Retirees Returning to Work

Non-Covered Employment

Non-covered employment is a part-time position with a VRS-participating employer. Non-covered positions do not provide eligibility for benefits. Part-time positions typically require 80% or less of the hours of comparable full-time permanent positions. Some full-time positions may be considered non-covered if they are temporary and require 80% or less of the hours per year that would be considered full-time and permanent for that position. Note that some permanent salaried part-time state positions are covered under VRS.

Teaching While Retired

Retirees may work in a non-covered part-time teaching or adjunct faculty position with their former employer and continue to receive retirement benefits, provided they have a bona fide break in service of at least one full calendar month from their retirement date over a period they normally would work. This includes teachers who retire under an early retirement incentive program (ERIP). If retirees work in more than one part-time position for their former employer, the total number of hours must not exceed a part-time schedule.

Periods of leave with or without pay, including educational leave and sabbaticals, as well as intersession periods do not count toward satisfying the bona fide break in service. Summer breaks for employees on nine-, 10- and 11-month contracts also do not satisfy this break.

Examples

• A teacher on a nine-month contract for the period August 1 to May 31 is retiring at the end of the contract. If the teacher wishes to return to the same employer on a part-time basis, the months of June, July and August will not count toward satisfying the bona fide break in service. To continue receiving retirement benefits, the earliest the retiree could return to work would be September 1.
• A teacher on a 10-month contract for the period August 20 to June 15 is retiring at the end of the contract. If the teacher wishes to return to the same employer on a part-time basis, the months of July and August will not count toward satisfying the bona fide break in service. To continue receiving retirement benefits, the earliest the retiree could return to work would be October 1.

Working in a Non-Covered Position

• Retirees who return to non-covered employment with the employer from which they retired will continue to receive their retirement benefits if they have a bona fide break in service. The Commonwealth of Virginia, including all state agencies and public colleges and universities, is considered one employer. School divisions and political subdivisions are considered separate employers.
• There can be no verbal or written offer of reemployment between you and the employee as certified on the employee's retirement application.
• If a retiree returns to covered employment, his or her benefits must stop. The retiree will resume active membership.

Federal Requirements

VRS administers a tax-qualified pension plan under Section 401(a) of the Internal Revenue Code. Under most circumstances, the Internal Revenue Code prohibits distributions from a qualified pension plan to members who are working for the employer from which they retired. For VRS, this includes:

• Retirees who return to non-covered employment with the employer from which they retired without a bona fide break in service.

Because federal requirements govern VRS retirement plans, non-compliance may result in penalties for employers and VRS. Members and retirees also may face tax consequences.

Collection of Benefit Overpayments

If you hire a retired former employee in a non-covered position without a bona fide break in service, you may be liable for repaying any retirement benefits the retiree receives while working in the position.

As provided in Section 51.1-124.9(B) of the Code of Virginia, VRS is authorized to collect benefit overpayments from the employer, not the retiree, in cases where the employer does not comply with return-to-work provisions.

Covered Employment

Covered employment is a full-time permanent, salaried position with an employer that participates in VRS or in an optional retirement plan. Some part-time permanent, salaried state positions are also covered under VRS.

Retirees who return to covered employment, generally will be rehired in the plan from which they retired. In certain circumstances involving hazardous duty service or judicial service, retirees will be rehired under the currently applicable retirement plan for that position.

Upon employment in a covered position, the retiree's benefits must stop effective with the date of the new position.

Counsel Employees About Returning to Work

If employees retire and then decide to return to covered employment, their future benefits may be impacted. When retiring again, the employee will retire under the currently applicable plan for that position, which may change the benefit calculation for the second retirement. The retiree’s benefit calculation also will include the additional service credit earned upon reemployment as well as any increase in average final compensation . In many cases, that will result in a higher subsequent benefit than the previous retirement benefit. However, depending on their circumstances, the next benefit may actually be less.

