105 KAR 1:390 - Employment after retirement
RELATES TO: KRS 15.420(2)(a), 16.010, 16.505, 61.505, 61.510, 61.565, 61.590, 61.637, 61.675, 61.702, 70.291 - 70.293, 78.510, 78.545, 78.5540, 78.625, 78.635, 95.022, 158.441, 164.952, 26 U.S.C. 401(a), 26 C.F.R. 1.401-1, 1.401(a)-1
NECESSITY, FUNCTION, AND CONFORMITY: KRS 61.505(1)(g) authorizes the Kentucky Public Pensions Authority to promulgate administrative regulations on behalf of the Kentucky Retirement Systems and the County Employees Retirement System that are consistent with KRS 16.505 to 16.652, 61.505, 61.510 to 61.705, and 78.510 to 78.852. KRS 61.637(18) and 78.5540(5) requires the Kentucky Public Pensions Authority to promulgate administrative regulations to implement the requirements of KRS 61.637 and 78.5540. This administrative regulation concerns the administration of KRS 61.637 and 78.5540 in conjunction with federal law regarding bona fide separation from service and changes in employment relationship if a retired member returns to employment with a participating employer in a retirement system operated by the Kentucky Public Pensions Authority. 26 C.F.R. 1.401-1(a)(2) requires that a qualified plan expressly provide in its statutes and administrative regulations (plan documents) how it shall administer its plan in accordance with federal law in order to maintain the tax qualified status of the plan. This administrative regulation is necessary to maintain the tax qualified status of the Kentucky Employees Retirement System, the County Employees Retirement System, and the State Police Retirement System under 26 U.S.C. 401(a), and to comply with the provisions established in 26 C.F.R. 1.401-1(b)(1)(i) and 1.401(a)-1.
Section 1. Definitions.
(1) "Bona fide separation from service"
means:
(a) A cessation of the employment
relationship between the member and the member's employer; and
(b) There is no prearranged
agreement.
(2) "Employee"
means a retired member who is performing services for an employer in a manner
that demonstrates an employment relationship under the common law factors used
by the Internal Revenue Service.
(3) "Non-participating position" means any
position of employment with a participating employer other than a regular
full-time position or a regular full-time officer position.
(4) "Participating position" means a regular
full-time position or a regular full-time officer position.
(5) "Prearranged agreement" means a verbal or
written, explicit or implicit agreement:
(a)
Between the retired member and his or her employer for the retired member to
reemploy with the employer within twelve (12) months after the retired member's
effective retirement date; and
(b)
That occurred prior to the retired member's effective retirement
date.
(6) "Retirement
date" means the member's effective retirement date as described in
KRS
61.590(5) and
78.545(4).
Section 2. Form 6000 Certification.
(1) In order to retire with the systems, an
eligible member shall complete and file a valid Form 6000, Notification of
Retirement, which shall comply with the requirements of
KRS
61.590,
KRS
78.545, and
105 KAR 1:200.
(2) The agency shall not process a Form 6000,
Notification of Retirement, until the member certifies on the Form 6000 that
there is no prearranged agreement for reemployment with a participating
employer after the member's retirement date.
Section 3. Employment After Retirement.
(1) A retired member who is reemployed with a
participating employer in any position, including participating positions and
non-participating positions, shall have:
(a) A
bona fide separation from service; and
(b) A break in service as provided in
subsection (3) of this section.
(2)
(a) A
retired member who is reemployed with a participating employer in any position,
including participating positions and non-participating positions shall not
have a prearranged agreement.
(b)
An elected official who is reelected and takes office in the same elected
position as he or she held prior to retirement within twelve (12) months after
his or her effective retirement date shall be deemed to have a prearranged
agreement.
(3) "Break in
service" as provided in this section shall require that:
(a) For effective retirement dates prior to
January 1, 2024:
1. A member who retired from
a hazardous position shall have a one (1) month break in service before
returning to work with any participating employer in a regular full-time
hazardous participating position.
2. Except as provided in subparagraph 1. of
this paragraph, a member who retired from a hazardous or nonhazardous position
shall have a three (3) month break in service before returning to work with any
participating employer in a participating or nonparticipating
position.
(b) For
effective retirement dates beginning January 1, 2024, a member who retired from
a hazardous or nonhazardous position shall have a one (1) month break in
service before returning to work with any participating employer in a
participating or nonparticipating position.
(4) If a retired member seeks reemployment
with a participating employer within twelve (12) months of his or her
retirement date, then the following shall be filed:
(a) A valid Form 6751, Employer Certification
Regarding Reemployment, completed by the participating employer, which shall
certify that there was no prearranged agreement;
(b) A valid Form 6754, Member Reemployment
Certification, completed by the retired member; and
(c) Any other information requested by the
agency from the participating employer and the retired member pursuant to
KRS
61.637(8) and
78.5540(2)(a).
