This is not legally possible. You might not do full-time employees though. For MPERS’s purposes, full-time means mean employment on a permanent, regularly scheduled basis for at least an average of thirty hours per week.

EVERY employer MUST enroll their eligible employees in MPERS. However, the following municipalities’ employees are able to opt out via affidavit, but only AFTER they are enrolled in MPERS. If your specific municipality is not listed on here, then your MPERS-eligible employees cannot opt out of MPERS. The employers on the following list must contribute to both MPERS and Social Security.

• ALBANY
• AMITE CITY
• ANGIE
• ARCADIA
• ASHLAND
• BALDWIN
• BASILE
• BENTON
• BERNICE
• BONITA
• BOYCE
• BREAUX BRIDGE
• BROUSSARD
• BRUSLY
• CAMPTI
• CARENCRO
• CASTOR
• CHATHAM
• CHENEYVILLE
• CHURCH POINT
• CLARENCE
• CLAYTON
• CLINTON
• COLFAX
• COLUMBIA
• COTTONPORT
• CULLEN
• DELCAMBRE
• DELHI
• DELTA
• DENHAM SPRINGS
• DIXIE INN
• DONALDSONVILLE
• DUBACH
• DUSON
• ELIZABETH
• ELTON
• EPPS
• ERATH
• ESTHERWOOD
• FARMERVILLE
• FENTON
• FERRIDAY
• FRANKLIN
• FRANKLINTON
• GEORGETOWN
• GIBSLAND
• GLENMORA
• GOLDEN MEADOW
• GRAMBLING
• GRAND COTEAU
• GRAND ISLE
• GRAYSON
• GREENSBURG
• GUEYDAN
• HARAHAN
• HARRISONBURG
• HENDERSON
• HESSMER
• HODGE
• IOTA
• IOWA
• JONESVILLE
• JUNCTION CITY
• KAPLAN
• KENTWOOD
• KINDER
• KROTZ SPRINGS
• LAKE ARTHUR
• LAKE PROVIDENCE
• LECOMPTE ​
• LEESVILLE
• LIVINGSTON
• LOGANSPORT
• LOREAUVILLE
• LUTCHER
• MADISONVILLE
• MAMOU
• MANDEVILLE
• MANGHAM
• MANY
• MARION
• MARKSVILLE
• MELVILLE
• MER ROUGE
• MERRYVILLE
• MONTGOMERY
• MOREAUVILLE
• MORGANZA
• NAPOLEONVILLE
• NEW LLANO
• NORTH HODGE
• NORWOOD
• OAK GROVE
• OBERLIN
• OLLA
• PALMETTO
• PARKS
• PATTERSON
• PEARL RIVER
• PINE PRAIRIE
• PIONEER
• PLAIN DEALING
• PLAUCHEVILLE
• PLEASANT HILL
• PONCHATOULA
• PORT BARRE
• ROBELINE
• ROSEPINE
• SALINE
• SCOTT
• SIBLEY
• SIMMESPORT
• SIMSBORO
• SLAUGHTER
• SPRINGHILL
• ST. FRANCISVILLE
• ST. JOSEPH
• ST. MARTINVILLE
• STERLINGTON
• SUNSET
• TANGIPAHOA
• TULLOS
• URANIA
• VIDALIA
• VIVIAN
• WALKER
• WASHINGTON
• WATERPROOF
• WELSH
• WHITE CASTLE
• WINNSBORO
• WISNER
• YOUNGSVILLE
• ZWOLLE

The short answer is no, and you must enroll them on their date of hire. Under R.S. 11:2214(A)(1) any person who becomes an employee as defined in R.S. 11:2213 on and after September 9, 1977 “shall become a member as a condition of his employment.”

To comply with the mandatory enrollment provisions of R.S. 11:157(A), regulations require that an employer must enroll each employee in MPERS on the first day the employee qualifies for membership. The employer shall remit to MPERS the required employee and employer contributions no later than the fifteenth day of the month following the first day the employee qualifies for membership. If the employee subsequently submits an affidavit under R.S. 11:157(C) before the end of the first calendar month during which the employee qualified for MPERS membership, a prorated amount of employer contributions shall be refunded to the employer.

