N.J. Admin. Code § 17:1-17.14

Current through Register Vol. 56, No. 23, December 2, 2024

Section 17:1-17.14 - Retiree reemployment

(a) Definitions. For purposes of this section, the following words and terms shall have the following meanings:

1. "Defined benefit plans" means the following: Public Employees' Retirement System, Teachers' Pension and Annuity Fund, Police and Firemen's Retirement System, State Police Retirement System, Judicial Retirement System, Prison Officers' Pension Fund, and Consolidated Police and Firemen's Pension Fund.

2. "Bona fide severance from employment" means a complete termination of the employee's employment relationship with the employer for a period of at least 180 days. The following does not constitute a complete termination of the employee's relationship with the employer:

i. Employment or reemployment in a part-time position;

ii. Employment or reemployment in a position that is not covered by the Defined Benefit Plan;

iii. A change in title;

iv. Employment or reemployment as a contract employee, a leased employee, or an independent contractor; or

v. Termination of employment with a pre-arranged agreement for reemployment.

Federal Internal Revenue Service factors shall be used as guidance in determining whether an employment relationship exists. A mandatory retirement shall be treated as a bona fide severance from employment.

(b) Qualified plan status. In accordance with the 43:3C-18, the defined benefit plans are established as qualified governmental defined benefit plans in accordance with Internal Revenue Code Sections 401(a) and 414(d), or such other provision of the Federal Internal Revenue Code as applicable, regulations of the United States Department of the Treasury, and other guidance of the Federal Internal Revenue Service.

(c) Requirement for a bona fide severance from employment. In order to maintain qualified plan status, as set forth in (b) above, Federal law requires that a defined benefit plan pay retirement benefits to a member only when there is bona fide severance from employment unless both of the following conditions are met:

1. The member has attained normal retirement age under the defined benefit plan; and

2. A defined benefit plan provides for the distribution without a bona fide severance from employment (also referred to as an "in-service distribution"). As of March 9, 2012, none of the defined benefit plans provide for an in-service distribution. The Federal law requirement does not apply to disability benefits.

(d) In order to demonstrate that there has been a bona fide severance from employment in compliance with Federal law, each member and the member's employer shall certify as part of the application for a retirement benefit that the member has had a bona fide severance from employment with the employer as of a specific date and that there is no pre-arranged agreement for that member to be reemployed by the employer as an employee, a contract employee, a leased employee, or an independent contractor. The certification shall be made under penalties of perjury.

(e) Investigation. In order to comply with Federal law, if an employee who has applied and commenced a retirement benefit is reemployed by the same employer (as used in this subsection, this term shall include the agencies of a single employer) within fewer than 180 days after the specified date of termination, the Division may, but is not required to, do the following:

1. Require the employee and employer to again certify that there was no prearranged agreement for the reemployment; and

2. Investigate the circumstances of the reemployment to determine if there was, in fact a bona fide severance from employment.

(f) If after investigation in (e) above, the Division determines that there was not a bona fide severance from employment, the Division may revoke the retirement of the member and require the repayment of benefits in order to protect the qualified status of the defined benefit plans in accordance with (b) above.

(g) As required by Federal law, the Division shall issue a Form 1099-R with respect to any retired member who receives a taxable distribution from the defined benefit plans. In order to fulfill its obligations under Federal law with respect to the defined benefit plans, the Division must identify those retired members who may be subject to a premature distribution penalty (10 percent of the taxable amount of the benefit) because they have not attained age 59 1/2. In the case of a retired member who returns to employment with the same employer (as defined in (e) above) within the 180-day period specified in (e) above, if the retired member has not attained age 59 1/2 during the time that some or all of distributions were made from the defined benefit plans, the Division shall code the Form 1099-R to indicate that the distribution is an "Early Distribution" and that no known exception from the penalty applies.

(h) Effective immediately, certain retirees who have not yet met the 180-day complete termination from employment and who did not retire on a disability retirement allowance may return to work for their former employer on a temporary basis, if the following conditions are met:

1. There must not be any pre-planning of this temporary return to employment. All employees who retire on or after April 1, 2020, will be presumed to have pre-planned their temporary return to employment;

2. The retiree must have met a 30-day separation from their former employer from the date of retirement or the date of Board approval, whichever is later, in order for their retirement benefit to be considered due and payable; and

3. The employer that seeks to reemploy a retiree, who has met the criteria in (h)1 and 2 above, shall provide a statement to the Division:

i. Substantiating that the person is returning for COVID-19 emergency duty;

ii. Detailing the job description for the retiree's temporary duties;

iii. Detailing the justification for the need for this retiree's reemployment, including the expertise that the retiree brings to the agency; and

iv. Indicating the length of time during the COVID-19 emergency that the retiree's expertise would be required.

N.J. Admin. Code § 17:1-17.14

Amended by 48 N.J.R. 1306(a), effective 6/20/2016

Modified by Executive Order No. 103(2020) 52 N.J.R. 1363(a), effective 5/6/2020