information about retiree wait periods and how returning to work impacts the number of hours the retiree can work before the retiree’s benefit stops for the year.

For Additional Information:

The New Hire Pyramid provides additional links to key retiree information, such as DRS Notices and FAQ’s.

Personal Service Contracts

Most retirees may work under a personal service contract as an independent contractor with no impact to their pension benefit; however, stricter return to work rules apply to retirees retired under the 2008 early retirement factors (see note below).

To qualify as an independent contractor, a worker must establish a valid contractual relationship with an employer. DRS follows the same criteria as the Internal Revenue Service for defining what constitutes a valid contractual relationship. Employers should review WAC 415-02-110 or contact their own legal counsel for assistance in determining whether a reemployed retiree's status is that of an employee or an independent contractor.

Note: Stricter return to work rules apply to a retiree who has used the 2008 early retirement factors to retire early.

  • The retiree cannot return to work as a contractor before age 65 for a DRS-covered employer and continue to receive a retirement benefit for any month in which they work. The benefit will stop the first of the month they return to work and will restart the month following the day they stop working. After age 65, work as a contractor will not affect the benefit.
  • Employers are required to use the Contractor or Third-Party Worker Retirement Status Verification form or similar document to determine an independent contractor's retirement status. Contact Employer Support Services immediately if you hire a contractor, independent contractor, or personal service contractor who retired under the 2008 early retirement factors and is under age 65.

Retiree Returning to Work Reporting Charts

First use Member Reporting Verification to determine if your new employee or contractor is a retiree of a DRS-administered plan.  Next, use these quick reference charts to report a retiree returning to work.  Select the plan from which your new employee retired, or see separate chart for retirees returning to work at an institution of higher education.

Retired From:

See Reporting Retirees - Higher Education for information on retirees returning to work at an institution of higher education.

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