Thinking About Working After Retirement?
For Plan 2 and Plan 3 Members of the Public Employees' (PERS) and School Employees' (SERS) Retirement Systems
Last Updated January 2012
This publication describes the possible impacts on your retirement benefit if you return to work for an employer covered by one of the Washington State retirement systems. You can return to work for an employer not covered by a Washington State retirement system without impacting your retirement benefit, unless you are a disability retiree.
When do I become a retiree?
It is important to understand when you become a retiree because you must first retire before you can be covered under the return to work laws. You become a retiree on your effective retirement date. Your effective retirement date is set when you:
- Meet the age and service requirements;
- Terminate all employment with DRS-covered employers;
- Sever all agreements (written or verbal) for future DRS-covered employment; and
- File an application for retirement with DRS.
Once these steps are taken, your effective retirement date depends on your status at retirement and the plan to which you belong. Your effective retirement date is the first day of the month following termination of employment, if you are eligible to retire when you separate from service.
If you are not eligible to retire when you separate from service, your effective retirement date is the first of the month following the date you meet the age and service requirements.
Please note: If you terminate employment and apply for retirement, but return to work for a DRS-covered employer before your effective retirement date, your retirement is nullified, you return to active membership, resume paying contributions and must return to DRS any benefit payments already received.
- Sally applies for retirement and terminates employment on August 15, 2008. She meets the age and service requirements. Her effective retirement date will be September 1, 2008.
- Jackson applies for retirement and terminates employment on June 23, 2007 with enough service to meet one of the eligibility requirements for retirement. But he does not meet the age requirement until June 23, 2009. So his effective retirement date will be July 1, 2009 - the date he meets both the age and service eligibility requirements.
After I retire can I work for an employer not covered by DRS?
Yes. Your benefit will only be affected if you work for a DRS-covered employer. If you are unsure if an employer is covered, contact DRS.
What should I do if I return to work for a DRS-covered employer?
If you return to work for a DRS-covered employer, it is important to let your employer know you are a retiree. Your employer is required to report your employment to DRS. If your employer does not know you are retired, you may be reported as an active member - which may stop your benefit.
What happens if I return to work less than 30 days after I retire?
If you return to work for a DRS-covered employer before being retired for 30 consecutive calendar days, your benefit will be reduced 5.5 percent for every eight hours you work to a maximum of 160 hours each month. If the reduction is more than the benefit, the remaining amount will be deducted from the next month's benefit payment. The reduction continues until you are separated from employment for 30 consecutive calendar days.
What happens if I return to work more than 30 days after I retire?
The rules that determine the number of hours you can work and continue receiving your benefit at the same time depend on how you choose to retire.
If you choose a normal retirement or early retirement using factors other than the 2008 Early Retirement Factors (ERF)*
You will continue to receive retirement benefits if you wait at least 30 consecutive calendar days after you retire and you work:
- For a DRS-covered employer, but your position is ineligible for membership in a DRS or higher education retirement plan (HERP), or
- 867 hours or less in a calendar year in one or more eligible DRS- or HERP-covered positions. Your retirement benefits stop once you work more than 867 hours in a calendar year. Your benefits will resume following your last day of employment, or at the beginning of the next calendar year, whichever comes first.*
If you choose to retire early using the 2008 ERF**
If you retire using the 2008 ERF, and have not reached age 65, you cannot work:
- In any capacity for a DRS-covered employer and continue to receive your benefit. If you do return to work, you will not receive your monthly benefit for any month in which you work. Your benefit will restart the first of the month after you stop working. Once you reach age 65, you can work under the rules previously described.
You cannot earn compensation from a DRS-covered employer for services performed as a contractor and continue to receive a monthly benefit.
For more information, see the DRS brochure Thinking About Retiring Early?
*Effective July 1, 2011, higher education employers may not offer participation in HERP to retirees (or members who are eligible to retire) from any retirement plan administered by DRS and listed in RCW 41.50.030. If you're a rehired retiree who was participating in a HERP before July 1, 2011, you may continue to do so, and you are subject to the return to work rules described in this borchure.
**The 2007 Legislature passed a law to end gain sharing after January 1, 2008. Under the new law, Plan 2 and Plan 3 members of PERS and SERS may choose to use the 2008 ERF at retirement. To qualify for the 2008 ERF, members must be at least 55, have 30 years of service credit and retire on or after July 1, 2008 for PERS and September 1, 2008 for SERS.
If a court of law decides the repeal of gain sharing is invalid, the early retirement factors and return to work rules for early retirement that were in place before the passage of the new law will apply.
Can I work over the annual limit?
You can work as many hours as you wish in a calendar year. However, if you work over the maximum number of hours allowed, your retirement benefit will be stopped for the remainder of the calendar year or until you terminate employment. In the month you exceed the limit, your benefit will be prorated.
- Ellen retires effective January 1, 2009, and returns to work on February 1, 2009. She works full-time for the rest of the year. On July 11, 2009, she exceeds 867 hours of employment. Her benefit is stopped on July 12. She will receive a partial month's benefit for July 1 through July 11.
Can I return to active membership?
You are not required to return to PERS or SERS membership, but you may elect to do so if you are employed in an eligible position.
If you retired from PERS or SERS with less than 15 years of service credit, you may become a contributing member of the Teachers' Retirement System (TRS), Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF), Public Safety Employees' Retirement System (PSERS) or First-Class Cities (Seattle, Spokane or Tacoma). However, your PERS or SERS benefit may be stopped pending termination of your employment.
Recalculating your benefit
Your return to active PERS or SERS membership may impact your future retirement. If your retirement status was terminated because you returned to membership, your retirement benefits will be recalculated when you reapply for benefits. If you first retired early, the actuarial value of the monthly payments you received may be assessed against your second retirement.
Be sure to contact DRS for an estimate before resuming membership.
What if I retired as a dual member?
A dual member retiree is retiree who qualified for retirement by using service credit accumulated under more than one system. In certain situations, returning to membership results in termination of benefits under both systems. If you have questions, contact DRS.
What if I am receiving a disability retirement?
If you are retired because of a disability, your right to receive a benefit is subject to the same conditions as service retirees. However, DRS may require a disability retiree to have a medical examination at any time. If a medical examination shows that you have recovered from your disability, your disability retirement benefits will stop.
Overpayments and Underpayments: If you receive an overpayment of your retirement benefit, you will be required to repay the amount of the overpayment to DRS. If you receive an underpayment, DRS will correct the error and pay you the amount owed.
Deferred Compensation: If you are receiving payment from the Deferred Compensation Program (DCP), your payments will not be affected by your return to work. If you are not yet receiving payment and return to work, you can continue making contributions to the plan up to an annual maximum contribution amount depending on your income. If you have questions, please contact DCP.
Health Care: If you retired from state government, a public education institution or a local government employer participating in the Public Employees Benefits Board (PEBB), you may have the option to return to PEBB-sponsored coverage. If you have questions about your health care coverage, please contact the Health Care Authority. If you retired from a local government employer, you need to coordinate with your employer and health care provider to determine what you can do.
If you have questions about returning to work after retirement that are not covered in this publication, please contact DRS. Be prepared to provide your name, Social Security number, and retirement system and plan.