Pre-retirement Issues

Three notes to recent and soon-to-be retirees

1. While you are an active educator, your health insurance premiums may have been withheld on a pre-tax basis. Please note, however, that the IRS requires that retirees’ insurance premiums be withheld on an after-tax basis.’
2. Regardless of the group insurance program you may be offered after your retirement, you should contact your local insurance coordinator approximately three months prior to your effective date of retirement in order to obtain the necessary forms for coverage. Likewise, please review our information on Medicare.
3. An important notice for charter school employees and inactive members: Be aware that school districts have different rules for providing insurance coverage to active members and retired members, and your district may or may not provide you with insurance benefits in retirement. Accordingly, if you are either an employee of a charter school, or you are not employed by a school district, as soon as you start thinking about retiring, investigate your eligibility for retiree health coverage, as your districts’ rules may affect your retirement decisions.

About your health insurance in retirement

Health insurance for retired members of the MTRS is not provided by the MTRS, but, rather, is a local contractual benefit. Most school districts offer continued health insurance to their retirees and either:

• participate in the Retired Municipal Teachers’ (RMT) Program (see list below) or
• offer their own group insurance plan.

How this insurance will be administered depends upon which school system you are retiring from. Since health insurance coverage is a very important issue for you as you consider your retirement, you may want to investigate your options several years prior to your actual retirement.

For more information on your health insurance coverage options in retirement, if your district:

• Participates in the Retired Municipal Teachers (RMT) Program (see list, below), contact the Group Insurance Commission, or 617-727-2310.
• Is not listed as participating in the RMT Program, below, please contact your local insurance coordinator. (Note: Your city or town may participate in the “GIC Municipality Program.” If so, you should still contact your local insurance coordinator as he or she will administer your coverage, which is provided through the GIC.)

Districts participating in the Retired Municipal Teachers’ (RMT) Program

(as of March 2023)

For questions about your coverage or premium, contact the Group Insurance Commission at 617-727-2310.

As you probably know, Massachusetts is one of a handful of “non-Social Security” states. This means that you, as a member of a contributory retirement system, pay into our system instead of Social Security; you do not earn any Social Security “credits” or “quarters” for your MTRS contributions or service. However, you may have earned Social Security credits through other employment. If you are eligible for Social Security benefits, you may be subject to one of two Social Security “double-dipping” laws: the Windfall Elimination Provision and the Government Pension Offset.

IMPORTANT NOTE: All retirees should contact the Social Security Administration to determine their eligibility for social security benefits three months before retirement or three months before age 65, whichever comes first.

FAQs

FAQs

Why does the MTRS do this?

The Massachusetts retirement law requires that the MTRS perform, at least once every two years, a verification of all retirees and beneficiaries who receive a monthly benefit (840 CMR 15.01 ).

While in past years we performed this process on an annual basis, in calendar year 2010, the Board suspended its annual verification policy in order to reduce costs. We now perform this process once every two years, as allowed by PERAC regulations (840 CMR 15.01 ). As always, we will continue to be vigilant and use available resources to help achieve the purpose of the benefit verification process.

What is the purpose?

Our job is to pay the appropriate retirement or survivor allowance to the unique person who earned the particular benefit. In some cases, we have discovered that, after a retiree has died, a family member has continued to collect benefits—even though that family member is not eligible for any survivor benefits. In order to ensure that benefits are still being paid to the correct individuals, by law, we must confirm that the intended recipients are still alive and, therefore, eligible to receive benefits.

This is a very serious process, intended to prevent the fraudulent collection of pension benefits by ineligible parties.

If I receive a form in the mail, do I HAVE to complete and return it?

Yes. If you receive a form from us, you most definitely have to complete and return it. If you do not return your completed form by the due date indicated on the form, your benefit may be interrupted or discontinued.

Why does my signature have to be notarized?

Because the very serious purpose of this process is to ensure that we are paying benefits to the individuals who are entitled to them—in other words, that “you,” the person who earned the benefit, are “you,” the person who is receiving the benefit—it is necessary that your signature be witnessed by a notary public: a public servant who is legally responsible for verifying your identification.

Can I fax my Benefit Verification Form to the MTRS?

No—for several reasons: we need your original, notarized signature on file; the returned Benefit Verification Forms are being processed by a third-party vendor; and, faxes introduce the possibility of erroneous duplication.

Regarding the “Return by” date—does my Benefit Verification Form have to be postmarked or received by that date?

