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Re-employment Rules for Employees Who Have Taken a Distribution from the Defined Benefit Retirement Plan

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Policy Information
  • Issue Date: April 21, 2005
  • Revision Date: October 7, 2016
  • Primary Contact: Director of Human Resources and EEO Officer
  • Senior Administration: Vice President of Finance & Administration
  • Responsible Office: Human Resources
Policy Statement

The Woods Hole Oceanographic Institution may, from time to time, reemploy former employees and retirees when doing so is in the best interest of the Institution. However, the Institution will, at all times, comply with applicable law, as well as with provisions of The Retirement Plan for Employees of Woods Hole Oceanographic Institution.



Reason for Policy

This policy has been developed to help ensure that the reemployment of individuals who have taken distributions from the Retirement Plan is consistent with applicable law and the standards that apply to making distributions from the Retirement Plan.



Contents
Policy Information
Policy Statement
Reason for Policy
Who Should Be Familiar With This Policy
Related Documents
Contacts
Definitions & Responsibilities
   Annuity
   Bona Fide Termination of Employment
   Casual Status
   Lump Sum
   Member
   Normal Retirement Age
   Pre-Normal Retirement Person
   Post-Normal Retirement Person
   Regular Status
   Retirement Plan
   Qualified Plan
   Vested Member
Overview
   Institution Retirement Plan
   IRS Regulations
   Consequences of Non-compliance
Procedures
   Age at Distribution
   Reemployment of Pre-Normal Retirement or Post-Normal Retirement Persons
   What is a Bona Fide Termination?
   What are possible examples of an express or implied agreement?
   What if a former employee has not previously received a payment from the Retirement Plan?
   Reemployment of Pre-Normal Retirement Person
   Reemployment of Post-Normal Retirement Person
   Reemployment Procedures
   Exceptions
   Effective Date
Forms


Who Should Be Familiar With This Policy
  • Vice Presidents, Directors, and Department Heads
  • Department Administrators and Managers
  • Individuals considering retirement
  • Supervisors of individuals considering retirement
  • Individuals who have taken a distribution from the Retirement Plan


Related Documents
Institution Policies Other Documents
Human Resources: Hiring Policy

Retirement Plan for Employees of Woods Hole Oceanographic Institution

How do I become a volunteer at the Woods Hole Oceanographic Institution?



Contacts

If you have questions about specific issues or need assistance with the interpretation of this policy, contact:

Human Resource
x2253
Assistant Director, Benefits x2217


Definitions & Responsibilities
These definitions apply to these terms as they are used in this policy.

Annuity A form of distribution under the Retirement Plan providing for periodic, monthly payments.
Bona Fide Termination of Employment An end to an employee’s employment relationship with the Institution, with no implied or explicit agreement between the employee and any employee or other representative of the Institution for reemployment at any time in the future.
Casual Status Employment status (which can be either temporary [under three months] or permanent) who’s work hours shall not exceed 988 hours in payroll year.
Lump Sum The single sum value of a Member’s benefit under the Retirement Plan that may be paid to the Member on resignation or retirement, if he/she is a vested Member and entitled to a distribution under the terms of the Retirement Plan.
Member An individual who is a Member of the Retirement Plan.
Normal Retirement Age The Normal Retirement Age under the Retirement Plan, which is used in determining plan benefits and eligibility for payment. In general, Normal Retirement Age under the Retirement Plan is age 65.
Pre-Normal Retirement Person A Member who first receives a benefit distribution under the Retirement Plan before attaining age 65 (i.e., Normal Retirement Age.)
Post-Normal Retirement Person A Member who first receives a benefit distribution under the Retirement Plan at age 65 (i.e., Normal Retirement Age) or older.
Regular Status Employment status for those expected to work at least 40 hours per pay period for an indefinite period of time, but at least 12 consecutive months.
Retirement Plan The Retirement Plan for Employees of Woods Hole Oceanographic Institution.
Qualified Plan A plan for providing retirement benefits that meets the requirements of Section 401(a) of the Internal Revenue Code. Employees participating in such plans receive significant tax advantages.
Vested Member A Member whose right to receive a present or future pension benefit under the Retirement Plan is no longer contingent upon remaining in the service of the Institution.

Overview
Institution Retirement Plan The Retirement Plan is a “qualified plan” and must comply with Internal Revenue Service (IRS) regulations and other applicable law.  In addition, the Retirement Plan’s provisions must be administered prudently and in a consistent manner. Finally, the funding and tax-qualified status of the Plan is based on the assumption that the IRS’s requirements and the Plan’s terms are followed.

