May 20, 2013
Note: Clarification indicated in blue type.
New ATRS Retirement Rules Apply to All Members, Regardless of Retirement Date
The Arkansas Teacher Retirement System's (ATRS) retirement bill, now Act 743 of 2009, continues to draw questions from school employees, particularly those who wish to retire before July 2 of this year.
AEA provided several updates about the bill while the Arkansas General Assembly was in session. We hope that the following information provided by ATRS will help to clarify any remaining questions. This information applies to everyone, regardless of whether you retire before or after July 2, 2009.
The IRS now requires ATRS to have rules that prohibit members from retiring before the system’s normal retirement age and then returning to work for an ATRS employer. ATRS must comply with the IRS mandate and will take every action necessary to do so. If a member fails to retire according to the separation requirements of ATRS, then returns to work for an ATRS employer after retirement, the retirement is voided. The member must repay all retirement payments and return all T-DROP distributions that have been made, with interest. Extreme caution should be used to avoid such financial liability if the rules are violated.
ATRS is preparing an affidavit/certification form that members and their ATRS employers must execute under oath which establishes that ATRS is taking all necessary action to ensure that the separation from employment is real and not contrived. The affidavit will include the following points:
- The member is executing the retirement application and forms to fully retire from ATRS-covered employment.
The member and employer are completely severing the employment relationship.
- The member does not have a contract, option, understanding, representation, or other proposal between the member and an ATRS employer for re-employment after his/her separation from the current ATRS employer. (The employer will only have to certify that the employer has not made such an arrangement with the member.)
- The member is not performing usual duties for the employer as a volunteer in anticipation of completing a separation period and being rehired.
- The member has not engaged anyone to fulfill the job duties of the member until the member separation is complete, with an understanding that the individual would resign, allowing the member to be rehired. (The employer must also verify this point.)
- The member is not being paid as a consultant, either directly or indirectly, by the employer through personal contract, contract with another company or entity, or through a temporary service.
- The member has not been informed by an ATRS employer that a position will become available to the member after the separation period is met.
- The member must agree that the member would have no legal claim against an ATRS employer for failure to hire or rehire the member after retirement due to any representation, agreement, or obligation of an ATRS employer after the member’s voluntary retirement.
- The member must verify that during the separation period the employer is not paying any salary, payment, remuneration, stipend, or other fee arrangement for services rendered or commitments made by the member after the member’s official retirement date. (The employer must verify this point.)
ATRS may expand this certification to include other potential circumstances that would pose a loophole to “actual versus contrived” separation.
This information was taken from an ATRS Executive Director’s Update. If you wish to view the entire Update, go to: http://artrs.gov/index.php?option=com_content&task=view&id=192&Itemid=152