If a former employee who is collecting their pension benefit returns to work, there are certain stipulations the employer should understand.
If a rehired pension benefit recipient at any age returns to work in an MSRS-eligible position that is not under a State of Minnesota Post Retirement Option (PRO) appointment, there is a 30 day waiting period from the date of retirement to the rehire date.
If the rehired pension benefit recipient is over age 62, rehired under a State of Minnesota PRO agreement, there is a one-day waiting period from the date of retirement to the rehire date. If under age 62, the 30 day break applies.
Retired judges age 62 or over are not subject to a waiting period before rehired.
Retired state patrol officers age 50 or over are subject to a 1-day break in service before rehired.
An earnings limitation applies for retirees who receive a pension benefit and return to an MSRS-eligible position. The limits for those covered under the General Employees Retirement Plan and Correctional Employees Retirement Plan are imposed by MS section 352.115, Subd 10 (reemployment of annuitant). If the employee was covered under the Judges Plan or State Patrol Retirement Plan, please contact MSRS.
The maximum earnings limit per calendar year is established by the federal old age, survivors, and disability insurance program (OASDI) under United States Code, title 42, section 403. It applies to rehired pension benefit recipients who have not attained the age of normal retirement (and also in the year in which they do attain that age) per the Social Security administration rules.
The earnings limits may change each year and can be found in IRS tax code, Title 42, Section 403.
2021 earnings limits
Retirees under full retirement age is $18,960
Retirees who attain full retirement age during calendar year is $50,520. The limit no longer applies beginning of month full retirement age reached.
MNSCU pension benefit recipients who have at least ten years of service, employed on a full-time basis as a faculty member or an excluded administrator immediately prior to retirement, and is rehired by MNSCU in an appointment that is not less than one-third time and not more than two-thirds time, may earn up to $62,000 per calendar year.
Important Reporting Requirement
Quasi State (Non SEMA4) employers must report earnings for rehired pension benefit recipients even if no contributions are remitted because their salary is ineligible. MSRS reviews the status of an employee once the ernings limit is reached.
When an rehired employee reaches the earnings limit, notification is sent to employee explaining that the monthly MSRS benefit will be discontinued and held in abeyance for the rest of the calendar year.
If the retiree terminates state service before the end of the year, MSRS will restart the monthly benefit, beginning with the next month after receiving notification of the termination from the employee.
The money held in abeyance is payable per Minnesota Statutes, section 356.47, once the retiree has terminated state service, as a lump sum or rollover one year from the date that the last monthly payment was withheld.
MSRS must receive copies and sign off of all State of Minnesota PRO agreements. The agreement must include retirement date, beginning and ending dates of the agreement.
If the agreement is renewed, MSRS will sign off on the renewal, and will need the beginning and ending dates of the agreement. A new agreement form is required whenever modifying or renewing any PRO appointment.
PRO agreements can only be offered up to one year at a time for a total of five years.
To learn more, see Post-Retirement Option on the Policies, Procedures and General Memos page of MMB's website.