Chapters

00:00 Introduction to PERS Return to Work Options

01:01 Introduction to PERS Retiree Return to Work Earnings Limits

02:10 PERS Retiree Rules and Limits Returning to Work as W2 Employee or Contractor

05:11 PERS Retiree Rules & Limits Returning to Work as FT Teacher

07:23 PERS Retiree Rules & Limits Returning to Work as Independent Contractor

08:44 PERS Retirees Rules & Limits Returning to Work as Elected Official

09:33 PERS Retiree Rules & Implications of Coming Out of Retirement

10:39 Action Items for PERS Retirees

11:19 Preview of Next Video & Calls to Action

12:31 Disclaimer

Transcript

Ryan Earley (00:00)

Hi everyone, I'm Ryan Earley, vested PERS member, former public school finance officer, current financial planner, and host of the PERS Pro YouTube channel. Today, we are diving deep into the requirements to return to work for a Mississippi PERS agency, including how House Bill 4073 has shortened the waiting period and increased the earning potential for some Mississippi PERS retirees. Let's get started.

In our last video, number 51, we established that a PERS retiree has three main ways to return to work for a PERS.  First, W2 employee, working directly for the agency. Second, contract worker, an individual hired for a specific task. Third, independent contractor, someone operating through their own business entity. Although not covered in the previous video, we can add a fourth to the list, elected official, serving in a local or state office.

Historically, these return to work PERS options were strictly limited in hours or pay a retiree could earn in a fiscal year by either what I'll call the 50-50 rule, working no more than half the time for no more than half the pay for the position the retiree was hired into, or what I'll call the 25% rule, earning no more than 25% of the average compensation used in that retiree's benefit calculation. 

However, House Bill 4073 that was approved by the Governor during the 2026 session has added a third limited re-employment condition, compensation not to exceed 80% of the salary in effect for the position of re-employment. However, there are additional requirements placed on this condition, as well as exceptions that we will go into more detail later in this video. 

The other big change for retirees from House Bill 4073 is the required break in service has decreased from 90 calendar days to 30 calendar days.  This additional limited re-employment condition of 80% of salary will be repealed on July 1, 2036, meaning PERS retirees only have 10 years to take advantage of this new opportunity.

Most retirees return as W-2 employees or contractors. Here is how the rules break down based on when you return to work. Let's go over first the rules and features if you return to work as a PERS retiree before July 1, 2026.  Break and service. A strict 90 day consecutive calendar day break is required. You cannot have a pre-arranged agreement to return before you retire. Be aware that retiring educators working on a less than 12 month basis who wish to return to work with a covered educational institution must wait 90 consecutive calendar days beginning with the start of the next school year. Limits. You are limited to one, the 50-50 rule: working no more than 50% of the normal hours and earning no more than 50% of the position's full-time salary, or two 25% average compensation rule, earning no more than 25% of your average compensation used in your retirement benefit calculation. Forms, you and your employer must file Form 4B within five days of your return. Employer cost, although the employee does not contribute any money into PERS, the employer still contributes its share at the standard employer rate into PERS. Key exceptions, retirees working as elected officials, senior and special judges, and full-time teachers are subject to different rules, some of which we'll cover later in this video. 

Now let's go over the rules and features if you return to work as a PERS retiree on or after July 1st, 2026, incorporating House Bill 4073 changes. Break in service. A strict 30-day consecutive calendar day break is required. You still cannot have a pre-arranged agreement to return before you retire. Limits. In addition to the 50-50 rule and 25% average compensation rule, retirees also have access to the 80% salary rule, which is earning no more than 80% of the position's salary, though this condition is not available to retirees whose retirement allowance is subject to an actuarial reduction other than as a result of a partial lump sum option or optional benefit under section 25-11-115. Forms. A written agreement must be executed between the retiree and employer after the 30-day break. Form 4B is still required to be filed with PERS within five days of your return, and if any amendments are made to the written agreement, those amendments must be filed with PERS within 20 days. Employer cost. In addition to the employer contributing its share at the standard employer rate into PERS, the employer must also contribute the employee share at the standard rate into PERS for those retirees electing the 80% salary condition, making this a very costly limited re-employment option for employers. Key exceptions, this 80% salary limit is not available for elected officials, K-12 superintendents, or university and community college administrators.

Now, there is a very specific full-time opportunity for some of you, the Retired Teacher Return to Work option under Mississippi Code 25-11-126. This was created to address Mississippi's teacher shortage, and it works differently than the standard W-2 and contractor rules we just discussed. 

Eligibility requirements. The role, you must have been a public school teacher at the time of your retirement and hold a valid Mississippi Standard Teaching license at the time of re-employment. Credible service. You must have retired with at least 30 years of service or 25 years if you were already retired as of July 1st, 2024. Location, you can only be hired in districts designated by the Department of Education as having critical teacher shortages or in critical subject area shortages. Break in service, before July 1st, 2026, a 90 day break is required.  On or after July 1st, 2026, this has been reduced to a 30-day break matching the other return to work options. 

