Section 20: Earnings After Retirement

Introduction

New York state public retirees may be employed by participating employers of NYSTRS under certain conditions. Different regulations apply to service and disability retirees and to retirees of other New York state public retirement systems. We suggest you familiarize yourself with the information contained here, as well as information available from other affected retirement systems, before hiring a retired public employee since the retiree’s pension could be negatively affected.

Reporting a Retired Member’s Earnings

Earnings of all retired employees who receive a NYSTRS pension, no matter in what capacity they are employed, must be reported to NYSTRS by both the employer and the retiree.

The most common earnings reportable to NYSTRS include those paid on regular payroll, whether full-time, part-time or temporary. Employers need to report these payments (including earnings reportable to another retirement system) on their monthly report. Please refer to Section 2 or Section 3 of this Employer Manual for more specific information on the reporting of retirees. To determine if an individual is a NYSTRS retiree, use the Membership Verification feature in the Employer Secure Area (ESA).

NYSTRS retirees working in your district and receiving compensation from a source other than your district payroll must be reported to NYSTRS through the Earnings After Retirement application in ESA. This includes retirees paid:

As consultants (whether or not a 1099-MISC was issued)
By voucher
Through accounts payable
From other New York state funds, such as grants
Through a business entity (i.e., LLC, S-Corp, Partnership, etc.)
Through a third-party vendor

To determine if an individual receiving these types of payments must be reported to NYSTRS, use the Earnings After Retirement/Add New Retiree page in ESA. For complete instructions, please see the Earnings After Retirement Instructions.

Districts are not billed on earnings for those retirees working in retirement under Section 212 or 211 of NYS law.

Retirees Must Have Bona Fide Termination Before Working in NYS Public Service

Please note that retirees who intend to work in NYS public service in retirement must have a bona fide termination from all NYS public employment before beginning post-retirement NYS public employment. Retirees must have a minimum of a business day off payroll and fully retired (weekends and holidays do not count).

Internal Revenue Service (IRS) rules and the Retirement and Social Security Law (RSSL) require a member have a bona fide termination from public service to be eligible to retire. Bona fide termination is defined as a member stopping paid service with their employer prior to their date of retirement. In addition, a member and employer must have no prearranged agreement to return the member to service after their date of retirement. Where the employer and member expect the member will return to employment after their date of retirement, the member risks the termination not constituting a bona fide termination.

While this has always been a requirement, compliance is now receiving increased legal and administrative scrutiny.

The only exception permitted by the RSSL: Elected officials may continue serving their current term; however, they are still restricted by all post-retirement earnings limitations outlined in Sections 211 & 212.

Employers play a key role in ensuring compliance. Please verify effective resignation dates and contract timelines carefully to help members avoid complications in their retirement processing.

For Service Retirees

Please refer to the Earnings After Retirement page for information regarding the rules for NYSTRS retirees who return to NYS public employment while collecting their pension.

You can also find more information about post-retirement earnings, including the rules governing work as a consultant, in the Retired Members’ Handbook.

Section 212

Retirees employed under Section 212 are allowed to earn up to a specific amount each calendar year from all types of New York state public employment. Note that these earnings limitations apply even if the public employer contracts with a private, third-party entity to hire the retiree.

If a retiree exceeds the annual limit, NYSTRS will suspend the retiree’s pension benefit for the remainder of the calendar year. The retiree will also be required to repay NYSTRS any pension benefits received after exceeding the limit. If the retiree stops working in public service and provides written confirmation that they have stopped for the remainder of the calendar year, their pension can be reactivated.

If a retiree working in your district exceeds the earnings limit in a calendar year, you will need to complete a Retiree Earnings Verification (RMS-99) form, available on the Employer Forms page.

Section 211

Retirees who anticipate earnings in excess of the Section 212 limit may be employed under Section 211. This type of employment requires the employer to receive permission for an earnings waiver from whichever entity has jurisdiction over the retiree’s employment.

Depending on the position to be filled, a waiver may be requested from one of the following entities: New York State Department of Education, Chancellor of the New York City Department of Education, Trustees of the City University of New York, a SUNY or community college president, and the New York State or New York City Civil Service Commission. New York state public retirement systems do not grant waivers.

Waivers generally will not be granted to retirees seeking to return to the same or similar position within one year of retirement, and waivers will be limited to one year and can only be renewed once except in extreme instances. To obtain a waiver, the employer must demonstrate that there is an urgent need for the retiree's services or that there are no available, qualified non-retired persons to fill the position.