Examples

• If a retiree is receiving cost-of-living adjustments (COLAs) and returns to covered employment, the COLAs will not immediately resume upon subsequent retirement. As a result, the subsequent benefit may be less than the previous benefit, especially if the retiree has been receiving the COLA for several years. The retiree will become eligible for a COLA effective July 1 of the second calendar year after the subsequent retirement date. The COLA will be calculated as if the retiree were retiring for the first time.
• Employees who retired under a severance program administered by VRS will lose any additional retirement credits used to calculate their retirement benefit upon subsequent retirement. This may affect whether or not the retiree's next benefit is less than the current benefit amount.

Hazardous Duty Enhanced Benefits and Return to Work

If the employee retired with an enhanced benefit from a position covered by VRS, SPORS or VaLORS and returns to covered employment with any VRS-participating employer in any capacity, the retirement benefit will be determined based on the plan the employee is covered under at the time of subsequent retirement. This may result in the loss of enhanced hazardous duty retirement benefits.

Subsequent Retirement After Disability Retirement

Retirees on disability retirement who return to covered employment will retire under service retirement when they retire again. The period of time they were retired on disability will be included in the calculation of their service retirement benefit. If a former disability retiree wishes to retire on disability retirement again, he or she must reapply by submitting all required disability retirement forms and documents. The application will be evaluated under the medical review process based on the duties of the new position.

Working in a Covered Position

• There can be no verbal or written offer of reemployment between you and the employee as certified on the employee's retirement application.
• The retiree will resume active membership.
• For retirees who return to work and then retire again, any cost-of-living adjustments they were receiving during their previous retirement will not resume into their next retirement. They will become eligible for the COLA effective July 1 of the second calendar year after their subsequent retirement date. The COLA will be calculated as if they are retiring for the first time. Read more about the COLA.

Federal Requirements

VRS administers a tax-qualified pension plan under Section 401(a) of the Internal Revenue Code. Under most circumstances, the Internal Revenue Code prohibits distributions from a qualified pension plan to members who are working for the employer from which they retired. For VRS, this includes:

• Retirees who return to covered employment under a retirement plan administered by VRS (this is also prohibited under the Code of Virginia).

Because federal requirements govern VRS retirement plans, non-compliance may result in penalties for employers and VRS. Members and retirees also may face tax consequences.

Collection of Benefit Overpayments

If you hire a retiree in a position that would be considered covered and do not report the retiree to VRS, you may be liable for repaying any retirement benefits the retiree receives while working in the position.

As provided in Section 51.1-124.9(B) of the Code of Virginia, VRS is authorized to collect benefit overpayments from the employer, not the retiree, in cases where the employer does not comply with return-to-work provisions.

Critical Shortage Positions

K-12 Critical Shortage Positions

A retiree may be eligible to teach or serve as a principal or assistant principal in a critical shortage position in a Virginia public school. The retiree does not have to retire as a teacher or school administrator as long as he or she becomes licensed by the Virginia Board of Education for the position he or she will hold.

Positions are full time and temporary (non-covered) for the current school year and the employer must recruit annually to fill the position before hiring or re-hiring a retiree in a critical shortage position; and if the retiree qualifies, he or she will continue to receive VRS retirement benefits. If the retiree is on VRS disability retirement, he or she cannot work in a critical shortage position and continue to receive a retirement benefit.

To be considered for a K-12 critical shortage position, a retiree must:

• Be retired from a VRS-covered position. Members of the State Police Officers' Retirement System, the Virginia Law Officers' Retirement System and the Judicial Retirement System are not eligible.
• Be hired by a Virginia public school division in a designated teacher critical shortage position.
• Hold a Virginia Board of Education license for the position.
• Have a break in service of at least 12 consecutive months between your retirement date and the date you wish to work in a critical shortage position. This break in service means not working in any full-time, part-time or volunteer position, including coaching and substitute teaching, with any VRS-participating employer, or working for a contractor with any VRS-participating employer.
• Not have retired with a reduced VRS benefit under an early retirement incentive program (ERIP).
• Not have retired under the Transitional Benefits Program or the Workforce Transition Act with an enhanced monthly VRS benefit.
• Not be on VRS disability retirement.
• Not have a prearranged commitment, either verbal or written, with the school division before the employee’s retirement date.

