What follows are the basic provisions for working after PERS retirement with private employers, out-of-state employers and employers who participate in the Alaska PERS. This text also explains the reemployment restrictions for members who retired under a Retirement Incentive Program (RIP). For specific information regarding your individual retirement, please contact the Alaska Division of Retirement and Benefits.

After you retire in the PERS, you may work for a private company, in state or out of state, without limitations. You may work for an out of state or federal government employer without limitations.

If you retired under the standard provisions for the PERS (excluding Retirement Incentive Program (RIP) retirees), you may reemploy and become a member of the Teachers’ Retirement System (TRS), Judicial Retirement System (JRS) or National Guard and Naval Militia Retirement System (NGNMRS) without limitations, assuming you have had a bona fide separation (see bona fide separation policy outlined below).

You may work in a temporary, nonpermanent position, or on a personal services contract with an Alaska PERS participating employer without affecting your retirement benefits assuming you have had a bona fide separation, see bona fide separation policy outlined below.

Caution: There are some restrictions for those who retired under a Retirement Incentive Program (RIP). See RIP reemployment information below.

Returning to work with an Alaska PERS employer

Normal retirement is defined as retiring with either age or service eligibility for an unreduced retirement benefit. After vesting, normal PERS retirement age is 55 for Tier I, 60 for Tiers II/III, and any age for "all others" with 30 years of service or police/firefighters with 20 years of service. (Normal retirement does not include RIP retirees.)

1. Returning to work with a PERS employer in a permanent full-time or part-time position after normal retirement.
   • Alaska Statute 39.35.150 prohibits a member from working in a PERS covered position while receiving PERS retirement benefits.
   • If you go back to work in a PERS position, your retirement benefit will be suspended until you terminate employment. PERS contributions will be deducted from your paycheck and you will accrue PERS service. You are required to pay back any retirement benefits you receive while simultaneously earning PERS credit. This amount must be paid in full before you retire again.
   • For most members, when you retire again, your first retirement benefit will be restarted once we receive notification that you have terminated employment. You must apply for the additional retirement benefit earned during reemployment. The additional benefit will be calculated using your back-to-work employment segment and salaries.
   • For those first hired prior to July 1, 1977, a second option is also available; your retirement benefit can be recalculated combining your original service and back-to-work service. This combined service is then multiplied by the average monthly salary, based on your high three consecutive salaries and a 2% benefit multiplier. Upon your subsequent retirement, you may elect the calculation you prefer.
2. Returning to work with a PERS employer in a permanent full-time or part-time position after early retirement.
   • Early retirement is defined as retiring prior to normal age eligibility with a reduced retirement benefit. After vesting, early retirement age is 50-54 for Tier I and 55-59 for Tiers II/III.
   • If you go back to work in a PERS position, your retirement benefit will be suspended until you terminate employment. PERS contributions will be deducted from your paycheck and you will accrue PERS service.
   • When you retire again, if you were first hired prior to July 1, 1977, you may have your benefit calculated in one of two ways. Your first and second retirement benefits can be calculated together, as if you had not retired early, with an actuarial reduction based on what you received on early retirement. Or, you may choose to have your previous retirement reinstated. A second retirement benefit will then be calculated using your back-to-work employment segment and salaries. This benefit will have an actuarial increase based on the duration of your reemployment and the difference between your early retirement compared to a normal retirement benefit.
   • If you were first hired after July 1, 1977, you will receive your original retirement benefit and a second benefit based on your back-to-work employment segment and salaries.
3. Returning to work after taking a Level Income Option (LIO) at retirement.
   • Under the Level Income Option, you receive a larger PERS retirement benefit before age 65 and a smaller benefit after age 65.
   • When you return to work, your LIO retirement will be recalculated and adjusted for the pre-65 and post-65 benefits when you terminate employment. Please contact the Division of Retirement Benefits for further information on the effects of reemployment with this option.

• Health insurance plans

  If you receive major medical (either paid by the State of Alaska or yourself) and/or dental-vision-audio coverage under the AlaskaCare Retiree Health Plan, it will end on the last day of the month in which you become reemployed in the PERS. However, if you are reemployed on the first day of a month, your coverage will end on the last day of the previous month.

  If you have health insurance under your employer, you may need to verify when it goes into effect. If there is a waiting period before your active coverage begins, you may want to purchase retiree COBRA coverage. The division will provide you with the form and information when we are notified of your return to work.