(5)
(a) The
agency shall issue a final determination to the retired member no later than
thirty (30) calendar days after receipt of all required forms and additional
requested information.
(b) If the
agency determines that the retired member failed to comply with any of the
requirements of this section or federal law, the retired member's retirement
shall be voided and he or she shall repay all retirement allowances, dependent
child payments, and hospital and medical insurance plan premiums paid by the
systems.
Section
4. Independent Contractors and Leased Employees.
(1) If a retired member seeks to provide
services to a participating employer as an independent contractor, under a
professional services contract, or as a leased employee within twelve (12)
months of the retired member's retirement date, then the following shall be
filed:
(a) A valid Form 6752, Employer
Certification of Independent Contractor/Leased Employee, completed by the
participating employer;
(b) A valid
Form 6754, Member Reemployment Certification, completed by the retired
member;
(c) A complete copy of any
contract under which services are provided by the retired member to the
participating employer; and
(d) Any
other information requested by the agency from the participating employer and
the retired member pursuant to
KRS
61.637(9) and
78.5540(2)(b).
(2) The agency shall apply common
law factors used by the Internal Revenue Service (IRS), in accordance with IRS
Publication 1779, Independent Contractor or Employee, to determine whether a
retired member is an employee of the participating employer or an independent
contractor of the participating employer. The agency may also consider rules
issued by the United States Department of Labor for determining whether a
worker is an employee or an independent contractor under federal wage and hour
law.
(3)
(a) The agency shall issue a final
determination to the retired member no later than thirty (30) calendar days
after receipt of all required forms and requested information.
(b) If the agency determines that the retired
member is an employee of the participating employer, rather than an independent
contractor or leased employee through a leasing company, staffing agency, or
other entity:
1. The retired member shall be
subject to the provisions of Section 3 of this administrative regulation and
shall have a "bona fide separation from service" and "break in service";
and
2. The employer shall:
b. Pay employer contributions for the retired
member as specified by
KRS
61.565,
61.702, and
78.635; and
c. Reimburse the systems for the cost of
hospital and medical insurance plan premiums paid by the systems for the
retired member.
(c) If the agency determines that the retired
member is an independent contractor or leased employee through a leasing
company, staffing agency, or other entity, the retired member may still be
required to observe a bona fide separation from service to the extent required
by federal law.
Section
5. Volunteers.
(1) If a retired
member seeks to volunteer with a participating employer within twelve (12)
months of the retired member's retirement date, then the following shall be
filed:
(a) A valid Form 6753, Employer
Certification of Volunteer, completed by the participating employer;
(b) A valid Form 6754, Member Reemployment
Certification, completed by the retired member; and
(c) Any other information requested by the
agency from the participating employer and retired member pursuant to
KRS
61.637(8) and
78.5540(2)(a).
(2)
(a) The
agency shall issue a final determination to the retired member no later than
thirty (30) calendar days after receipt of all required forms and requested
information.
(b) If the Agency
determines that the retired member is an employee of the participating
employer, rather than a volunteer:
1. The
retired member shall be subject to the provisions of Section 3 of this
administrative regulation and shall have a "bona fide separation from service"
and "break in service"; and
2. The
employer shall:
b. Pay employer contributions for the retired
member as specified by
KRS
61.565,
61.702, and
78.635; and
c. Reimburse the systems for the cost of
hospital and medical insurance plan premiums paid by the systems for the
retired member.
(c) If the agency determines that the retired
member is a volunteer, the retired member may still be required to observe a
bona fide separation from service to the extent required by federal
law.
Section 6.
Hospital and Medical Insurance Plan Premium Reimbursements for Retired Members
Reemployed by Multiple Participating Employers.
(1) This section shall only apply to a
retired member who is reemployed by a participating employer on or after
September 1, 2008 in accordance with
KRS
61.637(17) and
78.5540(4).
(2) If a retired member is reemployed by
multiple participating employers in a month in two (2) or more regular
full-time positions, one (1) regular full-time position and one (1) or more
part-time positions pursuant to
KRS
61.680(6) and
78.545, or multiple part-time
positions pursuant to
KRS
61.680(6) and
78.545, then:
(a) Each participating employer shall be
responsible for reimbursing the systems for a portion of the hospital and
medical insurance plan premium paid by the systems to provide coverage for the
retired member for that month; and
(b) The portion shall be equal to the cost of
the premium divided by the number of participating employers that are not
exempt from reimbursement of hospital and medical insurance plan
premiums.
(3)
Participating employers that are exempt from reimbursement of hospital and
medical insurance plan premiums under Section 7 of this administrative
regulation, or by virtue of being a school board employing the retired member
for eighty (80) calendar days or less during the fiscal year, are not
responsible for hospital and medical insurance plan premiums under this
section.