Received, so we encourage you not to wait until the last minute to return your form. To ensure proper delivery of your form to our vendor, please use the pre-addressed reply envelope that we provide.

I misplaced the pre-addressed reply envelope. To what address must I return my form?

Please return your form to:

Massachusetts Teachers’ Retirement System
500 Rutherford Avenue, Suite 210
Charlestown, MA  02129-1628

Will the MTRS acknowledge receipt of my Benefit Verification Form?

Yes. Within four to six weeks after we have received and processed your completed form in our database, we will send you a postcard acknowledging the receipt of your form. We suggest that you make a photocopy of your form before you return it.

Where can I find a notary public? How much will it cost to have my form notarized?

You can usually find someone who is a notary in businesses and offices that regularly handle legal documents, such as in:

• city and town clerks’ offices,
• local banks, real estate offices and attorneys’ offices, and
• travel agencies.

In Massachusetts, notaries may charge no more than $1.25 for noting and recording a document (M.G.L. c. 262, s. 41). Notaries are public servants, expected to perform a public service at a reasonable cost. If you have any questions about Massachusetts notaries, please go to Find a Notary Public or, contact:

Secretary of the Commonwealth, Public Records Division
One Ashburton Place, Room 1719
Boston, MA 02108
Phone: 617-727-2836

If you are not in Massachusetts at the time that you are completing your form, please have your signature notarized by an appropriate official in the state (or country) where you are located. (In other words, your form does not need to be notarized by a Massachusetts notary.)

I am caring for a benefit recipient who is housebound and unable to obtain a notary’s signature. What should we do?

If the benefit recipient is housebound and is unable to obtain a notary’s signature, please:

• review and complete Sections 1 and 2 of the form with the benefit recipient,
• have the benefit recipient sign Section 3,
• obtain a letter from the benefit recipient’s physician stating that he or she is under the doctor’s care and is housebound, and
• return the Benefit Verification Form and physician’s letter in the reply envelope enclosed with the form.

The benefit recipient is in a nursing home and is unable to obtain a notary’s signature. What should we do?

If the benefit recipient is in a nursing home and is unable to obtain a notary’s signature, please:

• review and complete Sections 1 and 2 of the form with the benefit recipient,
• have the benefit recipient sign Section 3,
• obtain a letter, signed by the director and one other administrator of the nursing home, stating that the benefit recipient is in a nursing home, and
• return the Benefit Verification Form and nursing home’s letter in the reply envelope enclosed with the form.

The benefit recipient is deceased, or under guardianship or conservatorship or has assigned power of attorney to another person. What should we do?

If the person to whom the Benefit Verification Form is addressed is deceased, or under guardianship or conservatorship or has assigned power of attorney to another person, a survivor or the appropriate responsible person needs to complete and return the form. Please note:

• You do not need to complete anything on the front of the form.
• Please review the instructions in the shaded box on the back of the form, then check one of the two boxes to indicate the status of the Benefit Recipient
• If the Benefit Recipient is deceased, please call our Contact Center at 617-679-6890 as soon as possible.
• As noted, please attach the requested documentation, sign and date the form, and then submit this information in the envelope provided.

Can I access my Benefit Verification form online?

No—you will need to complete and return the original blue-and-yellow form that we send you. Your Benefit Verification form is not available online in order to prevent duplicate returns.

Reminder to members: As described below, there are time and earnings restrictions on re-employment with a Massachusetts public employer. However, there are no restrictions on employment in the private sector, public employment in another state or employment with the federal government.

Reference: PERAC memos, including an interactive earnings calculator

• Expansion of Post-Retirement Work in the Public Sector (Memo 29; October 22, 2021)
• Calculation Worksheet for Post-Retirement Earnings in the Public Sector
• Frequently asked questions
• Enforcement of Post-Retirement Limits on Retirees of a Public Retirement System who Take Employment with any Public Entity in Massachusetts (Memo 30, November 1, 2013)
• Restrictions on post-retirement employment in Massachusetts (Memo 24; July 2, 2008)
• Post-retirement earnings limitations in G.L. c. 32, § 91 (Memo 20; May 19, 2004)
• Post-retirement earnings limitations in G.L. c. 32, § 91 (Memo 3; January 12, 2004)

Overview

Pursuant to Massachusetts General Laws c. 32, § 91, there are limitations on the amount of time that a rehired retiree may work and the amount of money that he or she may earn.

