ORBIT

Return to Work Laws

Man with truck

Some retirees of the Teachers’ and State Employees’ Retirement System and Local Governmental Employees’ Retirement System will officially retire and later be reemployed. If the retiree returns to work for an employer in the Retirement System from which they retired, certain earnings limitations may apply.

The earnable allowance is the amount the retiree is allowed to earn per year during reemployment, under most circumstances. Please click on the "Educate Yourself" tab in ORBIT to learn more about reemployment after retirement. Retirees of the Consolidated Judicial Retirement System, Legislative Retirement System, and Registers of Deeds’ Supplemental Pension Fund should contact the Retirement Systems Division to discuss reemployment provisions for their systems.

Over time, the North Carolina General Assembly has enacted, and amended, laws governing the return to work for all retirees of the North Carolina Retirement Systems.

Return-to-work laws apply differently to members of the Local Governmental Employees’ Retirement System (LGERS) and the Teachers’ and State Employees’ Retirement System (TSERS), so before you decide to return to work for an employer under the Retirement System from which you retired, you should familiarize yourself with the laws governing return-to-work. As a retiree, you are responsible for knowing and abiding by the return-to-work laws that apply to your particular situation.

Please be aware that violation of the return-to-work laws could cause you to incur financial penalties, possible loss of retirement benefits and/or possible loss of health coverage.

Financial Penalty for TSERS returning to work for TSERS Employer

Financial Penalty for TSERS returning to work for TSERS Employer

If you retired under TSERS, to avoid a financial penalty, you must be retired at least 6 months before performing any services for a TSERS employer in any capacity (except as a school board member, a member of a board of trustees of a community college or of any constituent institution of the University of North Carolina, or a volunteer in a position normally designated as an unpaid bona fide volunteer position, as described in the section Returning to Service Without a Penalty). As an active employee, you may not establish an agreement for post-retirement employment with a TSERS employer.

The financial penalty for returning to work for a TSERS employer on a part-time, temporary, interim, or fee for service basis, during the 6 months immediately following TSERS retirement, will be the lesser of the following as determined by the Retirement System:

  • You will be deemed to have retired the month after the month you ceased to perform services for the employer and repay all retirement benefits received and the cost of State-provided State Health Plan premiums until that date; or
  • You will be required to make a lump sum payment to the retirement system equal to three times the compensation earned during the 6-month period.

If you return to work for a TSERS employer in a position that requires TSERS membership during the 6 months immediately following your retirement date, your TSERS benefits will be cancelled retroactively to your retirement date, and you must repay all retirement benefits received and the cost of state-provided State Health Plan premiums since your retirement date. If your retirement benefit is cancelled, your State Health Plan retiree group coverage also will be cancelled.

NOTE: If you are reemployed in a permanent TSERS position which requires at least 30 hours per week of work on a recurring basis for 9 months per year, your retirement payment must be stopped and you will again become a contributing TSERS member.

Financial Penalty for LGERS retiree returning to work for LGERS Employer

Financial Penalty for LGERS retiree returning to work for LGERS Employer

You cannot perform any work for an LGERS employer during the month in which your initial LGERS retirement became effective without a financial penalty. As an active employee, you may not establish an agreement for post-retirement employment with a LGERS employer.

The financial penalty for returning to work for an LGERS employer on a part-time, temporary, interim, or fee for service basis, during the month immediately following the effective date of LGERS retirement, will be the lesser of the following as determined by the Retirement System:

  • You will be deemed to have retired the month after the month you ceased performing services for the employer and repay all retirement benefits received until that date; or
  • You will be required to make a lump sum payment to LGERS equal to three times the compensation earned during the month immediately following the effective date of retirement.

If you return to work for an LGERS employer in a position that requires LGERS membership during the month of your effective date of retirement, your LGERS benefit will be cancelled retroactively to your retirement date, and you must repay all retirement benefits received since your retirement date.

NOTE: You are required to be a contributing LGERS member if you are regularly employed as an officer or employee of a participating LGERS employer in a regular position that requires at least 1,000 hours of work in a calendar year. You will not be a contributing member of LGERS if your work is considered “temporary employment,” meaning employment for a limited term which does not exceed 12 consecutive months on a non-recurring basis for an LGERS employer, or “statutorily required interim employment,” meaning employment as an interim city or county manager for a period that does not exceed 12 months on a non-recurring basis.