In our opinion, absolutely not. It’s not a required form, and you’d be waiving your rights to valuable benefits. Your employer will do everything that it can to talk you into executing and filing it, but it’s not in your best interest (it just saves them money). And doing so may prevent you from joining MPERS if you become employed by a different employer.

Failure to enroll eligible employees in MPERS means that neither employer nor employee contributions were paid to MPERS. In this situation, the employee must be enrolled, and R.S. 11:2227(J)(1), which provides the following, applies:

J.(1) If any employer fails to transmit either employer’s contributions or member’s contributions within five days after their due date, the payment shall be delinquent. As used in this Subsection, “due date” means the close of the tenth day after the end of the month for which payment of employer’s and member’s contributions is applicable or deducted. In addition to the employer and member contributions owed, the employer shall submit an amount determined in accordance with Paragraph (2) of this Subsection.

(2)(a) Interest charged at the legal rate shall be due from the date the payment became delinquent.

(b) Any employer who becomes delinquent for a period in excess of ninety days in the collection and remittance of the amounts due as monthly contributions is also subject to a penalty of twenty-five percent of the aggregate monthly contributions due.

(c) Any employer who becomes delinquent for a period in excess of one hundred and eighty days in the collection and remittance of the amounts due as monthly contributions is liable for the greater of the amounts in Subparagraphs (a) and (b) of this Paragraph and an amount equal to the actuarial cost of a purchase of the service credit for which contributions were not timely paid calculated by the system’s actuary pursuant to R.S. 11:158(C).

(d) The employer that failed to transmit the required contributions in a timely manner shall also reimburse the system any legal and actuarial fees paid by the system in the collection of amounts pursuant to this Paragraph.

Once enrolled and all applicable payments have been received, the employee can then choose to opt-out by filing an affidavit. He will then receive a refund for the principal amount of the employee contributions.

Via state supplemental pay reports, public records requests, etc. However, the proper course is for employers to follow the law. We absolutely understand that sometimes mistakes happen. That said, those mistakes will result in costs.

On June 22, 2022, the board of trustees authorized granting a 3% one-time permanent COLA under R.S. 11:2225(A)(7)(b) (which has been repealed). The 3% COLA is based on the member’s benefit at that time. The COLA was paid beginning on July 1, 2022 benefit payments to all eligible benefit recipients who retired on or before July 1, 2021. If you were eligible, the COLA is reflected in your current benefit.

MPERS’s actuary estimated the present value cost of the COLA to MPERS’s employers at $47,221,459. The employers are required to pay this amount, plus interest over a 15-year period.

As of June 30, 2022, there are no more legal hurdles to granting a COLA. However, COLAs must be pre-funded and can no longer be put on the “charge card.”

Presently, in order to grant a COLA, two things need to happen:

1. there must be sufficient funds in the funding deposit account (the balance can be found on the most recent ACFR report here); and
2. the MPERS board of trustees needs to approve it.

The board will charge employers an additional 0.425% in employer contributions for FY 23-24 and then 0.85% for all fiscal years thereafter.

When there are sufficient funds in the funding deposit account (the balance can be found on the most recent ACFR report here), and the MPERS board of trustees approves it.

The board will charge employers an additional 0.425% in employer contributions for FY 23-24 and then 0.85% for all fiscal years thereafter.

We hope to have enough funds to pay some form of COLA in 2028 or 2029, which will most likely be sooner than a COLA could have been granted under previous law.

The last three COLAs were granted in 2022, 2014 (which couldn’t have been granted but for special legislation), and 2008. A complete list of MPERS COLAs can be found here.

DROP statements will be available online in the member portal after every December.

Assuming that you are a Louisiana resident, this depends on whether or not you enjoy paying more in state income taxes than is necessary. Under R.S. 11:2228, all monies paid by MPERS are exempt from any Louisiana state tax. This includes DROP withdrawals.

If you are a Louisiana resident and rollover your MPERS DROP funds, your withdrawals will now be subject to Louisiana income tax (ranges from 2-6%). It makes no sense to rollover these funds. Read more about it here.

Also, if you keep your money with MPERS, you have several investment options, which you can learn about here.

Finally, if someone tries to sell you a variable annuity or a fixed indexed annuity, RUN (don’t walk) out of their office. These can have high fees and steep cancellation penalties.

