Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
15.420(2)(a),
16.010,
16.505,
61.505,
61.510,
61.565,
61.590,
61.637,
61.675,
61.702,
70.291
- 70.293, 78.510, 78.545, 78.5540, 78.625, 78.635, 95.022, 158.441, 164.952,
26 U.S.C.
401(a),
26 C.F.R.
1.401-1, 1.401(a)-1
NECESSITY, FUNCTION, AND CONFORMITY: KRS 61.505(1)(g)
authorizes the Kentucky Public Pensions Authority to promulgate administrative
regulations on behalf of the Kentucky Retirement Systems and the County
Employees Retirement System that are consistent with
KRS
16.505 to
16.652,
61.510
to
61.705,
and
78.510
to
78.852.
KRS
61.637(18) and 78.5540(5)
requires the Kentucky Public Pensions Authority to promulgate administrative
regulations to implement the requirements of
KRS
61.637 and 78.5540. This administrative
regulation concerns the administration of
KRS
61.637 and 78.5540 in conjunction with
federal law regarding bona fide separation from service and changes in
employment relationship if a retired member returns to employment with a
participating employer in a retirement system operated by the Kentucky Public
Pensions Authority.
26 C.F.R.
1.401-1(a)(2) requires that
a qualified plan expressly provide in its statutes and administrative
regulations (plan documents) how it shall administer its plan in accordance
with federal law in order to maintain the tax qualified status of the plan.
This administrative regulation is necessary to maintain the tax qualified
status of the Kentucky Employees Retirement System, the County Employees
Retirement System, and the State Police Retirement System under
26 U.S.C.
401(a), and to comply with
the provisions established in
26 C.F.R.
1.401-1(b)(1)(i) and
1.401(a)-1.
Section 1. Definitions.
(1) "Agency" means:
(a) Prior to April 1, 2021, the Kentucky
Retirement Systems, which administered the State Police Retirement System, the
Kentucky Employees Retirement System, and the County Employees Retirement
System; and
(b) Beginning April 1,
2021, the Kentucky Public Pensions Authority, which is authorized to carry out
the day-to-day administrative needs of the Kentucky Retirement Systems
(comprised of the State Police Retirement System and the Kentucky Employees
Retirement System) and the County Employees Retirement System.
(2) "Employee" means a retired
member who is performing services for an employer in a manner that demonstrates
an employment relationship under the common law factors used by the Internal
Revenue Service.
(3) "Employer" is
defined by
KRS
16.505(3),
61.510(6),
and
78.510(7).
(4) "File" means a form has been received at
the retirement office by mail, fax, secure email, in-person delivery, or upload
via Self Service on the Web site maintained by the agency (if
available).
(5) "Fiscal Year" is
defined by
KRS
16.505(32),
61.510(19),
and
78.510(19).
(6) "Hazardous position" is defined by
KRS
78.510(42).
(7) "Member" is defined by
KRS
16.505(21),
61.510(8),
and
78.510(8).
(8) "Month" is defined by
KRS
16.505(34),
61.510(35),
and
78.510(32).
(9) "Nonhazardous position" is defined by
KRS
61.510(44) and
78.510(41).
(10) "Non-participating position" means any
position of employment with a participating employer other than a regular
full-time position or a regular full-time officer position.
(11) "Participating employer" means any
employer that participates in one (1) of the systems operated by the
agency.
(12) "Participating
position" means a regular full-time position or a regular full-time officer
position.
(13) "Reemployment" means
the retired member's first date of employment with a participating employer
following his or her most recent retirement date.
(14) "Regular full-time officer position" is
defined by
KRS
16.505(22).
(15) "Regular full-time position" is defined
by
KRS
61.510(21),
61.680(6),
78.510(21),
and
78.545(16).
(16) "Retired member" is defined by
KRS
16.505(11),
61.510(24),
and
78.510(23).
(17) "Retirement date" means the member's
effective retirement date as described in
KRS
61.590(5) and
78.545(4).