Section 7.
Exemption for Payment Of Employer Contributions and Reimbursement of Hospital
and Medical Insurance Plan Premiums for Retired Members Reemployed as Police
Officers and School Resource Officers.
(1)
This section shall only apply to a retired member who is reemployed by a
participating employer on or after September 1, 2008 in accordance with
KRS
61.637(17) and
78.5540(4).
(2)
(a) A
participating employer shall be exempt from paying employer contributions and
from reimbursing the systems for the cost of the hospital and medical insurance
plan premiums paid by the systems for a retired member reemployed as a police
officer pursuant to KRS 70.291 to
70.293 for a term of appointment
of no more than one (1) year if a valid Form 6760, County Police or Sheriff
Appointment of Retired Police Officer, and the supporting documentation
required by the Form 6760 are on file prior to the start of the retired
member's term of appointment.
(b)
If a valid Form 6760, County Police or Sheriff Appointment of Retired Police
Officer, and the supporting documentation required by the Form 6760 are not on
file prior to the start of the retired member's term of appointment as a police
officer pursuant to KRS 70.291 to
70.293, then the participating
employer shall be exempt from paying employer contributions and reimbursements
of hospital and medical insurance plan premiums for a retired member reemployed
as a police officer pursuant to
KRS
70.291 to
70.293 effective in the month
after a valid Form 6760 and supporting documentation are on
file.
(3)
(a) For each subsequent term of reappointment
after the initial term of appointment listed on the valid Form 6760, County
Police or Sheriff Appointment of Retired Police Officer, described in
subsection (1) of this section, the participating employer shall be exempt from
paying employer contributions and from reimbursing the systems for the cost of
the hospital and medical insurance plan premiums paid by the systems for a
retired member reemployed as a police officer pursuant to
KRS
70.291 to
70.293 for a term of
reappointment of no more than one (1) year if a valid Form 6764,
Recertification of Retired Police Officer, is on file prior to the start of the
retired member's term of reappointment.
(b) If a valid Form 6764, Recertification of
Retired Police Officer, is not on file prior to the start of the retired
member's term of reappointment as a police officer pursuant to
KRS
70.291 to
70.293, then the participating
employer shall be exempt from paying employer contributions and reimbursements
of hospital and medical insurance plan premiums for a retired member reemployed
as a police officer pursuant to
KRS
70.291 to
70.293 effective in the month
after a valid Form 6764 and supporting documentation are on
file.
(4)
(a) A participating employer shall be exempt
from paying employer contributions and from reimbursing the systems for the
cost of the hospital and medical insurance plan premiums paid by the systems to
provide coverage for a retired member reemployed as a school resource officer
pursuant to KRS
158.441 for a term of appointment of no more
than one (1) year if a valid Form 6766, Appointment of Retired School Resource
Officer, and the supporting documentation required by the Form 6766 are on file
prior to the start of the retired member's term of appointment.
(b) If a valid Form 6766, Appointment of
Retired School Resource Officer, and the supporting documentation required by
the Form 6766 are not on file prior to the start of the retired member's term
of appointment, then the participating employer shall be exempt from paying
employer contributions and reimbursements of hospital and medical insurance
plan premiums for a retired member reemployed as a school resource officer
pursuant to KRS
158.441 effective in the month after a valid
Form 6766 and supporting documentation are on file.
(5)
(a) A
participating employer shall be exempt from paying employer contributions and
from reimbursing the systems for the cost of the hospital and medical insurance
plan premiums paid by the systems for a retired member reemployed as a Kentucky
State Police school resource officer pursuant to
KRS
158.441 for a term of appointment of no more
than one (1) year if a valid Form 6767, Appointment of Kentucky State Police
School Resource Officer, and the supporting documentation required by the Form
6767 are on file prior to the start of the retired member's term of
appointment.
(b) If a valid Form
6767, Appointment of Kentucky State Police School Resource Officer, and the
supporting documentation required by the Form 6767 are not on file prior to the
start of the retired member's term of appointment, then the participating
employer shall be exempt from paying employer contributions and reimbursements
of hospital and medical insurance plan premiums for a retired member reemployed
as a Kentucky State Police school resource officer pursuant to
KRS
158.441 effective in the month after a valid
Form 6767 and supporting documentation are on file.
(6)
(a) A
participating employer shall be exempt from paying employer contributions and
from reimbursing the systems for the cost of the hospital and medical insurance
plan premiums paid by the systems for a retired member reemployed as a police
officer by a postsecondary institution pursuant to
KRS
164.952 for a term of appointment of no more
than one (1) year if a valid Form 6768, Postsecondary Institution Appointment
of Retired Police Officer, and the supporting documentation required by the
Form 6768 are on file prior to the start of the retired member's term of
appointment.
