FAQs - Re-Employment After Retirement
As a retiree from the County, it is important that you understand the consequences of reemployment after you retire. In some instances there may be a limitation as to what you may earn before it affects your pension benefit. In other instances there may be a restriction imposed by the Internal Revenue Service (IRS).
Reemployment with a County Government participating employer
Anne Arundel County policy requires that there be a minimum 30-day break in employment between the person’s date of retirement with the County and their subsequent date of re-hire. This break applies to ALL retired County employees regardless of their age at their date of retirement or employment classification upon re-hire.
Internal Revenue Service (IRS) guidelines prohibit distributions from a qualified pension plan to participants who are actively employed in either a full-time or part-time position with an employer covered by the plan. This prohibition extends to participants under the age of 59 ½ years who are re-employed after retirement without a bona fide break in service. The IRS may impose a 10% penalty on your retirement benefit if you violate the prohibition.
Consequently, you must be removed from the County payroll for at least 30 days before being reemployed by the County. Also, your decision to retire must not be conditioned upon an offer of re-employment. In fact, no offer of re-employment should be discussed by you and your employer prior to retirement.
If you are reemployed with an Anne Arundel County Government employer after you retire, certain types of employment are subject to an earnings limit and your retirement benefit may be reduced by $1.00 for every $2.00 you earn as an employee. Prior to accepting employment with the County, you should contact the Benefits Office to discuss any potential impact on your retirement allowance.
RETIREES FROM DROP ARE SUBJECT TO AN EARNINGS LIMITATION REGARDLESS OF THE TYPE OF EMPLOYMENT ACCEPTED WITH THE COUNTY AFTER RETIREMENT. THE EXCEPTIONS BELOW DO NOT APPLY TO DROP RETIREES.
Exceptions to the Earnings Limitation
Exceptions to the earnings limitation are if the employee (other than a DROP retiree) is retired from the County as:
A classified employee and is reemployed by the County as:
- An exempt employee under §802(a)(14) of the Charter; which would be a person assigned to an hourly rate position for temporary help, provided that the person is not compensated for more than 1500 hours per calendar year;
- An employee of the Sheriff in a position that requires the employee to be certified as a Police Officer by the Police Training Commission if the employee was certified as a Police Officer by the Police Training Commission at the time the employee retired;
- An employee of the State’s Attorney in a position that requires the employee to be certified as a Police Officer by the Police Training Commission if the employee was certified as a Police Officer by the Police Training Commission at the time the employee retired;
Retired from the County as an exempt employee under the County Personnel Code § 6-2-101, 6-2-101, or 6-2-105 in a position that is not exempt from the provisions of the Fair Labor Standards Act, 29 U.S.C §207 et eq. and is reemployed by the County as an exempt employee under§802(a)(14) of the Charter.
Reemployed by the private sector or a public sector employer OTHER THAN Anne Arundel County Government
If you elected a normal or early service retirement and accept employment with the private sector or with a non-participating County Government employer, there are no restrictions. You will continue to receive your full monthly retirement benefit regardless of your employment income.
Reemployment Impact for Disability Retirees
This section applies only to retirees from the Employees’ Retirement Plan.
If you were granted disability retirement, you are subject to an earnings limitation for any employment accepted after retirement. This provision only applies in the first five years of retirement.
You are required to report employment earnings to the County annually and failure to do so may result in cessation of your retirement benefits. Your monthly benefit is subject to an adjustment or suspension if your annual pension benefit received during a calendar year, when added together with employment earnings, if any, exceeds the current salary of a similarly classified position from which you retired. Any offset will not be greater than your annual pension amount.
You should discuss specific circumstances with the Benefits Office to ensure that you make an informed decision regarding your retirement benefits and any offset that may be applicable.