MPERS does not offer back DROP.

DROP is the Deferred Retirement Option Plan. Upon entry into DROP your service credit stops and employee contributions are no longer paid to the system. Employer contributions remain in effect. Member completes the DROP Application and chooses their retirement option at that time. Benefit is calculated and that monthly amount is deposited into a DROP account for up to 60 months, depending on the duration specified on the application. DROP funds are available upon retirement.

Contact the MPERS office.

Only members of this system whose employing municipality irrevocably elects such coverage. Currently, only the following employers have irrevocably elected coverage:

• Folsom
• Mandeville
• MPERS (for employees of the retirement system itself who are also members)
• New Orleans
• New Roads
• Slidell

The starting point is your total unused earned annual and sick leave hours that you accrued and accumulated. From that amount, you must subtract the total number of leave hours for which payment can be made in accordance with law at the time of your retirement. Next, your employer will convert the hours to days by dividing by the average number of (non-overtime) hours in your work day. This will be reported by your employer to MPERS. Then, once your employer pays MPERS the full cost, you will be credited in accordance with the following formula:

Days Percentage of a Year
1-26 10
27-52 20
53-78 30
79-104 40
105-130 50
131-156 60
157-182 70
183-208 80
209-234 90
235-260 100
Fractional days of one-half or more shall be granted as one day and less than one-half day shall be disregarded. Any member who terminates his employment for any period of time but who later becomes reemployed as an active contributing member in this system shall contribute to the system for not less than eighteen months subsequent to his reemployment date before using converted unused earned sick and annual leave for purposes of benefit computation. Additional membership service obtained by conversion of unused earned sick and annual leave shall not be used in computation of average final compensation.

No, the only limitation is the reduction for the amount of unused earned annual and sick leave for which payment can be made in accordance with law at the time of retirement (regardless of whether actually paid). Unfortunately, we have had some problems with an employer arbitrarily “changing” the formula set for in R.S. 11:2218(J) by applying a reduction factor. If your employer attempts to do this, then you should consult with your own personal attorney immediately.

Complete the transfer application found on the Forms page.

Yes, although it is best to schedule an appointment to ensure that the staff can be prepared in advance.

Yes, if you are married you must leave at least a 50% option, unless the spouse relinquishes their rights to your retirement.

Complete the refund of accumulated contributions form.

You must be out of municipal police service for a minimum of 60 calendar days to be eligible for your refund.

Complete the Member Enrollment Form and the Forfeiture of Benefits Attestation.

Complete the Personal History Update Form

Complete the Beneficiary Designation Form.

Contact the MPERS office.

Complete the Request for an Estimate Form

Up to four years. Please send a copy of your DD214 discharge papers.

The IBO is the Initial Benefit Option. A member can elect to choose the IBO retirement and receive a lump sum benefit and receive a reduced monthly benefit for the rest of the member’s life.

Member prior to January 1, 2013

20 years of service at any age – actuarially reduced from age 50

Member on or after January 1, 2013 – Hazardous

20 years of service at any age – actuarially reduced from age 55

Member on or after January 1, 2013 – Non-Hazardous

20 years of service at any age – actuarially reduced from age 55 or 60

Member prior to January 1, 2013

12 years of service at age 55
20 years of service at age 50
25 years of service at any age

Member on or after January 1, 2013 – Hazardous

12 years of service at age 55
25 years of service at any age

Member on or after January 1, 2013 – Non-Hazardous

10 years of service at age 60
25 years of service at age 55
30 years of service at any age

Previously, statements were mailed around the fourth quarter of each year. Since implementing our updated pension administration system in 2020, annual statements are no longer mailed, but members can download a Contribution Verification letter and track monthly updates to their contribution balance via the member portal. For instructions on gaining access to your member portal, please call the office at 225-929-7411.

In short, it’s all about the City denying valuable retirement benefits to almost every single one of its police officers who retired on or after January 22, 2007.

On January 22, 2007, the New Orleans City Council enacted Ordinance 22493 M.C.S. irrevocably electing coverage under La. R.S. 11:2218(J), thus requiring the City to convert its retiring MPERS members’ uncompensated leave to MPERS retirement service credit.

