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Return-to-Work Guidelines
- Federal Government Requirements
- Full-time and Part-time Employment
- Bona Fide Break in Service
- Non-Covered Employment with the Same Employer
- Teaching After Retirement
- Teachers Taking ERIPs
- Critical Teaching Shortage
- Returning to Covered Employment
- Life Insurance
- Disability Coverage
Federal Government Requirements
Under the Internal Revenue Service (IRS) guidelines, VRS is a qualified pension plan. The IRS prohibits distributions from a qualified pension plan to members who are actively employed in either a full-time or part-time hourly position with an employer participating in that plan. This includes:
- Retirees who return to covered employment.
- Retirees who return to non-covered employment with the same employer without a bona fide break in service.
- Non-covered employment includes temporary, part-time hourly and adjunct faculty positions that do not provide VRS benefits.
- Members who have taken a refund of their contributions.
Federal requirements govern all VRS plans:
- Virginia Retirement System (VRS) (teachers, state employees, local government employees, political subdivision employees in hazardous duty positions)
- State Police Officers’ Retirement System (SPORS)
- Virginia Law Officers’ Retirement System (VaLORS)
- Judicial Retirement System (JRS)
- VRS Optional Retirement Plans (ORP)
Non-compliance will affect employers, members, retirees and VRS. It may result in penalties for employers and VRS, and members and retirees may face tax consequences and penalties.
Full-Time and Part-Time Employment
Employees in full-time permanent positions with employers participating in VRS are covered. Some state employees in part-time permanent positions as well as part-time non-adjunct faculty also are covered under VRS. Faculty members who have elected the Optional Retirement Plan (ORP) are considered covered employees. VRS leaves the definition of "full-time" and "part-time" to employers according to the following general standards:
- The normal workweek for full-time employment is usually considered to be 40 hours a week. Thirty hours is the suggested minimum number of hours for full-time employment.
- Full-time permanent employees receive fringe benefits such as annual leave, sick leave, health insurance, life insurance and retirement.
- Part-time employment is generally considered to be no more than 80 percent of full-time employment; positions requiring less than 30 hours a week; or positions requiring less than 1,500 hours per year.
- Part-time employment also can be temporary work that has a definite start and end date and generally lasts less than 12 months, such as interim or acting positions or work that requires specific services for the duration of a project.
- Part-time employees are paid on a wage or hourly basis and do not receive fringe benefits.
- VRS-participating employers that define full-time or part-time positions must apply the definitions consistently to all employees and maintain documentation regarding their classifications.
Bona Fide Break in Service
The IRS requires a bona fide break in service from active employment before a pension plan may distribute retirement benefits. VRS requires a 30-day break in service over a period the member normally would work before he or she can return to non-covered employment with the member’s former employer.
Non-Covered Employment with Same Employer
VRS retirees who accept non-covered employment with the same employer must have a bona fide break in service to continue receiving their benefits. Non-covered employment includes temporary, part-time hourly and adjunct faculty positions that do not provide VRS benefits.
The Commonwealth of Virginia, including all state agencies and public colleges and universities, is considered one employer. Local school systems and political subdivisions are considered separate employers.
Before hiring a VRS retiree in a non-covered position, you should:
- Check that the retiree has been terminated from the VRS-covered payroll for at least 30 days.
- Have no pre-arranged employment commitment with the retiree.
- Ensure that the retiree is not expected to perform all of the duties required of his or her pre-retirement, full-time position.
- Evaluate the need for the position periodically if it does not have an end date.
- Structure the position so that the hours worked are at least 20 percent less than a full-time position. Position descriptions should clearly define the difference between part-time and full-time positions requiring the same skills, experience and knowledge.
Teaching After Retirement
The IRS requires a bona fide break in service from active employment before a pension plan may pay retirement benefits. VRS requires a 30-day break in service over a period the member normally would work before he or she can return to non-covered employment with the member’s former employer. Summer breaks do not count toward satisfying the 30-day break in service.
To determine if the retiree has satisfied the 30-day break, review the end date of his or her last working contract before retirement. The retiree must sit out 30 days from the end date, excluding the summer break. Examples:
Contract period: August 1, 2006 - May 31, 2007
The end date of this contract is May 31, 2007. Therefore, this retiree may return to the same employer in a non-covered or part-time position no earlier than September 1, 2007.Contract period: August 25, 2006 - June 20-2007
The end date of this contract is June 20, 2007. Therefore, this retiree may return to the same employer in a non-covered or part-time position no earlier than September 25, 2007.
Teachers Taking ERIPs
Teachers considering taking an early retirement incentive program (ERIP) should be aware that:
- VRS retirement benefits will continue if the member has a bona fide break of at least 30 days immediately following the effective date of retirement during a normal work period and returns to the classroom on a part-time basis.
- Retirement benefits will cease if the member returns to a position that qualifies as a covered position under VRS.
Critical Teaching Shortage
VRS-covered retirees who are certified to teach in Virginia will continue to receive their retirement benefits if they teach full time in a critical shortage area. To be eligible, they must:
- Teach in designated critical teacher shortage areas.
- Have a bona fide break in service of at least 12 months following the effective date of their retirement and not have worked in any capacity for a VRS participating employer, even on a part-time basis, during that period.
- Not have retired under a local school system’s early retirement incentive program (ERIP), unless the member is receiving an unreduced VRS retirement benefit. Any period of work performed by the retiree to satisfy the requirements of an ERIP will extend the number of months required to satisfy the bona fide break in service to comply with this program.
- Not have taken a refund of contributions or deferred their retirement.
Returning to Covered Employment
If a retiree returns to VRS-covered employment, benefits cease and the retiree again becomes an active member. To avoid overpayment of retirement benefits, you and the member must submit a Request for Termination of Monthly Benefit (VRS-7) to VRS immediately upon the member’s re-employment.
Life Insurance
Retirees who return to covered employment with employers that offer the Basic Group Life Insurance program resume their active-member coverage based on their compensation when they retired. If the retiree has 20 or more years of service, coverage is based on the highest compensation in his or her history of VRS-covered employment.
Retirees returning to employers that do not participate in the Basic Group Life Insurance program continue their retiree coverage at the level to which it had reduced before re-employment.
Disability Coverage
Retirees who return to covered employment with the Commonwealth of Virginia are automatically enrolled in the Virginia Sickness and Disability Program (VSDP).
Faculty members who elect to participate in the VRS defined benefit plan have the option to enroll in VSDP or the institution’s disability program, if offered. Faculty who elect the Optional Retirement Plan are eligible for the institution’s disability program only.
Retirees who return to covered employment with any other participating employer are eligible for VRS disability retirement
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