Returning to Work with a Private Entity

Returning to Work with a Private Entity

If you are employed with a private-sector agency or a government agency that does not participate in the sysem (LGERS or TSERS) from which you retired (i.e., the federal government, another state government, or another municipality that does not participate in LGERS or TSERS) and you do no work for a participating system agency, your lifetime system retirement benefit will continue. In other words, the return-to-work laws do not restrict you from gaining employment in general, but rather these laws place certain restrictions on you if you return to work with, or do any work for, a participating system agency.

However, if you return to work for a private entity, such as a temporary staffing agency or a Limited Liability Corporation (LLC), which then assigns you to do work for, or “leases” you back to, the participating system employer from which you retired, you will be subject to the return-to-work laws when such an  arrangement is merely a pass-through arrangement or is seen as an attempt to circumvent the applicable return-to-work laws.

Returning to Work and Stopping Your Benefit Voluntarily

Returning to Work and Stopping Your Benefit Voluntarily

TSERS

After the required 6-month break, if you go back to work in a regular contributing TSERS position which requires you to be a permanent employee who works at least 30 hours per week for 9 months per year, your TSERS retirement benefit must be suspended the month following the month in which you return to work, and you will again be a contributing member of TSERS in the month in which you are restored to service. When you are no longer employed by a participating TSERS agency, your TSERS retirement benefits may be reinstated. However, you must re-apply for retirement.

LGERS

After the 1-month break, if you go back to work in a regular contributing LGERS position which requires at least 1,000 hours of work per calendar year, your LGERS retirement benefit must be suspended the month following the month in which you return to work, and you will again be a contributing member of LGERS in the month in which you are restored to service. When you are no longer employed by a participating LGERS agency, your LGERS retirement benefits may be reinstated. However, you must re-apply for retirement.

Violation of Return-to-Work Laws; Benefit Stopped

Violation of Return-to-Work Laws; Benefit Stopped

TSERS

After the 6-month break, if the Retirement System is not notified immediately upon your return to work in a position in which you should have become a contributing TSERS member, all TSERS benefits paid to you beginning with the month following the month you returned to TSERS employment must be repaid to the Retirement System. You can choose to go back to work in any position at an agency that participates in the TSERS at any time after the 6-month break, but if you work in a TSERS position which requires you to be a permanent employee who works at least 30 hours per week for 9 months per year, your TSERS retirement benefit must be stopped on the first day of the month following the month of reemployment and you must again become a contributing member of the TSERS in the month in which you are restored to service. When you are no longer employed by a participating TSERS agency, your TSERS retirement benefits may be reinstated. However, you must re-apply for retirement.

LGERS

After the 1-month break, if the Retirement System is not notified immediately upon your return to work in a position in which you should have become a contributing LGERS member, all LGERS benefits paid to you beginning with the month following the month you returned to LGERS employment must be repaid to the Retirement System. You can choose to go back to work in any position at an agency that participates in the LGERS at any time after the 1-month break, but if you are regularly employed as an officer or employee of a participating LGERS employer in a position which requires at least 1,000 hours of work per calendar year, your LGERS retirement benefit must be stopped on the first day of the month following the month of reemployment and you will again become a contributing member of LGERS in the month in which you are restored to service. When you are no longer employed by a participating LGERS agency, your LGERS retirement benefits may be reinstated. However, you must re-apply for retirement.

Violating Earnings Limitation; Benefit Stopped

Violating Earnings Limitation; Benefit Stopped

After a six-month break in TSERS, or a one-month break in LGERS and return to work in a position that does not require membership in those systems, you are subject to the earning restrictions below. You can earn whichever is greater:

  • 50% of your gross pre-retirement salary (excluding termination payments) or
  • $33,560 (2019 amount)

The above amounts are adjusted annually on January 1 according to the Consumer Price Index, which is a national measure of increase in the cost of living from one year to the next. These earnings restrictions apply for the 12 months immediately following retirement and for each calendar year following the year of retirement.

If you abide by the waiting period rules but exceed the earnings limitation, your system retirement benefit must be suspended on the first day of the month following the month in which you exceeded the earnings limitation and will remain suspended for the remainder of that calendar year. Your retirement benefit will be reinstated on January 1 of the following year. If you do not inform the Retirement System at the time you exceed your earnings limitation, your system retirement benefit will be retroactively suspended to the effective date of the violation once notice is received by the Retirement System, and all retirement benefits paid and the cost of any state-provided State Health Plan premiums during this period must be repaid to the Retirement System. If the period of time that you are in violation of the return-to-work laws is extensive, the amount required to be repaid will be extensive as well.