(18) "Retirement office" is defined by
KRS
16.505(28),
61.510(31),
and
78.510(29).
(19) "School board" is defined by
KRS
78.510(4).
(20) "Service" is defined by
KRS
16.505(6),
61.510(9),
and
78.510(9).
(21) "Systems" means the State Police
Retirement System, the Kentucky Employees Retirement System, and the County
Employees Retirement System.
(22)
"Volunteer" is defined by
KRS
61.510(42) and
78.510(39).
Section 2. Form 6000
Certification.
(1) In order to retire with
the systems operated by the agency, an eligible member shall submit a Form
6000, Notification of Retirement, as incorporated by reference in
105 KAR
1:200. The Form 6000, Notification of Retirement,
shall comply with the requirements of
KRS
61.590,
KRS
78.545, and
105 KAR
1:200.
(2)
The agency shall not process a Form 6000, Notification of Retirement, until the
member certifies on the Form 6000 that there is no prearranged agreement for
reemployment with a participating employer after the member's retirement
date.
Section 3.
Employment After Retirement.
(1) A retired
member who is reemployed with a participating employer in any position,
including participating positions and non-participating positions, shall have:
(a) A bona fide separation from service as
provided in subsection (2) of this section; and
(b) A break in service as provided in
subsection (3) of this section.
(2)
(a)
"Bona fide separation from service" as provided in this section shall include a
cessation of the employment relationship between the member and the member's
employer without a prearranged agreement when the member retires that he or she
will return to work for any participating employer in any capacity.
(b) "Prearranged agreement" as provided in
this section shall not include reemployment accepted more than twelve (12)
months after the member's retirement date.
(c) An elected official's retirement shall be
voided due to the existence of a prearranged agreement if, within twelve (12)
months of retirement, the official is reelected and takes office in the same
position as the elected official held prior to retirement.
(3) "Break in service" as provided in this
section shall require that:
(a) A member who
retired from a hazardous position shall have a one (1) month break in service
before returning to work with any participating employer in a hazardous
participating position.
(b) Except
as provided in paragraph(a) of this subsection, a member who retired from a
hazardous or nonhazardous position shall have a three (3) month break in
service before returning to work with any participating employer.
(4) If a retired member seeks
reemployment with a participating employer within twelve (12) months of his or
her retirement date, then the following shall be filed at the retirement
office:
(a) The participating employer shall
certify that there was no prearranged agreement on a completed Form 6751,
Employer Certification Regarding Reemployment;
(b) A Form 6754, Member Reemployment
Certification, completed by the retired member; and
(c) Any other information requested by the
agency from the participating employer and the retired member pursuant to
KRS
61.637(8) and
78.5540(2)(a).
(5)
(a) The agency shall issue a final
determination to the retired member no later than thirty (30) days after
receipt of all required forms and additional requested information.
(b) If the agency determines that the retired
member failed to have a bona fide separation from service or a break in service
and returned to work with any participating employer in any position, including
a participating position or a non-participating position, the retired member's
retirement shall be voided and he or she shall repay all retirement allowances,
dependent child payments, and health plan premiums paid by the
systems.
Section
4. Independent Contractors and Leased Employees.
(1) If a retired member seeks to provide
services to a participating employer as an independent contractor, under a
professional services contract, or as a leased employee within twelve (12)
months of the retired member's retirement date, then the following shall be
filed at the retirement office:
(a) A Form
6752, Employer Certification of Independent Contractor/Leased Employee,
completed by the participating employer;
(b) A Form 6754, Member Reemployment
Certification, completed by the member;
(c) A complete copy of any contract under
which services are provided by the retired member to the participating
employer; and
(d) Any other
information requested by the agency from the participating employer and the
retired member pursuant to
KRS
61.637(9) and
78.5540(2)(b).
(2) The
agency shall apply common law factors used by the Internal Revenue Service
(IRS), in accordance with IRS Publication 1779, to determine whether a retired
member is an employee of the participating employer or an independent
contractor of the participating employer.