Since Ordinance No. 22493 became effective, the City has not converted all unused earned sick leave accrued and accumulated by employees for which payment was not made at the time of retirement, as required by state law. From January 22, 2007 until May 12, 2013, no retiring MPERS member employed by the City received any retirement service credit for unused sick leave.

One member who retired on May 12, 2013 received such credit (many years later, and only after suing the City), but from May 13, 2013 until June 29, 2021, no MPERS member employed by the City received service credit for unused sick leave.

In 2021, MPERS researched the City’s civil service leave rules and determined that, in its opinion, just about all (everyone but those who burned through all sick leave or already earned a maximum benefit equal to one hundred percent of their average final compensation) of its retiring police officers have been getting shortchanged by the City. The bottom line is that, reading MPERS’ leave conversion law in conjunction with the City’s civil service leave rules, retiring officers MUST get cashed out for the maximum amount possible under the civil service rules before any leave can be converted to MPERS retirement service credit. The leave that must be converted to MPERS retirement service credit is that which is left over, which turns out to be the portion of the sick leave that the City cannot legally pay the retiring officer for at the time of retirement. Annual leave doesn’t come into play, because a retiring City police officer can receive cash for all of that leave.

Of course, the City would like the portion of sick leave that it “magically washes away” to stay in City coffers rather than be converted to MPERS retirement service credit. However, no one forced the City to irrevocably adopt the ordinance mandating leave conversion. Presumably, it did so in hopes that officers would take less sick leave, because they could rest assured that they’d be fully compensated in the long run. In fact, that sounds like an excellent policy for a City that is losing over 50 police officers every year but hopes to stem the tide.

At any rate, shortly after MPERS attempted to enforce the law correctly, New Orleans sued MPERS and lost (see the update below).

As of August 8, 2023, only approximately 25 total retiring MPERS members employed by the City have received any retirement service credit for unused sick leave. The City likely shortchanged most (if not all) of those 25 retiring members on their cash payout in order to “compensate” for the unused sick leave that was converted to MPERS retirement service credit.

Given the City’s refusal to properly compensate retiring New Orleans police officers, MPERS strongly encourages all of these individuals to consult with their own private attorney before retiring. And if you are interested, you can review MPERS’ Motion for Partial Summary Judgment and associated documents.

Update: On December 12, 2023, Judge Johnson signed a judgment declaring that MPERS’ interpretation of Ordinance 22493 M.C.S. and La. R.S. 11:2218(J) is correct. Basically, if you retire from the City of New Orleans, then you must receive the maximum cash payout for terminal annual and sick leave. The terminal sick leave that New Orleans can’t pay you must be converted to MPERS retirement credit (up to the amount that would provide you a maximum benefit equal to one hundred percent of your average final compensation). The maximum amount of sick leave that can be converted to retirement service credit is 272 days, which converts to 1.1 years of service credit. The actual amount that you must convert depends on how many sick leave hours you have at retirement. New Orleans must pay MPERS for the entire cost of the conversion in order for credit to be granted.

MPERS expects the City to file a suspensive appeal, which will delay the application of Judge Johnson’s judgment. However, MPERS expects to prevail in the long run.

Also, the judgment was a partial summary judgment that did not address the prescriptive period (statute of limitations) issue. If MPERS prevails, the courts will have to decide how far the City must go back to rectify the situation.

In short, it’s all about the City denying its police officers valuable retirement (and disability and survivor) benefits (noticing a trend here?).

As you likely know, the City has adopted a plan under which it makes certain recruitment and retention incentive payments to its police officers.

La. R.S. 11:2213(10) broadly defines earnable compensation for MPERS members as “the full amount of compensation earned by an employee for a given month, including supplemental pay paid by the state of Louisiana, but shall not include overtime.” Common sense and a plain reading of the law dictates that the recruitment and retention incentive payments are earnable compensation. Louisiana’s attorney general believes so, and has since 1977. This means that both the police officers and the City must pay contributions on the compensation. The payments will fund overall higher retirement, disability, and survivor benefits for the City’s police officers.

However, we assume the City didn’t do its homework and budget for the employer contributions associated with the incentive payments that would be required to be paid. Or maybe it just didn’t want to pay. But the City did pay at least some of the contributions, and then turned around and sued MPERS on May 17, 2023. MPERS answered, asserted affirmative defenses, and made counterclaims against the City. MPERS has no idea when this frivolous lawsuit will be resolved.

