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Working After You Retire

Working After You Retire

If you go to work after you retire, your earnings usually won't affect your pension, with the following exceptions.

Returning to work as a State of Michigan employee
If you would like to return to work, your earnings usually won't affect your pension, with the following exceptions:

Disability retirement pension

Because of the nature of a disability pension, you must get approval from the Michigan Office of Retirement Services (ORS) before you return to work for any employer. Write a letter to ORS before you resume working. The letter should include:

  • the name and contact information of your potential employer.
  • an official job description.
  • the number of hours you plan to work.

Failure to gain advanced approval may result in suspension of your disability pension.

State of Michigan employment

If you return to work for the state as an employee, independent contractor, or through a contractual arrangement with another party, you must forfeit your state pension for the duration of the reemployment.

Complete the Retiree Rehire Certification (R0792G) form at the time of hire.

If you are rehired as a state employee, you will be enrolled in the Defined Contribution (DC) Plan.

Who must forfeit their pension?

  • Retirees employed directly by the state.

Retirees must forfeit their pensions when returning to work for the State of Michigan. This includes retirees hired on an ad hoc, infrequent or advisory basis, contractors, and retirees who transferred from the Defined Benefit (DB) Plan to the DC Plan as active members. Participants in the DC Plan who are not receiving a pension are subject to federal rules regarding distributions. DC Plan participants cannot continue a distribution from a 401(k) if they return to work at the State of Michigan and they’re younger than age 59 1/2. DC Plan participants cannot continue to take a distribution from the 457 Plan while working for the State of Michigan no matter their age. If stopped, distributions can resume after employment with the State of Michigan ends.  

  • Independent contractors.

Retirees must forfeit their pensions if returning to work for the State of Michigan as an independent contractor after Oct. 1, 2010. This includes independent contractors who may have had an existing contract on or before Oct. 1, 2010, and the contract was extended or amended after Oct. 1, 2010.

  • Retirees employed by a third party.

Retirees who are hired by a third party (e.g., temporary hiring agency or as an employee of a third-party contractor) and are performing work for the State of Michigan must forfeit their pensions, regardless of who pays the wages.

Who does not need to forfeit their pension?

  • Retirees rehired before Oct. 2, 2007.

Retirees who began reemployment with the state before Oct. 2, 2007, if they remain continuously employed by the state, do not need to forfeit their pensions.

  • Independent contractors.

Retirees who are rehired on or before Oct. 1, 2010, and meet the criteria of independent contractors do not need to forfeit their pensions. IRS Publication 15-A and the Economic Reality Test set forth in McKissic v. Bodine, 42 Mich App 203 (1972) are used to determine if a retiree meets the criteria. ORS will rely on each individual hiring agency to ensure that any independent contract it puts in place meets the criteria of an independent contractor. However, if a contract is extended or amended after Oct. 1, 2010, the retiree must forfeit their pension. Hiring agencies should consult their legal counsel for assistance with these contracts.

  • Retirees who are rehired by the Michigan Department of Corrections (MDOC).

Retirees who are rehired by the MDOC to provide healthcare services do not need to forfeit their pensions if all the following conditions are met:

  • The MDOC must first endeavor to recruit a person through the normal hiring process to fill the position. If unsuccessful, the MDOC must provide written notice to the State Budget Office and ORS of the need to rehire a State of Michigan retiree.
  • Within 30 days of rehire the MDOC must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, and total payable compensation.
  • The retiree must be in a limited-term position with no benefits paid and paid on a per diem basis.
  • The retiree retired after a bona fide termination. (This simply means that you terminated employment in good faith and without any intent to return to State of Michigan employment.) 
  • Retirees who are rehired indirectly by the MDOC.

MDOC retirees who are hired indirectly by the state through a contractual arrangement with another party providing telecommunications services to the MDOC for the primary purpose of collecting or analyzing intelligence generated in the MDOC do not forfeit their pensions if all the following conditions are met:

  • The MDOC determines that, because of the retiree’s previous state employment, they had specialized expertise and experience necessary to complete those tasks.
  • The MDOC reports the employment of a retiree to the State Budget Office and ORS within 30 days after employment and within 30 days after termination of employment.
  • The report is completed using the MDOC Retiree Certification (R3471G) form, which includes the retiree’s name, address, date of indirect hire with the state, contract company’s name, and the capacity in which they are employed.
  • Retirees who are rehired by the Michigan Department of Natural Resources (DNR) for active wildfire suppression.