Rules and limits. Duration. You can use this teacher exception for a maximum of five years total, consecutive or intermittent. Any portion of a school year counts as one of those five years. You do not have to work for the same school district all five years. Salary. The school district can allocate up to 125% of the state salary scale for your license type and experience, but you only take home 50% of that amount as your salary. If you work less than a full year, your salary is prorated accordingly. Employer cost, the other 50% is paid directly by the district to PERS as a pension liability assessment. Required forms, form CS must be submitted to PERS annually. 

Note, you can return to work as a PERS retiree under Section 127, which is the 50-50, 25% average compensation or 80% salary rule, or under Section 126, which is the full-time teacher path. You cannot do both. For example, first return under Section 127 as a bus driver, then return under Section 126 as a full-time teacher, so plan accordingly.

Working as an independent contractor is where it gets technical in the return to work decision isn't just made between the retiree and PERS agency, but requires PERS approval as well. Break in service. Working as an independent contractor still requires the 90 day break in service for those retirees hired before July 1st, 2026, or 30 day break in service for those hired after July 1st, 2026. Even as an independent contractor, you cannot have a prearranged deal. Classification test. PERS uses a common law test to see if you are truly independent. The test itself has 23 questions the employer must answer and six questions the employee or retiree must answer. If the employer controls when, where, and how you work, PERS will classify you as an employee or contractor and the 50-50, 25 % or 80 % limits will apply. Forms required. You must complete the employee versus independent contractor determination questionnaire and submit to PERS before you begin working. Failure to do so could result in repayment of retirement benefits to PERS if your work is reclassified as contractor or employee and subject to limits under Mississippi Section 2511.127. Salary Limits. If PERS determines you are a true independent contractor, there are no salary limits that apply.

If you are a service retiree and get elected to office, the rules and earning limitations are slightly different. General rules, break in service. Generally a 90 day break in service is required prior to July 1st, 2026, unless the retiree serving in a local office is age 59 and a half or older. After July 1st, 2026, that break in service requirement is reduced from 90 to 30 days. Earning options. Retirees serving as elected officials can either waive their full salary or earn up to 25% of their average compensation used in calculating their retirement benefit.  Retirees returning to work as elected officials are prohibited from using the new 80% salary limit under House Bill 4073. Required forms, Form 9C must be submitted to PERS annually.

What if you want to go back to work with a PERS agency and unretire? What are the rules and implications of that decision? Pension status, your monthly benefit will stop.  Retirement credits, you will resume contributing to PERS and will begin earning additional service credit on top of your previous service credit. Future benefit, when you eventually retire again, assuming you work at least six months, your benefit will be recalculated. If you work less than six months, you simply start receiving your old check again and your new contributions made after entering re-employment will be refunded to you. COLA impact, your COLA is calculated taken into account all fiscal years in retirement, not just since the most recent retirement. Partial lump sum impact. If you selected a partial lump sum option during your initial retirement, your new recomputed benefit on your second retirement will be reduced accordingly. Required forms. Form one will need to be completed and submitted to PERS, along with written notice that you wish to terminate your retirement allowance and return to work full time.

If you are a PERS retiree considering returning to work for a PERS agency, here are your action items for today. One, calculate your return date. Determine what break in service rule applies and make sure to start counting from the right date. Two, verify the position rules. If you are returning to work as a teacher, school superintendent, college administrator, or elected official, be aware of the special rules and exceptions that may apply. Three, file the correct paperwork.  Never start work without confirming the correct forms have been completed by both you and the employer and sent to PERS. If you don't, you risk having to pay some of your pension back. 

I hope this video clarifies the requirements and limitations of returning to work for a PERS agency in various roles. In our next video, we'll be providing an overview of Social Security for active and retired PERS members. Please make sure you subscribe so you don't miss this and other videos in our new retirement series.

If you found this video helpful, can thank me by hitting the thumbs up button and sharing it with other PERS members. If you have a follow up question about PERS or anything else related to personal finance, please visit our website at perspro.ms, click YouTube, and submit your question or topic for a future episode. And finally, if you are looking for a financial planner that specializes in helping PERS members plan for retirement, including deciding what return to work option and earnings limit is best for them, please visit our website at perspro.ms to learn more about our firm and to schedule your initial consultation. 

Thank you for your viable public service to the state of Mississippi. We'll see you next time.

Disclaimer, this video is for educational and informational purposes only. Neither the host nor this YouTube channel are officially affiliated with, endorsed by, or sponsored by the Public Employees Retirement System of Mississippi. Always consult a qualified professional for personal advice specific to your situation.