However, pursuant to M.G.L. c. 32, § 91(e), the earnings limitations on re-employment of retirees in Massachusetts public schools are eased in the event of a “critical shortage” in a position as determined by the Department of Elementary and Secondary Education (ESE). The ESE has adopted regulation 603 CMR 7.14(13)(b), allowing the Commissioner of Elementary and Secondary Education to deem that a district has a “critical shortage” upon the request of a superintendent and demonstration that the district has made a good-faith effort to hire non-retirees and has been unable to find them. The “critical shortage” application process is similar to that for requesting a waiver for certification. (School districts wishing to take advantage of the “critical shortage” provision of M.G.L. c. 32, § 91(e) are advised to consult with the Department of Elementary and Secondary Education for guidance on the certification requirements for re-employed retirees.)

In brief:

FAQs

The school district that wishes to rehire a retiree to work beyond his or her post-retirement time and earnings limitations has applied for a critical shortage waiver with the Department of Elementary and Secondary Education (ESE). How will the rehired retiree know whether the critical shortage waiver is approved?

Once the ESE completes their review of the critical shortage waiver application, they will send written notice of their decision to the school district and mail a copy of the decision to you. Please be advised that you should not assume that you are working under a critical shortage waiver unless you have received a copy of the approval from the ESE.

How does the MTRS calculate the amount that I can earn?

Until you have been retired for at least one full calendar year (meaning one full January-through-December year), the amount that you can earn is equal to the difference between the annual amount currently being paid for the position from which you retired, and your annual pension. After you have been retired for at least one full calendar year, this limit is increased by $15,000.

For example: Trudy Teacher retires on June 30, 2022, with an annual retirement allowance of $48,000. The position from which Trudy retires, based on her step and education level, will pay $65,000 per year in the fall of 2022, and will remain at that amount for the next several years. She will return to teaching on September 1, 2022, and continue to work for the next several years (without exceeding the limit of 1,200 hours per calendar year). Trudy’s earnings limitations for the next few years are as follows:
For the last four months of 2022 (September 1 through December 31, 2022), Trudy can earn $17,000
	Current annual salary for position from which Trudy retired*	$65,000
	– Trudy’s annual retirement allowance	– $48,000
	Amount of Trudy’s allowable earnings** for remainder of 2022	$17,000
* “Salary” includes earnings such as regular longevity, athletic coaching and contracted stipends. It does not include annuity/insurance premiums and other fringe benefits. ** “Earnings” include compensation in any form including annuity/insurance premiums and other fringe benefits.
For all of calendar year 2023 (January 1 through December 31, 2023), Trudy can still earn a total of $17,000
	Current annual salary for position from which Trudy retired*	$65,000
	– Trudy’s annual retirement allowance***	– $48,000
	Amount of Trudy’s allowable earnings** for calendar year 2023	$17,000
Beginning January 1, 2024, after she has been retired for one full calendar year, Trudy can now earn an additional $15,000 for calendar year 2024 and every calendar year thereafter
	Current annual salary for position from which Trudy retired*	$65,000
	– Trudy’s annual retirement allowance***	– $48,000
	Standard earnings limitation for calendar year 2024	$17,000
	+ $15,000 (per pension reform legislation of 2011)	+ $15,000
	Amount of Trudy’s allowable earnings** for 2024	$32,000
*** Because cost-of-living adjustments must be granted by the Massachusetts Legislature on an annual basis, we have not included any COLA amounts in Trudy’s annual retirement allowance figures in these examples. If, however, the Legislature approves a 3% COLA for fiscal years 2023 and 2024, and the COLA base remains $13,000, then Trudy’s annual retirement allowance for calendar year 2023 would be $48,195 (an additional $32.50 per month for the six months of July through December, for a total increase of $195), and her allowable earnings for calendar year 2023 would decrease by $195, to $16,805. Likewise, for calendar year 2024, her annual retirement allowance would increase to $48,585 (an additional $32.50 per month for January through June, and an additional $65.00 per month for July through December, for a total increase of $585), and her allowable earnings for calendar year 2024 would decrease by $585, to $31,415.

For an interactive worksheet that both the employer and the rehired retiree can use to determine the earning limitations, please see the Public Employee Retirement Administration Commission’s Post Retirement Earnings Calculator.

I am a disability retiree. Am I subject to any additional post-retirement earnings limitations?

