Returning to Work
After a 60 day break in employment, a retired member, other than a member receiving disability retirement benefits, may be employed by Oklahoma public eductation entities and still receive monthly retirement benefits. Earnings from such employment is limited based on your age at retirement and how long you've been retired. Employment during the 60-day break will cause the forfeiture of all retirement benefits received during this period. In addition to the 60 day break in employment, IRS regulations require a true separation from employment for TRS members to receive retirement benefits in good faith. Pre-arranged employment agreements between retiring members of TRS and their previous employers are not considered a good-faith separation. Such a retirement is considered a sham retirement (IRS terms) and could affect the qualified tax status of TRS. There are no restrictions on employment with a private business, private school, the federal government or governmental entities in Oklahoma when the employment is not in an Oklahoma public education-related capacity.
Post-retirement contributions must be paid on all employment of retirees, including temporary employment as an employee of a participating employer or as an employee of an employment agency.
Post-Retirement Earnings Limit
Effective July 1, 2008, a retiree who is employed in any capacity by a public school or in an education-related capacity for an agency of the state of Oklahoma, is limited to the following earnings amount per calendar year:
- If you are 61 or younger and have been retired less than 36 months, the earnings limit is the lesser of one-half of the final average salary used in calculating your monthly retirement benefit, or $15,000, unless the earnings limitation allowed by Social Security Administration is greater than $15,000.
- If you are 62 or older and have been retired less than 36 months, the earnings limit is the lesser of one-half of the final average salary used in calculating your monthly retirement benefit, or $30,000.
- If you've been retired for more than 36 months. There is no limit on earnings.
When your annual income from covered employment exceeds your earnings limit, you should notify TRS and either have monthly benefits reduced or plan how to repay any overpayment of retirement benefits by March 1 of the following calendar year.
Since post-retirement earnings limits are based on a calendar year (Jan-Dec), earnings limits are prorated when return to employment occurs in mid-year. Proper notification may prevent penalties on benefits paid after earnings limits are met.
A member retired under the disability retirement provisions of TRS is not eligible to be employed in any capacity, by any school, public or private, in Oklahoma or in other states, from the date of retirement to age 62. After age 62, a retiree receiving disability benefits will be eligible for post-retirement employment under the same conditions that apply to regular retirees. Disabled retirees may be employed in private industry or non-education related governmental employment so long as combined earnings from such employment and the TRS disability payments do not exceed the final average salary used in calculating your retirement entitlement.
A retiree who returns to full-time employment may elect to continue monthly retirement benefits until you reach the annual earnings limit or elect to return to active contributing status. If you choose to return to active contributing status, your monthly retirement benefits will be suspended until employment is terminated. You will make contributions to TRS in the same manner as active members, and upon termination of employment your monthly retirement will be increased to include credit for the additional service. TRS can provide detailed information to assist you in deciding which option is best when returning to full-time employment.
Working as an Independent Contractor or as a Corporation
Effective July 1, 2002, 70 O.S. 17-116.10(A)(4) clarifies that employment normally performed in an employee/employer relationship shall count toward a retiree's earnings limit regardless of whether the services are performed as an individual, independent contractor, limited partnership, corporation or any other relationship. Contributions must be paid by the employer in this situation.
Working as a Consultant
Income from working as a consultant for a public school is exempt from the TRS earnings limit. However, consulting contracts must meet the strict requirements of 70 O.S. 6-101.2. Retired members who plan on performing consultant work for Oklahoma public schools should contact TRS and provide documentation on the nature of the contract with the school district. You cannot be an employee and consultant for the same school district. Contributions must be paid on earnings unless TRS approves the contract between the employer and the retiree acting as a contractor or consultant.