  • Dental-Vision-Audio (DVA) insurance plan
    If you selected the optional DVA insurance plan at retirement, you may continue this coverage once you retire again.
  • Long-Term Care (LTC) insurance plan
    If you or you and your spouse are participating in the LTC program, you must pay the premiums during your period of reemployment in order to continue coverage. If you do not pay the premiums, you will not be eligible for LTC when you retire again. The division will provide you with the form and information when we are notified of your return to work in a PERS-eligible position.

RIP reemployment

If you retired under the Retirement Incentive Program (RIP), and return to work in a position that is covered by the Teachers’ Retirement System, the Public Employees’ Retirement System or (for those who retired under the 1996-2000 RIP) the Judicial Retirement System or the University of Alaska's Optional Retirement Program, you will:

1. Forfeit the three years of incentive credit that you received; and
2. 1. For the 1986 and 1989 RIPS, owe the PERS 110% of the benefits that you received as a result of the program, including any costs for health insurance.
   2. For the 1996-2000 PERS classified school district staff, owe the PERS 110% of the benefits that you received as a result of the program, including any costs for health insurance.
   3. For the 1996-2000 PERS (non-school district staff), owe the PERS 150% of the benefits that you received as a result of the program, including any costs for health insurance.

An indebtedness will be established for what you owe and will be reduced by the amount that you paid to participate in the RIP.

Interest (currently 7%) will accrue on your indebtedness from the date that you become reemployed until the indebtedness is either completely paid or you retire again. Any balance remaining when you retire again will result in an actuarial reduction to your future retirement benefits.

If you retired under the 1996-2000 PERS RIP, you have the following additional restrictions: you are prohibited from entering into personal services contracts with the University of Alaska or a state of Alaska agency or returning to State employment in a temporary or nonpermanent capacity for five years after you retire (State of Alaska and Municipal PERS) or three years after you retire (school district PERS).

Exceptions for RIP Retirees who want to go back to work

The following exceptions are very specific and narrowly defined:

1. Personal services contracts may be allowed by the University Board of Regents for the University and the Commissioner of Administration for the State when there is a compelling reason to retain an employee who has specialized or extensive experience that relates to a particular program or project.
2. Personal services contracts with the legislature are allowed during legislative sessions for hourly individuals who are not eligible for retirement, health, or leave benefits.
3. Personal services contracts with the University of Alaska may be allowed for individuals who are employed only to teach or perform research duties.
4. Personal services contracts during the three- or five-year restriction with a State agency or the University of Alaska if it is determined that there is a compelling reason to do so because of an individual’s specialized or extensive experience that relates to a particular program or project.

Need more information?

Please contact the Pension Adjustment Unit, Division of Retirement and Benefits by telephone at (907) 465-4460 or email .

Important Documents:

• PERS Standard Option — Reemployed Retiree form (pers018)
• PERS Working After Retirement (pers031)

What follows are the basic provisions for working after TRS retirement with private employers, out of state employers and employers who participate in the Alaska TRS. It also explains the reemployment restrictions for members who retired under a Retirement Incentive Program (RIP). For specific information regarding your individual retirement, please contact the Alaska Division of Retirement and Benefits.

After you retire in the TRS, you may work for a private company, in state or out of state, without limitations. You may work for an out of state or federal government employer without limitations.

If you retired under the standard provisions for the TRS (excluding Retirement Incentive Program (RIP) retirees), you may reemploy and become a member of the Public Employees’ Retirement System (PERS), Judicial Retirement System (JRS) or National Guard and Naval Militia Retirement System (NGNMRS) without limitations, assuming you have had a bona fide termination of employment (see bona fide termination policy outlined below).

You may work in a temporary, nonpermanent position, or on a personal services contract with an Alaska TRS participating employer without affecting your retirement benefits, assuming you have had a bona fide termination of employment (see bona fide termination policy outlined below).

Caution: There are some restrictions for those who retired under a Retirement Incentive Program (RIP). See RIP reemployment information below.

Returning to work with an Alaska TRS employer

Normal retirement is defined as retiring with either age or service eligibility for an unreduced retirement benefit. After vesting, normal TRS retirement age is 55 for Tier I, 60 for Tier II, and any age for all tiers with 20 years of service. (Normal retirement does not include RIP retirees.)