(3)
(a) The
agency shall issue a final determination to the retired member no later than
thirty (30) days after receipt of all required forms and requested
information.
(b) If the agency
determines that the retired member is an employee of the participating
employer, rather than an independent contractor or leased employee through a
leasing company, staffing agency, or other entity:
1. The retired member shall be subject to the
provisions of Section 3 of this administrative regulation and shall have a
"bona fide separation from service" and "break in service"; and
2. The employer shall do the following:
a. Report the retired member as required by
KRS
61.675,
KRS
78.625, and
105 KAR
1:145;
b.
Pay employer contributions for the retired member as specified by
KRS
61.565,
61.702,
and 78.635; and
c. Reimburse the
systems for the cost of health insurance premiums paid by the systems for the
retired member.
Section 5. Volunteers.
(1) If a retired member seeks to volunteer
with a participating employer within twelve (12) months of the retired member's
retirement date, then the following shall be filed at the retirement office:
(a) A Form 6753, Employer Certification of
Volunteer, completed by the participating employer;
(b) A Form 6754, Member Reemployment
Certification, completed by the retired member; and
(c) Any other information requested by the
agency from the participating employer and retired member pursuant to
KRS
61.637(8) and
78.5540(2)(a).
(2)
(a) The agency shall issue a final
determination to the retired member no later than thirty (30) days after
receipt of all required forms and requested information.
(b) If the Agency determines that the retired
member is an employee of the participating employer, rather than a volunteer:
1. The retired member shall be subject to the
provisions of Section 3 of this administrative regulation and shall have a
"bona fide separation from service" and "break in service"; and
2. The employer shall do the following:
a. Report the retired member as required by
KRS
61.675,
78.625,
and
105 KAR
1:145;
b.
Pay employer contributions for the retired member as specified by
KRS
61.565,
61.702,
and 78.635; and
c. Reimburse the
systems for the cost of health insurance premiums paid by the systems for the
retired member.
Section 6. Health Insurance Premium
Reimbursements for Retired Members Reemployed by Multiple Participating
Employers.
(1) If a retired member is
reemployed by multiple participating employers in a month in positions that
qualify as regular full-time, each participating employer shall be responsible
for reimbursing the systems for a portion of the health insurance premium paid
by the systems to provide coverage for the retired member for that month that
is equal to the cost of the premium divided by the number of participating
employers that are not exempt from reimbursement of health insurance
premiums.
(2) Participating
employers that are exempt from reimbursement of health insurance premiums under
Section 7 of this administrative regulation, or by virtue of being a school
board employing the retired member for eighty (80) days or less during the
fiscal year, are not responsible for health insurance premiums under this
section.
Section 7.
Exemption for Payment Of Employer Contributions and Reimbursement of Health
Insurance Premiums for Retired Members Reemployed as Police Officers and School
Resource Officers.
(1)
(a) A participating employer shall be exempt
from paying employer contributions and from reimbursing the systems for the
cost of the health insurance premiums paid by the systems for a retired member
reemployed as a police officer pursuant to
KRS
70.291 to
70.293
for a term of appointment of no more than one (1) year if a completed Form
6760, County Police or Sheriff Appointment of Retired Police Officer, and the
supporting documentation required by the Form 6760 are on file at the
retirement office prior to the start of the retired member's term of
appointment.
(b) If a completed
Form 6760, County Police or Sheriff Appointment of Retired Police Officer, and
the supporting documentation required by the Form 6760 are not on file at the
retirement office prior to the start of the retired member's term of
appointment as a police officer pursuant to
KRS
70.291 to
70.293,
then the participating employer shall be exempt from paying employer
contributions and reimbursements of health insurance premiums for a retired
member reemployed as a police officer pursuant to
KRS
70.291 to
70.293
effective in the month after a completed Form 6760 and supporting documentation
are on file at the retirement office.
