If a retired member returns to work in an IMRF qualifying position, you must enroll the retired member in IMRF and deduct IMRF member contributions from their earnings. The retired member’s pension will be suspended while working (see 5.20 F. How the IMRF Pension is Affected by Returning to Work).
Employers must determine if a new hire is a person receiving an IMRF pension from previous employment.
Public Act 99-745 gives IMRF the authority to assess employers penalties for return-to-work violations, up to half of the annuity paid to the member during the return-to-work period.
Note: Simply reporting wages for a retired member who returns to work in a position that qualifies for IMRF will not result in IMRF suspending the member's pension. It is important to submit a notice of enrollment for a retired member who returns to work in a position that qualifies for IMRF. Contact IMRF before you enroll an IMRF retiree who is discovered to have been in a qualifying position and was not properly reported to IMRF.
If a retiree will be working in a position that does not qualify for IMRF participation, the retiree may continue to receive his or her pension, provided that the retiree does not work over their hourly standard. However, both the employer and the retiree should monitor the actual hours worked to make sure the determination that the position is not qualifying is accurate and continues to reflect the actual experience. The Best Practice is to stop working when the retiree has reached 599 hours. If there is any question regarding the retiree’s participation in IMRF, the retiree and the employer should jointly contact IMRF to discuss IMRF’s return to work rules.
Public Act 98 - 0389 changed the rules for enrollment of retired IMRF members who return to work for an IMRF employer. Employers must enroll the retiree in IMRF once the retiree actually works 600 hours in a 12-month period instead of when the retiree’s position is “normally expected” to work the hourly standard. This rule applies in all return-to-work cases, regardless of the hourly standard the retired member earned his or her pension under.
A retired member who has an independent trade or business may be hired as an independent contractor (see 3.60 A. Independent Contractors). However, the retiree must truly be engaged in an independent trade or business, as defined by the Internal Revenue Service. IMRF may require proof that the person is an independent contractor. The Best Practice is to request an IRS opinion using their form SS 8 (Exhibit 3D, IRS Form SS 8). Merely designating a retiring or retired member as a consultant or independent contractor does not establish an actual independent contractor relationship.
Note: Different rules apply for members who first participate in IMRF or a reciprocal retirement system on or after January 1, 2012.
New Law: If a retired member performs services for his or her former IMRF employer on a contractual basis, the member’s pension will be suspended during that contractual service. The retired member must inform IMRF of the contract and must inform the employer that he/she is receiving an IMRF pension. If the retired member does not inform IMRF and his/her employer, the retired member will be guilty of a Class A misdemeanor and required to pay a $1,000 fine. Once the contractual work ends, the retired member’s pension will resume.
A member who retired under the IMRF Early Retirement Incentive may not return to work for an IMRF participating unit of government in any capacity, including as an independent contractor. Refer to Section 5 for more information on ERI retirements.
You can also refer to Exhibit 5R, Return to Work and Effect on Tier 1 and Tier 2 Members Chart and Exhibit 5S, Public Act 98-0389 Return to Work Rules Chart.