Administrators and the Rules for Rehired Annuitants

By Laura Pedersen, Attorney, Renning, Lewis & Lacy

With the hiring shortages facing Wisconsin school districts, retired and retiring school district administrators may be considering whether they should offer to serve much-needed vacancies for administrator positions.  This article serves as a reminder regarding the requirements for doing so related to the Wisconsin Retirement System (WRS).

Rehired Annuitants/Eligibility Criteria.  For a retired school district administrator to receive a retirement annuity and return to WRS-eligible employment, the administrator must have been terminated in “good faith.”  A good-faith termination occurs when (1) all required conditions for a valid termination have been met and (2) the annuitant fulfills a minimum break in service.  

Valid Termination.  For purposes of the WRS, a valid termination means that all of the following conditions have been met:

1. The school district administrator stopped working and earning compensable wages and other benefits as an administrator.
2. For a voluntary termination, the school district administrator complied with the employer’s policies, including filing a letter of resignation.
3. As of the termination date, the employer has no rights to any future services from the school district administrator that meet the qualifications for WRS coverage for which wages or benefits will be paid.
4. The school district administrator is consistently treated as a former administrator.
5. The terminated school district administrator has no authority to act as a representative of the employer or exercise any authority/control over employees of the employer.
6. The employer has paid the school district administrator any accumulated benefits that are customarily paid to administrators at the time of termination.

The school district administrator may not enter into an agreement for future services before the administrator’s termination.  This means that on or before the school district administrator’s termination date, the administrator cannot:

• Enter into an agreement for any future employment with the same WRS employer the administrator retired from, regardless of whether that employment would meet WRS-participation standards.
• Enter into an agreement for any future WRS-eligible employment with a different WRS employer.

The termination date for a school district administrator is the last day for which the administrator is required to perform district-related work, rather than the last day of the school district’s fiscal year (i.e., June 30).  The termination date may be important for purposes of considering when a school district administrator can be rehired by a WRS employer and is used when ascertaining whether the termination was done in “good faith” or whether applicable break-in-service requirements have been met.

Break in Service.  Generally, a school district administrator who has met the required conditions for a valid termination must be separated from WRS employment for at least 75 calendar days before they can return to employment.  If a school district administrator does not separate for at least 75 days, the retirement will be considered invalid if the administrator was required to fulfill the 75-day break-in-service period.

• A 75-day break in service is required when:
• A school district administrator returns to any work for the same employer.
• A school district administrator goes to work for a different WRS employer if the position is expected to meet the WRS-eligibility criteria.

• A 75-day break in service is not required when:
• A school district administrator goes to work for a different WRS employer if the position is not expected to meet the WRS-eligibility criteria.
• A school district administrator goes to work for an employer who does not participate in the WRS.

Return to Work.  If the school district administrator’s termination of employment date was prior to July 2, 2013, upon return to WRS-eligible employment, the administrator may elect to continue to receive the WRS annuity or to suspend the WRS annuity and participate in the WRS again. 

If the school district administrator’s termination of employment date was on or after July 2, 2013, the administrator’s annuity will be suspended until the administrator retires if:

• The administrator is rehired by a WRS employer; and
• The administrator returns to a position where he/she is expected to work two-thirds of full time (i.e., 880 hours) and for at least a 12-month period.  

That being said, if the school district administrator’s termination of employment date was on or after July 2, 2013, and the administrator returns to a position where he/she is expected to work less than two-thirds of full time, the administrator’s annuity status is dependent upon when the administrator was first employed in a WRS-eligible position:

• If the school district administrator first began working in a WRS-eligible position before July 1, 2011, and the administrator returns to work in a position that is at least one-third of full time (i.e., 440 hours) and for at least a 12-month period, the administrator may elect whether to continue or suspend the annuity.  
• If the school district administrator first began working in a WRS-eligible position on or after July 1, 2011, and the administrator returns to work in a position that is less than two-thirds of full time, the administrator must remain an annuitant.

On the one-year anniversary of the date the school district administrator returned to work, the WRS employer must determine if the administrator worked two-thirds of full time and for at least a 12-month period.  If the school district administrator has met the WRS-eligibility criteria, the administrator must be enrolled in the WRS and his/her annuity will be suspended on the first of the month following his/her one-year anniversary date.  The hours do not restart each year. 

If a school district rehires an annuitant in an independent contractor capacity without meeting the 75-day break in service, there is some risk that the Department of Employee Trust Funds (DETF) will conclude that the independent contractor is actually an employee and the contractor relationship may negatively impact the annuitant’s access to his/her WRS annuity, especially if the annuitant performs work for the school district for more than two-thirds of full time and for a period of at least 12 months.  DETF requires that contractors complete, sign, and date a Rehired Annuitant form.

Conclusion.  Retired school district administrators who wish to return to work for a WRS-eligible employer after retirement must complete the Rehired Annuitant Form (ET-2319).  Before taking a position with a WRS-eligible employer, retired school district administrators should explore whether their return to work will have any impact on their WRS annuities.  For additional information related to becoming a rehired annuitant, school district administrators should consult DETF’s Information for Rehired Annuitants brochure and/or to contact DETF to confirm the impact, if any, of accepting a new position of employment.