Earnings Limits Rules for Public School Employment -

If you retired on or AFTER July 1, 2010

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The rules are slightly different depending on where you’ll be returning to work. There are three different types of reporting units for which we’ll be reviewing the rules:

K-12 Michigan Public Schools and Charter Schools/Public School Academies

Your retirement effective date is on or between 7/1/2010 and 9/1/2015:

If you return to work directly for a Michigan public school or charter school/public school academy:
  • Your earnings limit is one-third of your Final Average Compensation (FAC). Example: If your FAC is $60,000, then you can return to work directly for a K-12 Michigan public school and earn $20,000, which is your FAC divided by three. You can find the amount of your FAC under the Pension Payments link in miAccount.
  • If you exceed the earnings limit for the gross amount paid in a calendar year, you will forfeit both your pension and retiree insurance premium subsidy until the month after your employment ceases. If you are paid in January for work performed in December, the payment would count toward the earnings limit in the new calendar year. In general, “gross earnings” includes more than the amount listed in Box 1 of your W-2. Additional earnings include items exempt from taxable wages. You can get a true representation of your gross earnings by looking at your last pay stub of the year. This includes all gross earnings as defined by the IRS. You can track your reported earnings and compare your earnings against your earnings limit in miAccount.
If your pension is forfeited for exceeding the earnings limit, the forfeiture will begin the month you first exceed the limit. If enrolled, your insurance coverage will continue, but you must now pay the full, unsubsidized premium rate. To cancel your insurance, we must receive written confirmation in the month before the month in which you wish to remove your coverage. Your pension and insurance premium subsidy can resume effective the first of the month following the month in which you terminate your employment at the school.

Substitute Teacher, Instructional Coach, or School Improvement Facilitator: If you’re employed directly as Substitute Teacher, Instructional Coach, or School Improvement Facilitator, you may earn up to one-third of your FAC without penalty. This applies to employees who are employed directly by the reporting unit, or as an independent contractor, or as an employee of a third-party contractor. The reporting unit will pay the contributions for both pension and health care.

Critical Shortage Exemption: If you’re employed by a K-12 Michigan public school in a critical shortage discipline, regardless of when you retired, you are exempt from the earnings limit until July 1, 2018 if all the following exist in your situation:
  • You are retired and have been collecting your pension for at least one year, and
  • You are employed by a K-12 Michigan public school that has a situation, not including a situation caused by a labor dispute, that requires the school to hire you in an area that has been identified by the state superintendent of public instruction as a critical shortage discipline, and
  • You are not employed in a critical shortage position for more than three years.
  • The K-12 Michigan public school shall pay 100% of the contribution rates for the unfunded actuarial accrued liability for retiree health care and pension to the Office of Retirement Services. Talk with your school to ensure that they are reporting you as working in a critical shortage position.
See the Michigan Department of Education memorandum containing a link to a list of critical shortage disciplines here.

If you return to work indirectly in a Michigan K-12 public school or charter school/public school academy as an employee of a third-party, or as an independent contractor:

  • If you perform a core service, unless that core service is also listed on the list of critical shortage positions, you will forfeit your pension and retiree insurance premium subsidy until your employment ceases. A list of core services can be downloaded here.
    • You may continue to collect your pension and receive the insurance premium subsidy if you’re not performing a core service.
    • You can work as a substitute teacher if your retirement effective date is between July 1, 2010 and September 1, 2015. You can earn up to one-third of your final average compensation.
    Instructional Coach or School Improvement Facilitator: If you’re employed as an Instructional Coach, or School Improvement Facilitator as an independent contractor or through a third-party contractor, you may earn up to one-third of your FAC without penalty until the expiration date of July 1, 2018. This applies to employees who are employed indirectly by the reporting unit, or as an independent contractor, or for a third-party contractor. The reporting unit will pay the contributions for both pension and health care. (If you meet all qualifications for the critical shortage list, as listed below, you will not be subject to the earnings limit until July 1, 2018.)

    If you exceed the earnings limit for the gross amount paid in a calendar year, you will forfeit both your pension and retiree insurance premium subsidy until the month after your employment ceases. If you are paid in January for work performed in December, the payment would count towards the earnings limit in the new calendar year. In general, “gross earnings” includes more than the amount listed in Box 1 of your W-2. Additional earnings include items exempt from taxable wages. You can get true representation of your gross earnings by looking at your last pay stub of the year. This includes all gross earnings as defined by the IRS. You can track your reported earnings and compare your earnings against your earnings limit in miAccount.
Critical Shortage List: If you’re employed by a K-12 Michigan public school in a critical shortage discipline, regardless of when you retired, you are exempt from the earnings limit until July 1, 2018 if all the following exist in your situation:
  • You are retired and have been collecting your pension for at least one year, and
  • You are employed by a K-12 Michigan public school that has a situation, not including a situation caused by a labor dispute, that requires the school to hire you in an area that has been identified by the state superintendent of public instruction as a critical shortage discipline, and
  • You are not employed in a critical shortage position for more than three years.
  • The K-12 Michigan public school shall pay 100% of the contribution rates for the unfunded actuarial accrued liability for retiree health care and pension to the Office of Retirement Services. Talk with your school to ensure that they are reporting you as working in a critical shortage position.
See the Michigan Department of Education memorandum containing a link to a list of critical shortage disciplines here.