(2)
(a) For
each subsequent term of reappointment after the initial term of appointment
listed on the completed Form 6760, County Police or Sheriff Appointment of
Retired Police Officer, described in subsection (1) of this section, the
participating employer shall be exempt from paying employer contributions and
from reimbursing the systems for the cost of the health insurance premiums paid
by the systems for a retired member reemployed as a police officer pursuant to
KRS
70.291 to
70.293
for a term of reappointment of no more than one (1) year if a completed Form
6764, Recertification of Retired Police Officer, is on file at the retirement
office prior to the start of the retired member's term of
reappointment.
(b) If a completed
Form 6764, Recertification of Retired Police Officer, is not on file at the
retirement office prior to the start of the retired member's term of
reappointment as a police officer pursuant to
KRS
70.291 to
70.293,
then the participating employer shall be exempt from paying employer
contributions and reimbursements of health insurance premiums for a retired
member reemployed as a police officer pursuant to
KRS
70.291 to
70.293
effective in the month after a completed Form 6764 and supporting documentation
are on file at the retirement office.
(3)
(a) A
participating employer shall be exempt from paying employer contributions and
from reimbursing the systems for the cost of the health insurance premiums paid
by the systems to provide coverage for a retired member reemployed as a school
resource officer pursuant to
KRS
158.441 for a term of appointment of no more
than one (1) year if a completed Form 6766, Appointment of Retired School
Resource Officer, and the supporting documentation required by the Form 6766
are on file at the retirement office prior to the start of the retired member's
term appointment.
(b) If a
completed Form 6766, Appointment of Retired School Resource Officer, and the
supporting documentation required by the Form 6766 are not on file at the
retirement office prior to the start of the retired member's term appointment,
then the participating employer shall be exempt from paying employer
contributions and reimbursements of health insurance premiums for a retired
member reemployed as a school resource officer pursuant to
KRS
158.441 effective in the month after a
completed Form 6766 and supporting documentation are on file at the retirement
office.
(4)
(a) A participating employer shall be exempt
from paying employer contributions and from reimbursing the systems for the
cost of the health insurance premiums paid by the systems for a retired member
reemployed as a Kentucky State Police school resource officer pursuant to
KRS
158.441 for a term of appointment of no more
than one (1) year if a completed Form 6767, Appointment of Kentucky State
Police School Resource Officer, and the supporting documentation required by
the Form 6767 are on file at the retirement office prior to the start of the
retired member's term appointment.
(b) If a completed Form 6767, Appointment of
Kentucky State Police School Resource Officer, and the supporting documentation
required by the Form 6767 are not on file at the retirement office prior to the
start of the retired member's term appointment, then the participating employer
shall be exempt from paying employer contributions and reimbursements of health
insurance premiums for a retired member reemployed as a Kentucky State Police
school resource officer pursuant to
KRS
158.441 effective in the month after a
completed Form 6767 and supporting documentation are on file at the retirement
office.
(5)
(a) A participating employer shall be exempt
from paying employer contributions and from reimbursing the systems for the
cost of the health insurance premiums paid by the systems for a retired member
reemployed as a police officer by a postsecondary institution pursuant to
KRS
164.952 for a term of appointment of no more
than one (1) year if a completed Form 6768, Postsecondary Institution
Appointment of Retired Police Officer, and the supporting documentation
required by the Form 6768 are on file at the retirement office prior to the
start of the retired member's term appointment.
(b) If a completed Form 6768, Postsecondary
Institution Appointment of Retired Police Officer, and the supporting
documentation required by the Form 6768 are not on file at the retirement
office prior to the start of the retired member's term appointment, then the
participating employer shall be exempt from paying employer contributions and
reimbursements of health insurance premiums for a retired member reemployed as
a police officer by a postsecondary institution pursuant to
KRS
164.952 in the month after a completed Form
6768 and supporting documentation are on file at the retirement
office.