(b) If a valid Form
6768, Postsecondary Institution Appointment of Retired Police Officer, and the
supporting documentation required by the Form 6768 are not on file prior to the
start of the retired member's term of appointment, then the participating
employer shall be exempt from paying employer contributions and reimbursements
of hospital and medical insurance plan premiums for a retired member reemployed
as a police officer by a postsecondary institution pursuant to
KRS
164.952 in the month after a valid Form 6768
and supporting documentation are on file.
(7) A participating employer shall not be
eligible for exemption from payment of employer contributions or from
reimbursing the systems for the costs of hospital and medical insurance plan
premiums for any retired members reemployed as a police officer pursuant to
KRS
95.022 unless a valid Form 6769,
Certification of Employed Police Officers Calendar Year 2015, is on
file.
(8)
(a) A participating employer with a valid
Form 6769, Certification of Employed Police Officers Calendar Year 2015, on
file shall be exempt from paying employer contributions and from reimbursing
the systems for the costs of hospital and medical insurance plan premiums for a
retired member reemployed as a police officer pursuant to
KRS
95.022 for a term of appointment of no more
than one (1) year if a valid Form 6770, City Appointment of Retired Police
Officer, and the supporting documentation required by the Form 6770 are on file
prior to the start of the retired member's term of appointment.
(b) If a valid Form 6770, City Appointment of
Retired Police Officer, and the supporting documentation required by the Form
6770 are not on file prior to the start of the retired member's term of
appointment, then the participating employer with a valid Form 6769,
Certification of Employed Police Officers Calendar Year 2015, on file shall be
exempt from paying employer contributions and reimbursements of hospital and
medical insurance plan premiums for a retired member reemployed as a police
officer pursuant to KRS 95.022 effective in the
month after a valid Form 6770 and supporting documentation are on
file.
(9)
(a) For each subsequent term of reappointment
after the initial term of appointment listed on the valid Form 6770, City
Appointment of Retired Police Officer, described in subsection (7) of this
section, the participating employer with a valid Form 6769, Certification of
Employed Police Officers Calendar Year 2015, on file shall be exempt from
paying employer contributions and hospital and medical insurance plan premiums
paid by the systems for a retired member reemployed as a police officer
pursuant to KRS
95.022 for a term of reappointment of no more
than one (1) year if a valid Form 6774, City Recertification of Retired Police
Officer, is on file prior to the start of the retired member's term of
reappointment.
(b) If a valid Form
6774, City Recertification of Retired Police Officer, is not on file prior to
the start of the retired member's term of reappointment, then the participating
employer shall be exempt from paying employer contributions and reimbursements
of hospital and medical insurance plan premiums for retired member reemployed
as a police officer pursuant to
KRS
95.022 in the month after a valid Form 6774
is on file.
(10) If the
appropriate form as required by this section is not on file, then the employer
shall not be exempt from paying employer contributions and reimbursement of
hospital and medical insurance plan premiums.
Section 8. Incorporation by Reference.
(1) The following material is incorporated by
reference:
(a) Form 6000, "Notification of
Retirement", June 2023;
(b) Form
6751, "Employer Certification Regarding Reemployment", December 2023;
(c) Form 6752, "Employer Certification of
Independent Contractor/Leased Employee", December 2023;
(d) Form 6753, "Employer Certification of
Volunteer", December 2023;
(e) Form
6754, "Member Reemployment Certification", December 2023;
(f) Form 6760, "County Police or Sheriff
Appointment of Retired Police Officer", December 2023;
(g) Form 6764, "Recertification of Retired
Police Officer", December 2023;
(h)
Form 6766, "Appointment of Retired School Resource Officer", December
2023;
(i) Form 6767, "Appointment
of Kentucky State Police School Resource Officer", December 2023;
(j) Form 6768, "Postsecondary Institution
Appointment of Retired Police Officer", December 2023;
(k) Form 6769, "Certification of Employed
Police Officers Calendar Year 2015", December 2023;
(l) Form 6770, "City Appointment of Retired
Police Officer", December 2023;
(m)
Form 6774, "City Recertification of Retired Police Officer", December 2023;
and
(n) Internal Revenue Service
Publication 1779, "Independent Contractor or Employee", March 2023.
(2) This material may be
inspected, copied, or obtained, subject to applicable copyright law, at the
Kentucky Public Pensions Authority, 1260 Louisville Road, Frankfort, Kentucky
40601, Monday through Friday, from 8:00 a.m. to 4:30 p.m. This material is also
available on the Authority's Web site at kyret.ky.gov.
Notes
STATUTORY AUTHORITY: KRS 61.505(1)(g), 61.590, 61.637(18), 78.5540(5)
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