Your retirement effective date is on or after 10/1/2015:

If you return to work directly for a Michigan public school reporting unit:

  • Your earnings limit is one-third of your Final Average Compensation (FAC). Example: If your FAC is $60,000, then you can return to work directly for a K-12 Michigan public school and earn $20,000, which is your FAC divided by three. You can find the amount of your FAC under the Pension Payments link in miAccount.
  • If you exceed the earnings limit for the gross amount paid in a calendar year, you will forfeit both your pension and retiree insurance premium subsidy until the month after your employment ceases. If you are paid in January for work performed in December, the payment would count toward the earnings limit in the new calendar year. In general, “gross earnings” includes more than the amount listed in Box 1 of your W-2. Additional earnings include items exempt from taxable wages. You can get a true representation of your gross earnings by looking at your last pay stub of the year. This includes all gross earnings as defined by the IRS. You can track your reported earnings and compare your earnings against your earnings limit in miAccount.

    If your pension is forfeited for exceeding the earnings limit, the forfeiture will begin the month you first exceed the limit. If enrolled, your insurance coverage will continue, but you must now pay the full, unsubsidized premium rate. To cancel your insurance, we must receive written confirmation in the month before the month in which you wish to remove your coverage. Your pension and insurance premium subsidy can resume effective the first of the month following the month in which you terminate your employment at the school.
Critical Shortage List: If you’re employed, either directly or indirectly, by a K-12 Michigan public school in a critical shortage discipline, regardless of when you retired, you are exempt from the earnings limit until July 1, 2018 if all the following exist in your situation:
  • You are retired and have been collecting your pension for at least 12 months, and
  • You are employed by a K-12 Michigan public school that has a situation, not including a situation caused by a labor dispute, that requires the school to hire you in an area that has been identified by the state superintendent of public instruction as a critical shortage discipline, and
  • You are not employed in a critical shortage position for more than three years.
  • The K-12 Michigan public school shall pay 100% of the contribution rates for the unfunded actuarial accrued liability for retiree health care and pension to the Office of Retirement Services.
See the Michigan Department of Education memorandum containing a link to a list of critical shortage disciplines here.

Important Note

Be sure to talk to your employer to confirm you will be reported as working in a Critical Shortage Position.

If you return to work indirectly in a Michigan K-12 public school as an employee of a third-party, or as an independent contractor:

  • If you perform a core service, unless that core service is also listed on the list of critical shortage positions, you will forfeit your pension and retiree insurance premium subsidy until your employment ceases.
  • You may continue to collect your pension and receive the insurance premium subsidy if you’re not performing a core service.
Core Services include most teaching and administrative roles. A list of core services can be downloaded here.

Critical Shortage List: If you’re employed by a K-12 Michigan public school in a critical shortage discipline, regardless of when you retired, you are exempt from the earnings limit until July 1, 2018 if all the following exist in your situation:

  • You are retired and have been collecting your pension for at least one year, and
  • You are employed by a K-12 Michigan public school that has a situation, not including a situation caused by a labor dispute, that requires the school to hire you in an area that has been identified by the state superintendent of public instruction as a critical shortage discipline, and
  • You are not employed in a critical shortage position for more than three years.
  • The K-12 Michigan public school shall pay 100% of the contribution rates for the unfunded actuarial accrued liability for retiree health care and pension to the Office of Retirement Services. Talk with your school to ensure that they are reporting you as working in a critical shortage position.
See the Michigan Department of Education memorandum containing a link to a list of critical shortage disciplines here.

Tax-Supported Community Colleges in Michigan

If you return to work directly for a tax-supported Michigan community college:

  • Your earnings limit is one-third of your Final Average Compensation (FAC). Example: If your FAC is $60,000, then you can return to work directly for a tax-supported Michigan community college and earn $20,000, which is your FAC divided by three. You can find the amount of your FAC under the Pension Payments link in miAccount.
  • If you exceed the earnings limit for the gross amount paid in a calendar year, you will forfeit both your pension and retiree insurance premium subsidy until the month after your employment ceases. If you are paid in January for work performed in December, the payment would count toward the earnings limit in the new calendar year. In general, “gross earnings” includes more than the amount listed in Box 1 of your W-2. Additional earnings include items exempt from taxable wages. You can get a true representation of your gross earnings by looking at your last pay stub of the year. This includes all gross earnings as defined by the IRS. You can track your reported earnings and compare your earnings against your earnings limit in miAccount.

    If your pension is forfeited for exceeding the earnings limit, the forfeiture will begin the month you first exceed the limit. If enrolled, your insurance coverage will continue, but you must now pay the full, unsubsidized premium rate. To cancel your insurance, we must receive written confirmation in the month before the month in which you wish to remove your coverage. Your pension and insurance premium subsidy can resume effective the first of the month following the month in which you terminate your employment at the school.