(6) A
participating employer shall not be eligible for exemption from payment of
employer contributions or from reimbursing the systems for the costs of health
insurance premiums for any retired members reemployed as a police officer
pursuant to
KRS
95.022 unless a Form 6769, Certification of
Employed Police Officers Calendar Year 2015, is on file at the retirement
office.
(7)
(a) A participating employer with a Form
6769, Certification of Employed Police Officers Calendar Year 2015, on file at
the retirement office shall be exempt from paying employer contributions and
from reimbursing the systems for the costs of health insurance premiums for a
retired member reemployed as a police officer pursuant to
KRS
95.022 for a term of appointment of no more
than one (1) year if a completed Form 6770, City Appointment of Retired Police
Officer, and the supporting documentation required by the Form 6770 are on file
at the retirement office prior to the start of the retired member's term of
appointment.
(b) If a completed
Form 6770, City Appointment of Retired Police Officer, and the supporting
documentation required by the Form 6770 are not on file at the retirement
office prior to the start of the retired member's term of appointment, then the
participating employer with a Form 6769, Certification of Employed Police
Officers Calendar Year 2015, on file at the retirement office shall be exempt
from paying employer contributions and reimbursements of health insurance
premiums for a retired member reemployed as a police officer pursuant to
KRS
95.022 effective in the month after a
completed Form 6770 and supporting documentation are on file at the retirement
office.
(8)
(a) Each subsequent term of reappointment
after the initial term of appointment listed on the completed Form 6770, City
Appointment of Retired Police Officer, described in subsection (7) of this
section, the participating employer with a Form 6769, Certification of Employed
Police Officers Calendar Year 2015, on file shall be exempt from paying
employer contributions and health insurance premiums paid by the systems for a
retired member reemployed as a police officer pursuant to
KRS
95.022 for a term of reappointment of no more
than one (1) year if a completed Form 6774, City Recertification of Retired
Police Officer, is on file at the retirement office prior to the start of the
retired member's term of reappointment.
(b) If a completed Form 6774, City
Recertification of Retired Police Officer, is not on file at the retirement
office prior to the start of the retired member's term of reappointment, then
the participating employer shall be exempt from paying employer contributions
and reimbursements of health insurance premiums for retired member reemployed
as a police officer pursuant to
KRS
95.022 in the month after a completed Form
6774 is on file at the retirement office.
Section 8. Incorporation by Reference.
(1) The following material is incorporated by
reference:
(a) Form 6751, "Employer
Certification Regarding Reemployment," March 2022;
(b) Form 6752, "Employer Certification of
Independent Contractor/Leased Employee," April 2021;
(c) Form 6753, "Employer Certification of
Volunteer," April 2021;
(d) Form
6754, "Member Reemployment Certification," April 2021;
(e) Form 6760, "County Police or Sheriff
Appointment of Retired Police Officer," March 2022;
(f) Form 6764, "Recertification of Retired
Police Officer," June 2019;
(g)
Form 6766, "Appointment of Retired School Resource Officer," March
2022;
(h) Form 6767, "Appointment
of Kentucky State Police School Resource Officer," March 2022;
(i) Form 6768, "Postsecondary Institution
Appointment of Retired Police Officer," March 2022;
(j) Form 6769, "Certification of Employed
Police Officers Calendar Year 2015," July 2016;
(k) Form 6770, "City Appointment of Retired
Police Officer," March 2022;
(l)
Form 6774, "City Recertification of Retired Police Officer," July 2016;
and
(m) Internal Revenue Service
Publication 1779, "Independent Contractor or Employee," March 2012.
(2) This material may be
inspected, copied, or obtained, subject to applicable copyright law, at the
Kentucky Public Pensions Authority, 1260 Louisville Road, Frankfort, Kentucky
40601, Monday through Friday, from 8:00 a.m. to 4:30 p.m. This material is also
available on the Authority's Web site at kyret.ky.gov.
STATUTORY AUTHORITY: KRS 61.505(1)(g),
61.590,
61.637(18),
78.5540(5)