Yes—whereas non-disability retirees are subject to limitations on their post-retirement Massachusetts public sector earnings only, disability retirees are subject to a limit on the total amount of their post-employment earnings, from both public and private sectors.

Pursuant to M.G.L. c. 91A, a disability retiree’s annual post-retirement earnings—from both the private and public sectors—when added to his or her disability retirement allowance, cannot exceed the amount of salary that would have been payable to the retiree had he or she remained in service in the grade held at the time of retirement, plus $15,000. If this earnings limitation is exceeded, the retiree’s allowance will be withheld until the overpayment is recovered by the MTRS.

“Salary” means, essentially, the type of payments that constitute the ‘regular compensation’ used in the calculation of your retirement allowance, including but not limited to your contractual salary, longevity, and eligible extra duty stipends, including stipends for athletic coaching. “Earnings” include compensation in any form, including annuity/insurance premiums and other fringe benefits, and implies some labor, management or supervision in production of the income and not income derived merely from ownership of property.

It is the retiree’s responsibility to advise the person responsible for paying his or her compensation that he or she is a public retiree and, as a result, his or her post-retirement earnings in the public sector are limited.

How is the “salary being paid” for the position from which the rehired retiree retired determined?

If, in the position from which the retiree retired, he or she:

• was covered by a collective bargaining agreement in the position from which you retired, the “salary being paid” is the current annual contract rate for the retiree’s step and education level on the salary schedule.
• was not covered by a collective bargaining agreement (e.g., the retiree was an administrator or other educator covered by an individual contract), then the “salary being paid” is your last annual salary prior to retirement, plus an inflation factor equal to the Consumer Price Index (CPI-W) as certified by the Commissioner of Social Security, unless the retiree can provide sufficient evidence for the MTRS to reliably determine what you would have earned in a year after his or her retirement. An example of sufficient evidence would be a written, contemporaneous policy showing that the class of employees of which you would have been a member had he or she not retired, would all receive the same raise in a given year.

For example, if an administrator retired in 2018 with a final salary of $125,000 and the district wished to rehire her in 2019, for the purposes of determining the “salary being paid” for that position, the MTRS would apply the following formula:

Salary at retirement + inflation factor = “salary being paid”

$125,000 + 2.8% (the January 2019 COLA factor) = $128,500

NOTE: “Salary” means, essentially, the type of payments that constitute the ‘regular compensation’ used in the calculation of your retirement allowance, including but not limited to your contractual salary, longevity, and eligible extra duty stipends, including stipends for athletic coaching.

For part-time positions…

If you worked part-time in your last year of employment, the “salary being paid” for the position from which you retired is, likewise, your former part-time equivalent of the current full-time salary. For example: Mary Music works on a 50%-of-full-time basis and retires June 30, 2019. For the 2018-19 school year, she earned $37,000, or 50% of the full-time salary of $74,000.

	School year 2019-20 full-time salary for Ms. Music’s former position		$76,000
x	Ms. Music’s former part-time basis (50%)	x	50%
	“Salary being paid” for Ms. Music’s position in 2019-20 on a 50% basis		$38,000
–	Ms. Music’s annual gross pension	–	$29,250
	Ms. Music’s allowable earnings for the rest of calendar year 2019		$8,750
	Beginning January 1, 2021, Ms. Music can earn an additional $15,000 per calendar year.

Ms. Music’s full-time equivalent salary is used to calculate her final salary average; this increase the annual benefit she will collect the rest of her life, but limits or eliminates her ability to work in the public sector in retirement.

If the amount earned or the number of hours worked will exceed the limitations, what are my options?

In either case, the retiree has two options. If the retiree wishes to work in a position that will exceed either the time or the earnings limitation, and he or she has not been approved for a critical shortage waiver, he or she may:

a) Request a temporary cessation of pension payments by notifying the MTRS in writing to waive his or her retirement allowance for the period of employment. A retiree who has waived his or her retirement benefits is not subject to the time and earnings limitations and is not required to make contributions to the pension system. Stopping a retiree’s pension payments can affect the administration of his or her health insurance benefit, however, so it is a good idea for the retiree to discuss the impact of waiving the retirement benefit with his or her local insurance coordinator before making this decision.