Retirees who are rehired by the DNR to suppress active wildfires do not need to forfeit their pensions if all the following conditions are met: 

  • There is an immediate continual need for prequalified, skilled, and trained personnel to address wildfire suppression.
  • The retiree works no more than 600 hours in a fiscal year.
  • The DNR must first endeavor to recruit a person through the normal hiring process to fill the position. If unsuccessful, the DNR must provide written notice to the State Budget Office and ORS of the need to rehire a State of Michigan retiree.
  • The retiree must be in a limited-term position with no benefits paid and pay is not more than 70% of the maximum hourly wage granted to classified Michigan Civil Service Commission employees employed by the DNR to perform the same duties as the retiree per fiscal year.
  • Within 30 days of rehire the DNR must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, equivalent Civil Service position, total hourly compensation, and total hours of service.
  • Within 30 days of termination the DNR must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, and total payable compensation.
  • Retirees who are rehired by the Michigan Department of Health and Human Services (MDHHS) as a psychiatrist.

Retirees who are rehired by MDHHS to provide mental health services as a psychiatrist to individuals in psychiatric hospitals operated by MDHHS do not need to forfeit their pensions if all the following conditions are met:

  • MDHHS determines that, because of the retiree’s previous employment with the state, the retiree possesses specialized expertise necessary for the hiring of the retiree and that the hiring of the retiree is the most cost-effective option for the state.
  • The retiree retired before Oct. 1, 2015, and after a bona fide termination of employment.
  • Within 30 days of rehire MDHHS must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, equivalent Civil Service position, total hourly compensation, and total hours of service.
  • Within 30 days of termination MDHHS must provide in writing to the State Budget Office and ORS the retiree’s name, employment capacity, total payable compensation, and the total hours of service provided by the retiree for the fiscal year.
  • Retirees who are rehired by the Legislative Service Bureau as legal counsel through a contractual arrangement.

Retirees who are rehired by the Legislative Service Bureau as legal counsel through a contractual arrangement do not need to forfeit their pensions if all the following conditions are met:

  • The legislative council administrator determines that, because of the retiree’s previous employment with the state, the retiree possesses specialized expertise necessary for the hiring of the retiree and that the hiring of the retiree is the most cost-effective option for the state.
  • The legislative service bureau reports to ORS the employment of the retiree under this subsection within 30 days after employment and within 30 days after termination of employment.
  • Defined Contribution (DC) Plan participants.

Participants in the DC Plan who are not receiving a pension are subject to federal rules regarding distributions. DC Plan participants cannot continue a distribution from a 401(k) or 457 if they return to work at the State of Michigan and they’re younger than age 59 1/2. If stopped, distributions can resume after employment with the State of Michigan ends.

  • Appointment to, or contracting with, the attorney general's office.

There are certain circumstances where a retiree who retired after a bona fide termination can return to work for the attorney general's office without forfeiting their pension. If you are a retiree who has been appointed as a special assistant attorney general or you are a retiree who has been asked to contract with the attorney general's office to act as a witness, expert, or consultant for litigation involving this state, please contact ORS for more information.

Effects on insurances

Except exemptions that will have no benefits paid, as listed below, you will have a choice of active or retiree insurances. If you choose to keep your retiree insurances and your pension is suspended, we will bill you for the normal insurance amount which would be deducted from your pension. If you choose to not keep your retiree insurances, please submit an Insurance Enrollment/Change Request (R0452G) form to cancel your retiree coverage.

Exemptions not eligible for active member insurance:

  • Retirees who are rehired by the MDOC to provide healthcare services.
  • Retirees who are rehired by the DNR for active wildfire suppression.

Upon termination of employment

When you stop working for the state, you should notify ORS in writing so pension payments can be restarted. Your pension will become effective again the month after employment with the state has ceased. You will not be eligible for a pension recalculation.