Obviously, if the City doesn’t report recruitment and retention payments to MPERS as earnable compensation and pay contributions thereon, it will result in lower benefits for the City’s police officers. Therefore, MPERS strongly encourages New Orleans police officers to monitor their payroll stubs like a hawk and to email our CFO, Taylor Camp, if employee contributions are not being withheld on recruitment and retention incentive payments.

On March 6, 2023, the Attorney General issued La. Atty. Gen. Op. No. 21-0062 about employees required to be enrolled in MPERS. In addition to police officers, any employee (1) who is employed full-time in the police services of a municipality, (2) who is under the direction of a chief of police (including, but not limited to, the superintendent of the New Orleans Police Department), (3) who is paid from the budget of the applicable police department, and (4) whose duties call for services to be rendered by one person must be enrolled in MPERS. Individuals meeting these criteria are eligible for membership in MPERS without regard to whether their positions fall within the classified or unclassified service.

Any MPERS retiree who is re-hired by the NOPD as a full-time employee in a civilian capacity on or after the opinion date of March 6, 2023 (or who first began working at least an average of thirty hours per week on or after March 6, 2023) must have their MPERS retirement benefit stopped and be re-enrolled into MPERS.

If you don’t want this to happen, don’t work at least an average of thirty hours per week. Inform the City that you can only work a maximum of 29 hours per week and have them schedule you that way.

Full-time, for MPERS purposes, means an average of thirty hours per week. Apparently, the City’s definition is thirty-five hours, and City employees are providing incorrect information to retired officers who are rehired in a civilian capacity.

Sometimes. It depends on when you retired, when you return to work, and the job you take.

The general rule is that if you return to work as an “employee” under R.S. 11:2213, your MPERS retirement benefit is suspended while you are employed. You and your employer must make contributions to MPERS, and you earn additional service credit.

See R.S. 11:2220(A)(2)(a)(i).

There are two important exceptions.

Exception 1: Certain retirees who retired on or before January 1, 2024

Your benefit will not be suspended if:

• you retired on or before January 1, 2024;
• you become an employee, as defined in R.S. 11:2213, no sooner than 90 days after retirement and before July 1, 2028; and
• you either:
• retired with at least 25 years of service credit; or
• retired with at least 20 years of service credit and have attained age 55.

If you qualify, you and your employer must make contributions to MPERS, but you do not earn additional service credit or an additional retirement benefit.

When the employment ends, you may apply for a refund of your employee contributions, without interest. MPERS keeps the employer contributions and interest.

No written election is required for this exception.

See R.S. 11:2220(A)(4).

Exception 2: Certain police officers who retire between July 1, 2024, and June 30, 2026

A separate exception applies if you:

• retire as a police officer between July 1, 2024, and June 30, 2026;
• no sooner than 90 days after retirement, are first employed as an employee under R.S. 11:2213(11)(a)(iii); and
• file a written irrevocable election with MPERS within 30 days after your employment begins stating that you will not receive additional service credit or accrue an additional retirement benefit.

R.S. 11:2213(11)(a)(iii) generally covers a person who works full time for a municipal police department, works under the direction of the chief of police, and does not meet another statutory definition of “employee.”

For example, this exception does not apply to someone returning as a full-time police officer with arrest powers because that position is separately covered by R.S. 11:2213(11)(a)(i).

If you qualify for this exception, your MPERS benefit continues while you work. You and your employer must make contributions to MPERS, but you do not earn additional service credit or an additional retirement benefit.

When the employment ends, you may apply for a refund of your employee contributions, without interest. MPERS keeps the employer contributions and interest.

See R.S. 11:2220(A)(2)(a)(ii).

What about part-time, contract, or other work?

For retirees who retired on or after July 1, 2021, special rules apply during the first 90 days after retirement, even if the job does not meet the definition of “employee.”

If you work for an MPERS employer during those first 90 days in a part-time, contract, or other nonqualifying position, your benefit is suspended until:

• the employment ends; or
• 90 days have passed since retirement,

whichever happens first.