Upon completion of the employment, the retiree may resume receiving his or her retirement allowance at the same level of benefits he or she had before waiving the allowance, plus any cost-of-living adjustments passed by the Massachusetts Legislature. (In other words, the retiree cannot recoup his or her retirement benefits for the period during which he or she waived them.)

b) Return to active membership in the MTRS and, in effect, “unretire,” if he or she agrees to certain terms and conditions. Pursuant to M.G.L. c. 32, § 105, in order to “unretire,” the retiree must pay back to the retirement system the total pension benefits received while retired, plus interest at the buy-back rate (currently, 3.5%). Moreover, the retiree must be employed in a full-time position subject to membership in the MTRS, for at least five full years from his reinstatement date in order to accrue additional retirement benefits. For more information, please see:

• Reinstatement to Service under G.L. c. 32 § 105 (July 27, 2023, PERAC memo 17 of 2023)
• Application for Reinstatement to Service (pdf, 3 pages)

Is it true that retired teachers can “unretire”?

Yes, a member may be reinstated, provided he or she agrees to certain terms and conditions. Please see Question 5(b) directly above.

Can a retired teacher or administrator who waives retirement benefits and then accepts a full-time, paid position, later have his or her retirement allowance reinstated for 1,200 hours during any calendar year?

No. The law does not permit retirees who waive their retirement benefits and then accept public employment to supplement their incomes by the device of reinstating their retirement allowances for the 1,200-hour period during each calendar year. Opinion of the Attorney General, February 2, 1979.

Whose responsibility is it to keep track of the number of hours worked and money earned by the retirees?

It is the responsibility of the rehired retiree to provide his or her employer and the treasurer of the city or town (or the source responsible for paying the retiree) with a certification of the length of time worked and the amount of income earned in a given calendar year. If either the period worked or the income earned exceeds the allowable amount, the rehired retiree can no longer be employed and the excess earnings must be returned to the appropriate treasurer or entity responsible for paying the retiree. In the case of excess or improper retirement payments, the MTRS has the authority either to require repayment or to offset the amount received against future retirement payments.

If a teacher or administrator is rehired as a “consultant,” do the restrictions on post-retirement employment still apply?

Yes. The restrictions set forth above apply to both employees and non-employees; except for services performed for the general court as a non-employee, the law makes no distinction between employees and non-employees. Accordingly, the restrictions on hours and earnings apply if a teacher or administrator is receiving a retirement allowance and is being paid as a “consultant,” independent contractor, or someone whose regular duties require their time to be devoted to the service of the Commonwealth.

Are “leased employees” subject to these restrictions?

Yes. M.G.L. c. 32, § 91(a) prohibits all retirees from “render[ing] service” to any public employer, including school districts. Section 91(b) provides a general exception to this prohibition, allowing post-retirement employment for up to 1,200 hours in any calendar year, and limiting annual earnings to the difference between the retiree’s retirement allowance and the salary being paid for the position from which he/she retired. The Massachusetts Teachers’ Retirement System (MTRS) interprets “render[ing] service” to include work under an employee leasing arrangement, and thus such arrangements are subject to the restrictions of section 91.

What is an employee leasing arrangement?

An employee leasing arrangement is one where one company (the “Leasing Company”) loans or hires out its employee to another (the “Client Company”). The “leased” employee is paid by the Leasing Company and may report occasionally to the Leasing Company. While working for the Client Company, however, the employee and his/her work are directed and controlled by the Client Company and the employee typically uses the Client Company’s work space and equipment to accomplish his/her work. A common example is a “temp” agency that supplies temporary workers. Since the law has often regarded “leased” employees as employed by both the Leasing Company and Client Company, it is clear that a “leased” employee “renders service” to the Client Company.

In the education context, some companies supply interim school administrators under “leasing” arrangements, and these administrators are directed in their day-to-day activities by the school district. Of course, superintendents, assistant superintendents and principals are by law appointed, employed and directed by their respective superiors (ultimately, the school committee). General Laws c. 71, §§ 59 and 59B. Thus, the System regards “leased” employees in such positions to be “render[ing] service” to the district and thus subject to the limitations of section 91(b).

Will I be subject to Social Security deductions? MTRS retirement deductions?

No, you will not be subject to either Social Security or MTRS contribution deductions. If a retired teacher or administrator returns to work in a Massachusetts public school, he or she is considered a “rehired annuitant” by the Internal Revenue Service, and therefore exempt from mandatory Social Security coverage. For more information, see the IRS web page on Rehired Annuitants as well as the Social Security Administration’s web page on Rehired Annuitants .

Where can educators get information on maintaining their teaching certification?

See the Department of Elementary and Secondary Education’s website for information on renewing your license.