If you return to work indirectly in a tax-supported community college as an employee of a third-party, or as an independent contractor:

  • If you perform a core service, you will forfeit your pension and retiree insurance premium subsidy until your employment ceases. If, however, you are employed by a community college as a substitute teacher, you can perform the duties of your position and make up to one-third of your FAC without penalty until July 1, 2018.  As long as your retirement effective date is on or before September 1, 2015.
  • You may continue to collect your pension and receive the insurance premium subsidy if you’re not performing a core service.

Core Services include most teaching and administrative roles. A list of core services can be downloaded here.


Universities Participating in MPSERS

There are seven universities in Michigan that participate with the Michigan Public School Employees Retirement System. Because these institutions are considered to be reporting units, you will be subject to the rules regarding earnings limits. The seven universities are Central, Eastern, Northern, and Western Michigan Universities, Ferris State and Lake Superior State Universities, and Michigan Technological University.

Your retirement effective date is on or between 7/1/2010 and 9/1/2015

If you return to work directly for a tax-supported university in Michigan that participates with the Michigan Public School Employees Retirement System:

  • Your earnings limit is one-third of your Final Average Compensation (FAC). Example: If your FAC is $60,000, then you can return to work directly for a tax-supported Michigan community college and earn $20,000, which is your FAC divided by three. You can find the amount of your FAC under the Pension Payments link in miAccount.
  • If you exceed the earnings limit for the gross amount paid in a calendar year, you will forfeit both your pension and retiree insurance premium subsidy until the month after your employment ceases. If you are paid in January for work performed in December, the payment would count toward the earnings limit in the new calendar year. In general, “gross earnings” includes more than the amount listed in Box 1 of your W-2. Additional earnings include items exempt from taxable wages. You can get a true representation of your gross earnings by looking at your last pay stub of the year. This includes all gross earnings as defined by the IRS. You can track your reported earnings and compare your earnings against your earnings limit in miAccount.

    If your pension is forfeited for exceeding the earnings limit, the forfeiture will begin the month you first exceed the limit. If enrolled, your insurance coverage will continue, but you must now pay the full, unsubsidized premium rate. To cancel your insurance, we must receive written confirmation in the month before the month in which you wish to remove your coverage. Your pension and insurance premium subsidy can resume effective the first of the month following the month in which you terminate your employment at the school.

If you return to work indirectly in a university in Michigan that participates with the Michigan Public School Employees Retirement Systems as an employee of a third-party or as an independent contractor:

  • If you perform a core service, you will forfeit your pension and retiree insurance premium subsidy until your employment ceases. If, however, you are employed by a community college as a substitute teacher, you can perform the duties of your position and make up to one-third of your FAC without penalty, until July 1, 2018.  As long as your retirement effective date is on or before September 1, 2015.
  • You may continue to collect your pension and receive the insurance premium subsidy if you’re not performing a core service.

Core Services include most teaching and administrative roles. A list of core services can be downloaded here.

Exceptions to the earnings limits

  • You won’t be subject to the earnings limit if you were a former teacher or administrator as a retiree and are now working at one of the seven participating universities in either a teaching or a research capacity or in a program department director position if your retirement effective date is on or between July 1, 2010 and October 1, 2014.
  • The K-12 Michigan public school shall pay 100% of the contribution rates for the unfunded actuarial accrued liability for retiree health care and pension to the Office of Retirement Services.

Your retirement effective date is on or after 10/1/2015:

If you return to work directly for a tax-supported university in Michigan that participates with the Michigan Public School Employees Retirement System:

  • Your earnings limit is one-third of your Final Average Compensation (FAC). Example: If your FAC is $60,000, then you can return to work directly for a tax-supported Michigan community college and earn $20,000, which is your FAC, divided by three. You can find the amount of your FAC under the Pension Payments link in miAccount.
  • If you exceed the earnings limit for the gross amount paid in a calendar year, you will forfeit both your pension and retiree insurance premium subsidy until the month after your employment ceases. If you are paid in January for work performed in December, the payment would count toward the earnings limit in the new calendar year. In general, “gross earnings” includes more than the amount listed in Box 1 of your W-2. Additional earnings include items exempt from taxable wages. You can get a true representation of your gross earnings by looking at your last pay stub of the year. This includes all gross earnings as defined by the IRS. You can track your reported earnings and compare your earnings against your earnings limit in miAccount.

    If your pension is forfeited for exceeding the earnings limit, the forfeiture will begin the month you first exceed the limit. If enrolled, your insurance coverage will continue, but you must now pay the full, unsubsidized premium rate. To cancel your insurance, we must receive written confirmation in the month before the month in which you wish to remove your coverage. Your pension and insurance premium subsidy can resume effective the first of the month following the month in which you terminate your employment at the school.

If you return to work indirectly in a university in Michigan that participates with the Michigan Public School Employees Retirement Systems as an employee of a third-party or as an independent contractor:

  • If you perform a core service, you will forfeit your pension and retiree insurance premium subsidy until your employment ceases.
  • You may continue to collect your pension and receive the insurance premium subsidy if you’re not performing a core service.

Core Services include most teaching and administrative roles. A list of core services can be downloaded here.