After the first 90 days, work that does not make you an “employee” under R.S. 11:2213 generally does not require suspension of your benefit.

See R.S. 11:2220(J).

Because return-to-work rules depend on your retirement date and the job you plan to take, contact MPERS before accepting post-retirement employment.

Generally, the rules surrounding limitations on rehiring retirees are based on the notion that a qualified retirement plan under Code § 401(a) (such as MPERS) requires that the plan be established and maintained primarily to provide systematically for the payment of definitely determinable benefits over a period of years, usually for life, after retirement. In other words, qualified retirement plans are supposed to pay benefits upon actual retirement.

There are certain exceptions to this general rule which allow retirement payments to begin after retirement, but these exceptions do not apply under MPERS’ plan terms. All MPERS retirees are required to have a bona fide separation from service in order to receive benefits. See Question 7 below for further information regarding bona fide separations.

It depends on the type of employment and whether the retiree qualifies for an exception.

If you return as an employee and no exception applies

Your monthly MPERS benefit is suspended while you are employed.

You and your employer must make contributions to MPERS, and you earn additional service credit.

When the employment ends, your original retirement benefit resumes, and you receive an additional retirement benefit based on the additional service you earned during reemployment, subject to the statutory calculation rules.

See R.S. 11:2220(A)(2)(a)(i) and (b).

If you qualify for one of the no-suspension exceptions

Your monthly MPERS benefit continues while you work.

You and your employer still make contributions to MPERS, but you do not earn additional service credit or an additional retirement benefit.

When the employment ends, you may apply for a refund of your employee contributions, without interest. MPERS keeps the employer contributions and interest.

See R.S. 11:2220(A)(2)(a)(ii) and (A)(4).

If you work during the first 90 days after retirement but are not an “employee”

If you retired on or after July 1, 2021, and work for an MPERS employer during the first 90 days after retirement in a job that does not meet the definition of “employee,” your benefit is suspended until:

• the employment ends; or
• 90 days have passed since your retirement,

whichever occurs first.

This rule applies even to part-time, contract, or other nonqualifying work.

See R.S. 11:2220(J).

Whether you are an “employee” matters because returning to work as an employee generally causes your retirement benefit to be suspended unless a statutory exception applies.

For most retirees, the important employee categories include:

• a full-time police officer with arrest powers;
• a full-time police officer who has been decommissioned because of illness or injury but remains employed by a Louisiana municipality in law enforcement;
• a full-time employee of a municipal police department who works under the direction of the chief of police and does not meet another statutory definition of “employee”;
• an elected chief of police who earns at least $1,000 per month;
• an academy recruit who meets the statutory requirements;
• a full-time secretary to an appointed or elected chief of police;
• a full-time MPERS employee; and
• a member who retired after June 30, 2021, and later works full time for a municipal police department in Louisiana.

For the police-department employees described in R.S. 11:2213(11)(a), the employee must also earn at least $375 per month, excluding state supplemental pay.

“Full-time” generally means permanent, regularly scheduled employment averaging at least 30 hours per week.

The statute also contains special provisions and exclusions for certain Baton Rouge employees, Baton Rouge Regional Airport Authority employees, city and ward marshals and their deputies, mayors, council members, and certain other positions.

If you are unsure whether a job makes you an “employee,” contact MPERS before you start work. A job title or the number of hours worked does not always answer the question.

See R.S. 11:2213(11) and (13).

That depends on what happened to the retiree’s benefit during reemployment.

If the benefit was suspended while the retiree worked

When the employment ends, the original monthly retirement benefit resumes.

The retiree also receives an additional retirement benefit based on the additional service earned during reemployment.

The retiree may not change the retirement option selected at the original retirement.

If the additional service is shorter than the retiree’s applicable average-final-compensation period – 36 or 60 months, as applicable – the additional benefit is based on the average final compensation used to calculate the original benefit.

If the additional service equals or exceeds the applicable 36- or 60-month period, the additional benefit is based on the average final compensation during the period of reemployment.

The original and additional benefits together cannot exceed 100% of the average final compensation used to calculate the additional benefit.

See R.S. 11:2220(A)(2)(b).

If the retiree worked under a no-suspension exception

The monthly retirement benefit never stopped, so there is no suspended benefit to restart.