Returning to Work; Benefit Continues

Returning to Work; Benefit Continues

TSERS

Returning to Work After a 6-Month Break for a TSERS Employer in a Position Not Eligible for TSERS Membership, Not Exceeding your Earnable Allowance Limit, and Continuing to Receive your Monthly TSERS Benefit

After the 6-month break, if you are not in violation of the return-to-work laws, you will receive your monthly TSERS retirement benefit as well as a paycheck from your new TSERS position. In order for you to continue receiving your monthly TSERS benefit, you must be reemployed on a part-time, interim, temporary, or contractual basis, or otherwise perform work for the TSERS agency on any basis that does not require membership in the TSERS, and not exceed your earnable allowance limit. You will be subject to return-to-work laws based on the nature of the particular work you perform for a participating TSERS employer, regardless of your job classification or your technical employment status (which may include being assigned work for a participating employer by a private company such as a temporary staffing agency, or working for a limited liability corporation).

Please note that temporary and interim employment positions with a TSERS employer should have set employment ending dates; otherwise, these positions may not be considered to be temporary or interim. The agency’s mere label for the position is not dispositive, as the facts may demonstrate something other than a temporary or interim position. As long as you are reemployed with a TSERS employer in a position that does not require membership in TSERS, you will not pay any contributions into the Retirement System and, as such, will not accrue any new service credit, and will not get the benefits of a “second retirement.”

Returning to Service Without a Penalty for a TSERS Employer as an Unpaid Bona Fide Volunteer, a School Board Member, or a Member of a Board of Trustees of a Community College, or of any Constituent Institution of the University of North Carolina

If you return to work at any time after retirement as a school board member, a member of a board of trustees of a community college or of any constituent institution of the University of North Carolina, or an unpaid bona fide volunteer, such work will not count for purposes of the return-to-work laws.

You may serve without affecting your TSERS retirement benefits as unpaid bona fide volunteer for a TSERS employer, performing service in a position in which any individual performing that type of service would not be paid. You will be subject to a penalty if other individuals performing that type of service are typically paid.

If you wish to volunteer a few hours a week selling concessions at an athletic game or assisting with fundraisers, among other activities, you may do so in the first 6 months following retirement. You cannot volunteer as a classroom teacher, for example, to hold a job open for the first six months after retirement, as that would violate both federal law and state statutes [G.S. § 135-1(20)] prohibiting an “intent or agreement, express or implied, to return to service.”

Volunteering is not employment; therefore, you cannot volunteer to fill a vacancy that is normally a paid position with a TSERS employer. The volunteer work must be performed without promise or expectation of compensation. If volunteering today helps you secure a paid position in the future, that is a form of compensation, and such an arrangement is not permitted.

There are some “volunteer” situations that are unclear, for example duties sometimes performed by paid employees and sometimes performed by parent or community volunteers. If you are considering volunteering in one of those roles, we strongly suggest that you provide the Retirement System with a full written description of the role you are considering so that we can provide additional guidance to you.

LGERS

Returning to Work After a 1-Month Break for an LGERS Employer in a Position Not Eligible for LGERS Membership, Not Exceeding your Earnable Allowance Limit, and Continuing to Receive your Monthly LGERS Benefit

After the 1-month break, if you are not in violation of the return-to-work laws, you will receive your monthly LGERS retirement benefit as well as a paycheck from your new LGERS position. In order for you to continue receiving your monthly LGERS benefit, you must be reemployed by, or otherwise perform work for, an LGERS employer on a part-time, interim, temporary, or contractual basis, or otherwise perform services on any basis that does not require membership in LGERS, and not exceed your earnable allowance limit. You will be subject to return-to-work laws based on the nature of the particular work you perform for a participating LGERS employer, regardless of your job classification or your technical employment status (which may include being assigned work for a participating employer by a private company such as a temporary staffing agency, or working for a Limited Liability Corporation).

Please note that temporary and interim employment positions with an LGERS employer should have set employment ending dates; otherwise, these positions may not be considered to be temporary or interim. The agency’s mere label for the position is not dispositive, as the facts may demonstrate something other than a temporary or interim position. As long as you are reemployed with, or otherwise perform work for, an LGERS employer in a position that does not require membership in the LGERS, you will not put any contributions into the Retirement System and, as such, will not accrue any new service credit, and will not get the benefits of a “second retirement.”