1. Returning to work with a TRS employer in a permanent full-time or part-time position after Normal Retirement.
   • Alaska Statute 14.25.043 prohibits a member from working in a TRS covered position while receiving TRS retirement benefits.
   • If you go back to work in a TRS position, your retirement benefit will be suspended until you terminate employment. TRS contributions will be deducted from your paycheck and you will accrue TRS service. You are required to pay back any retirement benefits you receive while simultaneously earning TRS credit. This amount must be paid in full before you retire again.
   • If you receive a contract for 172 days or more which entitles you to receive a full year of TRS service credit, the reemployment date is July 1, the beginning of the school year. Retirement benefits will stop effective June 30. You are not eligible for retirement benefits from July 1 to June 30 of the school year in which you become reemployed.
   • If you work less than 172 days, the reemployment date will be the actual hire date and you will accrue a partial year service credit. Retirement benefits will stop as of the date of reemployment.
   • For most members, when you retire again, your first retirement benefit will be restarted once we receive notification that you have terminated employment. You must apply for the additional retirement benefit earned during reemployment. The additional benefit will be calculated using your back-to-work employment segment and salaries.
   • Members are required to pay back any retirement benefits they receive while simultaneously earning TRS credit. This amount must be paid in full before you retire again.
2. Returning to work with a TRS employer in a permanent full-time or part-time position after Early Retirement.
   • Early retirement is defined as retiring prior to normal age eligibility with a reduced retirement benefit. After vesting, early retirement age is 50-54 for Tier I and 55-59 for Tier II.
   • If you go back to work in a TRS position, your retirement benefit will be suspended until you terminate employment. TRS contributions will be deducted from your paycheck and you will accrue TRS service.
   • The period of reemployment is determined by whether or not your contract is for 172 days or more (see additional information under #1).
   • When you retire again, you will receive your original retirement benefit and a second retirement benefit that is based on your back-to-work employment segment and salaries.

• Health insurance plans

  If you receive major medical (either paid by the State of Alaska or yourself) and/or dental-vision-audio coverage under the AlaskaCare Retiree Health Plan, it will end on the last day of the month in which you become reemployed in the TRS. However, if you are reemployed on the first day of a month, your coverage will end on the last day of the previous month.

  If you have health insurance under your employer, you may need to verify when it goes into effect. If there is a waiting period before your active coverage begins, you may want to purchase retiree COBRA coverage. The division will provide you with the form and information when we are notified of your return to work.

  • Dental-Vision-Audio (DVA) insurance plan
    If you selected the optional DVA insurance plan at retirement, you may continue this coverage once you retire again.
  • Long-Term Care (LTC) insurance plan
    If you or you and your spouse are participating in the LTC program, you must pay the premiums during your period of reemployment in order to continue coverage. If you do not pay the premiums, you will not be eligible for LTC when you retire again. The division will provide you with the form and information when we are notified of your return to work in a TRS-eligible position.

RIP Reemployment

If you retired under the Retirement Incentive Program (RIP), and return to work in a position that is covered by the Teachers’ Retirement System, the Public Employees’ Retirement System or (for those who retired under the 1996-2000 RIP) the Judicial Retirement System or the University of Alaska's Optional Retirement Program, you will:

1. forfeit the three years of incentive credit that you received; and
2. owe the TRS 110% of the benefits that you received as a result of the program, including any costs for health insurance.

An indebtedness will be established for what you owe and will be reduced by the amount that you paid to participate in the RIP.

Interest (currently 7%) will accrue on your indebtedness from the date that you become reemployed until the indebtedness is either completely paid or you retire again. Any balance remaining when you retire again will result in an actuarial reduction to your future retirement benefits.

If you retired under the 1996-2000 TRS RIP, you have the following additional restrictions: you are prohibited from entering into personal services contracts with the University of Alaska or a state of Alaska agency or returning to State employment in a temporary or nonpermanent capacity for three years after you retire.

Exceptions for RIP Retirees who want to go back to work

The following exceptions are very specific and narrowly defined:

1. Personal services contracts may be allowed by the University Board of Regents for the University and the Commissioner of Administration for the State when there is a compelling reason to retain an employee who has specialized or extensive experience that relates to a particular program or project.
2. Personal services contracts with the legislature are allowed during legislative sessions for hourly individuals who are not eligible for retirement, health, or leave benefits.
3. Personal services contracts with the University of Alaska may be allowed for individuals who are employed only to teach or perform research duties.
4. Personal services contracts during the three- or five-year restriction with a State agency or the University of Alaska if it is determined that there is a compelling reason to do so because of an individual’s specialized or extensive experience that relates to a particular program or project.