The retiree earned no additional service credit and no additional retirement benefit during the reemployment.

When the employment ends, the retiree may apply for a refund of the employee contributions paid during reemployment, without interest. MPERS keeps the employer contributions and interest.

See R.S. 11:2220(A)(2)(a)(ii) and (A)(4).

If the benefit was temporarily suspended because of work during the first 90 days after retirement

The suspension ends when:

• the employment ends; or
• 90 days have passed since retirement,

whichever occurs first, assuming the position does not otherwise make the retiree an “employee.”

See R.S. 11:2220(J).

No.

The Code (and its accompanying Treasury Regulations) requires MPERS, employers, and employees to ensure that reemployed retirees who have started their benefit actually terminated employment and the termination was not part of a pre-arranged plan to return the retiree to employment with their employer.

The IRS, in various contexts, has discussed what constitutes a bona fide separation from service:

• There can be no explicit or implicit agreement between the employer and the employee that upon retirement the employee will return to service with the employer.
• No separation from service occurs if both the employer and the employee know at the time of “retirement” that the employee will, with reasonable certainty, continue to perform services for the employer.
• This is generally a facts and circumstances analysis and there is no particular time period of separation that will definitively establish a bona fide separation from service. However, the longer the period of separation, the less it appears that there was a prearranged agreement between the employer and the employee that the employee would return to employment.
• Note that guidance and cases have found that true separation from service did occur even when only five months passed after the termination of employment when the facts and circumstances clearly showed that there was no intention at the time of termination for the employee to ever return to work for the employer.

If a retired member who is younger than age 59½ returns to work for the same employer or plan sponsor without a bona fide separation from service, the retiree is in violation of certain early distribution rules. Those retirees are subject to a 10% early distribution tax penalty, in addition to normal income tax liability, on any retirement benefits received until the member turns age 59½ so long as they continue to work for the employer without a bona fide separation from service. MPERS must report this on the annual Form 1099-R by the selection of the appropriate distribution code. Even though a qualified public safety member reaches normal retirement age under the Code to begin a retirement benefit at age 50 or 25 years of service under the plan, if the member does not have a bona fide separation of service, the member is subject to the 10% early distribution tax penalty.

If the retiree is younger than age 59½, all of the taxable pension payments the retiree receives prior to turning age 59½ or prior to having a bona fide separation from service (whichever is earlier) would be subject to the penalty.

MPERS will not withhold any additional income tax amounts related to this penalty from any benefit payments. The 10% penalty owed on early distributions of benefits must be paid as part of the retiree’s income tax return. Retirees should consult with their accountant or tax advisor on this issue.

Yes, to the extent DROP is paid directly to the retiree. No, if the DROP balance is rolled into another qualified plan or tax deferred IRA. If the retiree returns to work before age 59½ without a bona fide separation from service, the DROP distribution would be subject to the 10% penalty if the retiree takes a lump sum distribution of the DROP benefit (whether in whole or in part) when the retiree exits the DROP. If the retiree elects to take the DROP distribution in the form of monthly payments, each monthly payment would be subject to the penalty until the retiree turns age 59½ or has a bona fide separation from service (whichever is earlier).

No. If the retiree returns to work, for the same employer, as an independent contractor, leased employee, or other temporary employee without a bona fide separation from service, then there is not a termination of the employment relationship. As a result, the retiree still would be subject to the 10% penalty.

If an employer employs a retiree in violation of the MPERS plan document, then the employer puts MPERS’ plan qualification at risk, and MPERS could lose its tax-qualified status. In addition, the 10% penalty described above would apply if the retiree has not had a bona fide separation from service and is younger than age 59½.

• The IRS has stated that whether a bona fide separation from service has occurred is based on a facts and circumstances analysis of the employee’s retirement and the reemployment.

Complete a direct deposit form and return with a voided check.

Contact the MPERS office.

When do I receive my retirement benefit?

Benefits are payable on the first business day of each month. MPERS prepays for the month. If the first falls on a weekend or holiday, benefits are paid on the first business day.

Benefits change when the federal tax tables are adjusted. If you have a change in your municipality deduction, please contact the city for specifics.

Please refer to the Title 7, Chapter 29 of the Member Handbook.