Earnings under Section 211 may be limited or unlimited as follows:

Under Section 211, if a retiree is returning to work with a waiver for a former employer, the retiree's earnings in a calendar year are limited to the difference between the retiree’s final average salary (or the salary the retiree would be earning had they not retired, if greater) and the retiree’s Maximum retirement benefit. A “former employer” is defined as an employer participating in a state retirement system which directly paid the salary or compensation of a member at any time during the two years immediately preceding the member’s retirement and that salary was used in the calculation of the member’s final average salary. Retirees cannot renounce previously reported earnings to achieve an unlimited status.

If a retiree with a waiver is returning to work for an employer other than their former employer, the retiree may earn unlimited earnings without any effect on their pension benefit.

Retirees employed under Section 211 should be included on your employer report. Specific instructions are available in Section 2 of this manual for school districts and Section 3 for colleges. If a retiree working in your district under a limited waiver exceeds the earnings limit in a calendar year, you will need to complete a Retiree Earnings Verification (RMS-99) form, available on the Employer Forms page.

Suspending a Pension

Retirees who want to have unlimited earnings without obtaining a waiver may suspend their retirement benefit. Once the benefit is suspended, the retiree has up to one year to rejoin NYSTRS. In the second year after suspending, membership is mandatory. The membership tier will be the same as the tier held prior to retirement.

Generally, by rejoining the System, the member can receive an additional retirement benefit after earning two extra years of service credit. (For Tier 3 retirees, five extra years of service credit are required.)

If the member rejoins the System and earns two years or more of additional service credit, the member has the option of having their original retirement benefit recalculated instead of collecting two separate benefits. This would require the member to repay the System the benefits received prior to suspending their pension, plus interest. Repayment can be made in a lump sum or as a permanent reduction in their new retirement benefit.

The retiree should contact NYSTRS for additional information and to obtain the appropriate membership application.

Retirees Employed as Consultants or Independent Contractors

A consultant is an independent contractor who is not an employee of the public entity for which they work. Typically, a consultant is hired and/or paid by a third-party firm. However, because the work is being performed for a public employer, the legislated earnings limit under Section 212 remains in effect for retirees who joined NYSTRS on or after May 31, 1973.

Earnings as a consultant are unlimited for those retirees who joined the System prior to May 31, 1973. However, individuals hired in this capacity must satisfy the following criteria:

The service being rendered cannot be any function or operational task which would normally be completed by a regular employee of the district.
The consultant must be working as a bona fide independent contractor rather than an employee.

See the Guidelines to Assist Reportability for Consultants, Independent Contractors and Casual Employees, available on the Employer Forms page.

All consulting agreements must be reviewed by the System prior to the commencement of services to determine whether or not an individual is a consultant for retirement benefit purposes. Improper classification could result in substantial penalties to the retired member if they exceed the earnings limitations. An employer’s characterization of employment as a “consultant” or an “independent contractor” is not binding on NYSTRS and does not necessarily require NYSTRS to accept the characterization or description. All such agreements are subject to audit at any time as deemed necessary by NYSTRS.

The earnings of all NYSTRS retirees working under consultant agreements must be reported to NYSTRS.

Information for Disability Retirees

Retirees receiving a disability retirement benefit who are contemplating employment should be strongly urged to contact the retirement system from which they are receiving benefits to ascertain the impact employment may have on their disability retirement allowance.

Tier 3-6 retirees must be totally and permanently disabled from all employment to qualify for, and continue to receive, a disability retirement benefit. Employment of any type may jeopardize the retiree’s disability pension.

While Tier 1-2 retirees must be totally and permanently disabled from further teaching, they may work in a different job that is not affected by their disability. However, certain limitations on earnings apply. The amount of earnings allowed during a calendar year is limited to the difference between their final average salary (or the salary they would now be receiving had they continued in service, whichever is greater) and their retirement benefit.

Teachers who are hired on a full-time, per annum contractual basis and are also receiving a disability retirement allowance from another New York state public retirement system must join NYSTRS. They should indicate their disability retirement status in the appropriate portion of the Application for Membership (NET-2). The tier level established for these members will be the same tier they held prior to their retirement. These employees should be reported on the employer report under their new EmplID in the same manner as all other full-time, per annum contractual employees. Membership is optional for teachers who are employed less than full time and who are receiving a disability retirement allowance from another New York state public retirement system.

Since the provisions governing employment after retirement are complex, retirees considering re-employment should contact our Retired Member Services unit at 800-348-7298, ext. 6150.

COVID-Related Legislation Regarding Earnings After Retirement

The earnings limit has been temporarily suspended at times by state executive orders since the start of the COVID-19 pandemic in March 2020. In addition, a new state law extended the retirement earnings cap suspension through June 30, 2027 for public retirees who return to work at a public school district or BOCES. For the latest information, see the Earnings After Retirement page.

Despite the suspension, all retiree earnings must still be reported to NYSTRS by both the employer and the retiree.