Bus Driver Critical Shortage Positions

A retiree may be eligible to return to work full time as a bus driver in a critical shortage position at a Virginia public school. Positions are full-time and temporary (non-covered) for the current school year. A qualifying retiree will continue to receive a retirement benefit but will not earn additional service credit.

To be considered for a bus driver critical shortage position, a retiree must:

• Be retired from an eligible VRS-covered position. Members of the State Police Officers’ Retirement System, the Virginia Law Officers’ Retirement System and the Judicial Retirement System are not eligible.
• Be hired in a designated bus driver critical shortage position for a Virginia public school division.
• Have a break in service of at least 12 consecutive months between your retirement date and the date you wish to work in a bus driver critical shortage position. This break in service means not working in any full-time, part-time or volunteer position with a VRS-participating employer, or working for a contractor with any VRS-participating employer.
• Not have retired with a reduced VRS benefit under an early retirement incentive program (ERIP).
• Not have retired under the Transitional Benefits Program or the Workforce Transition Act with an enhanced monthly VRS benefit.
• Not be on VRS disability retirement.
• Not have a prearranged commitment, either verbal or written, with the school division before the employee’s retirement date.

Forms

Certification of Eligibility for Critical Shortage Teachers or Administrators (VRS-160)

A retiree employed in a K-12 critical shortage position must complete this form at the time of employment each year as long as the retiree continues to be employed in a K-12 critical shortage position. The employer must certify the form and send it to VRS by September 1. If hired after September 1, the form should be submitted as soon as possible.

Certification of Eligibility for Critical Shortage Bus Drivers (VRS-160D)

A retiree employed in a bus driver critical shortage position must complete this form at the time of employment each year as long as the retiree continues to be employed in a bus driver critical shortage position. The employer must certify the form and send it to VRS by September 1. If hired after September 1, the form should be submitted as soon as possible.

Enrollment

• Employers must enroll each critical shortage employee in myVRS Navigator.
• To ensure that the retiree's monthly retirement benefit continues while serving in the critical shortage position, employers must designate the retiree with the VRS job title, "Critical Shortage Teacher" or "Critical Shortage Bus Driver", in myVRS Navigator. Do not use the "teacher" or "bus driver" job name, which will cause the retiree's monthly retirement benefit to end.

School Security Officer Positions

Retired sworn law-enforcement officers may be eligible to return to work full time as a retiree school security officer at a Virginia public school. Positions are full-time; and if retirees qualify, they will continue to receive retirement benefits but will not earn additional service credit.

To be considered for a retiree school security officer position and continue to receive a retirement benefit, retirees must:

• Be retired from a sworn law-enforcement officer position covered under VRS.
• Be hired by a Virginia public school division in a retiree school security officer position.
• Have a break in service of at least 12 consecutive months between their retirement date and the date they wish to work in a retiree school security officer position. This break in service means not working in any full-time, part-time or volunteer position with a VRS-participating employer, or working for a contractor with any VRS-participating employer.
• Not have retired with a reduced VRS benefit under an early retirement incentive program (ERIP).
• Not have retired under the Transitional Benefits Program or the Workforce Transition Act with an enhanced monthly VRS benefit.
• Not be on VRS disability retirement.
• Not have a prearranged commitment, either verbal or written, with the school division before their retirement date.

Forms

Certification of Eligibility for Retiree School Security Officers (VRS-160C)

A retiree employed in a school security officer position must complete this form at the time of employment each year as long as the retiree continues to be employed in a school security officer position. The employer must certify the form and send it to VRS by September 1. If hired after September 1, the form should be submitted as soon as possible.

Enrollment

Retirees hired in the retiree school security officer position should not be enrolled using myVRS Navigator. Currently, reporting retiree school security officers is a manual process. VRS will use the Certification of Retiree School Security Officers form (VRS-160C) to manually track enrollments, annual salaries and contributions. When the process has been programmed into the system, employers will be provided guidance on enrolling and submitting contributions retroactive to July 1, 2020.