The PERS and TRS plans require benefits to be stopped during re-employment in a position that participates in the same retirement system (Alaska Statute 39.35.152 ; AS 14.25.043 ). Now, federal law similarly restricts re-employment into positions which are not covered by the retirement systems, such as temporary, nonpermanent positions or independent contractors if the positions are with the same employer from which the person retired. This policy was adopted to protect the retirement systems and members by placing restrictions of retiree re-employment with the same employer into non-covered positions.

Federal Treasury Regulations require employers and employees to be able to prove the returning retiree actually terminated employment by showing there was no pre-arrangement to return to work prior to the employee’s retirement and by showing a period of separation from employment.

In 2016, the IRS and treasury Department released proposed regulations for different requirements for the governmental plans which allow for in-service distributions before retirement and governmental plan sponsors may rely on them until the issuance of final regulations.

Failure to follow the qualification requirements under 26 U.S.C. § 401a(36) and the proposed normal retirement age regulations regarding in-service distributions raises potential qualification issues for a plan and early distribution tax penalties for the individual.

Importantly for purposes of this Policy, the pension and annuity plans administered by this Division (PERS, TRS and JRS) are qualified, governmental plans. Maintaining the qualified status of each plan is the top priority of the Division and it is of paramount importance to each plan and all their respective members, retirees, and beneficiaries.

Accordingly, the Division must take all steps necessary to preserve the qualified status of the plans.

The PERS, TRS and JRS do not allow in-service distributions of tax qualified funds (AS 14.25.220(37) TRS, AS 22.25.010 JRS and AS 39.35.370 PERS). The Division has conferred with its outside tax counsel, ICE Miller LLP, and confirmed that in order to avoid potential early distribution tax penalties for our members and to avoid a risk of disqualification of our plans, retirees must clearly demonstrate a valid severance from employment with their participating employer so that the retiree does not receive an in-service distribution in violation of the terms of the plans (the IRS refers to the valid severance from employment with the employer as a “bona fide separation from service”). To have a bona fide separation from service, a member cannot retire from service with his/her employer, but also have a prearranged agreement to be rehired by the same employer.

The Division requires the member to certify at retirement that there is no pre-arrangement to return to work with the same employer by confirming that on the retirement application form. The Division does not have to collect evidence to prove compliance or noncompliance, but it does need to have a policy regarding reemployment in compliance with federal law requirements for a qualified, governmental pension plan.

For retirees who are under age 62, there must be a separation employment of 6 months or more before rehire with the same employer in any capacity. For retirees who are age 62 or older there must be a separation of 60 days before rehire with the same employer in any capacity.

The Division has implemented the certification of no pre-arrangement for employment by adding a check box to the retirement applications for retirees to indicate whether there is a pre-arrangement for reemployment with the same employer.

Terms specific to this policy:

1. Sham Termination

   A situation where a member and his/her employer agree to a break in service for the member to commence his/her retirement benefits, but with a pre-arrangement for the member to return to employment with the same employer once retirement benefits have begun.

2. Same Employer

   All branches, departments, divisions and sections with a single employer are under the umbrella of that employer. Reemployment with a different branch, department, division or section is deemed to be reemployment with the same employer.

3. Early Distribution

   Under U.S. Code Section 72(t) , an early distribution of retirement funds, without satisfying one of the stated exceptions, results in a 10% tax penalty levied by the IRS on the member’s benefit. This is particularly relevant to members who are less than age 59 ½.

Employees:

1. Notification

   The explanation will also be part of the instruction guide in the retirement packet, as well as communicated in seminars, one-on-one counseling, brochures and on the Division web site. A one-time mailing will be sent to all active employees advising them about the rehire rules.

2. Education

   The rehire policy was communicated in the instruction guide in retirement packets, seminars, one-on-one counseling, brochures, and on the Division web site.

3. Enforcement

   If a rehire is detected or reported with the same employer within less than 6 months from the member’s retirement and the member is under age 62, the Division will contact the employer and the member for confirmation that no prearrangement existed at the time of termination. Depending on the member’s age, the member’s 1099-R will be coded as an early distribution (without a known exception) as of the date of retirement. Any member who is contemplating re-employment with his/her same employer in violation of this policy should consult with his/her tax advisor regarding the effect of this enforcement action upon him/her.