The Plan provides that after reaching normal retirement age, a vested Member may commence benefit payments (as an annuity or a lump sum) if the vested Member’s employment has terminated.
IRS Regulations IRS regulations prohibit payment or commencement of benefits from a qualified plan at or before normal retirement age, unless there is a bona fide termination of employment. This requirement is incorporated into the terms of the Retirement Plan. Further, IRS rules require that qualified plans be administered in accordance with their terms. In the case of the Retirement Plan, this includes, among other things, the prohibition on payments to Members employed after normal retirement age.
Consequences of Non-compliance Variance from the standards in the paragraph immediately above could jeopardize the Plan’s tax-qualified status and threaten the tax benefits received by all Members through the Retirement Plan.

Procedures
Age at Distribution Due to the terms of the Retirement Plan, different procedures apply to those who first receive a Plan distribution before reaching age 65 (i.e., Normal Retirement Age) than to those who first receive a Plan distribution after reaching age 65 (i.e., Normal Retirement Age). In most cases, Normal Retirement Age is age 65. For purposes of this policy, those who first receive distributions before Normal Retirement Age are referred to as “Pre-Normal Retirement Persons” and those who first receive distributions at or after Normal Retirement Age are referred to as “Post-Normal Retirement Persons.”
Reemployment of Pre-Normal Retirement or Post-Normal Retirement Persons A former employee who is a Pre-Normal Retirement Person or a Post-Normal Retirement Person may be considered for reemployment only if the termination of employment that led to the former employee’s receipt of a Retirement Plan distribution was a “bona fide termination of employment.”
What is a Bona Fide Termination? For purposes of this policy, a bona fide termination of employment will be considered to have occurred if:
  • at least 12 months have elapsed between the date of the individual’s last day of active employment and the date of his/her application for reemployment, if the Member is a Pre-Normal Retirement Person, or
  • at least 6 months have elapsed between the date of the individual’s last day of active employment and the date of his/her application for reemployment, if the Member has reached Normal Retirement Age; and
  • an Acknowledgment Form signed by the individual seeking reemployment is on record with Human Resources. The Acknowledgment Form must have been signed no later than one month after the individual elected to receive a distribution under the Retirement Plan and must state that:
he/she has not formally or informally requested of any employee, or other representative of the Institution, that he/she be reemployed by the Institution subsequent to payment of his/her Retirement Plan benefit, and there is no express or implied agreement between any employee, or other representative of the Institution, and him/her that he/she be reemployed by the Institution subsequent to payment of his/her Retirement Plan benefit,

and he/she understands he/she is not eligible for reemployment with the Institution for at least 12 months following payment of his/her Retirement Plan benefit (if he/she is a Pre-Normal Retirement Person), or at least 6 months following payment of his/her Retirement Plan benefit (if he/she is a Normal Retirement Person), unless his/her application for reemployment is approved by the President and Director of the Institution, after having performed an individual review and analysis of his/her application for reemployment for extenuating circumstances.
What are possible examples of an express or implied agreement? Examples may include, but may not be limited to, an informal or formal understanding between any employee or other representative of the Institution and the individual for employment of the individual’s services after retirement, or discussions about the employee’s plan to work on a project after retirement that occur before his/her retirement.
What if a former employee has not previously received a payment from the Retirement Plan? The rehire of a former employee who has not previously received a payment from the Retirement Plan is not subject to the above bona fide termination of employment guidelines.
Reemployment of Pre-Normal Retirement Person A Pre-Normal Retirement Person may not be considered for reemployment in regular or casual status unless:
  • at least 12 months have elapsed between the date of the individual’s last day of employment in regular or casual status and the date of his/her application or other request for reemployment in regular or casual status, and
  • an Acknowledgment Form signed by the individual seeking reemployment in regular or casual status is on record with Human Resources.  The Acknowledgment Form must have been signed no later than one month after the individual elected to receive a distribution under the Plan and must state that:
he/she has not formally or informally requested of any employee or other representative of the Institution that he/she be reemployed in regular or casual by the Institution subsequent to payment of his/her Retirement Plan benefit, and

there is no express or implied agreement between any employee

or other representative of the Institution and him/her that he/she be reemployed by the Institution in regular or casual status subsequent to payment of his/her Retirement Plan benefit,

he/she understands he/she is not eligible for reemployment with the Institution in regular or casual status for at least 12 months following payment of his/her Retirement Plan benefit; and

if he/she wishes to return to regular or casual status within 12 months, his/her application for reemployment in regular or casual status will be reviewed and analyzed, on an individual basis, and he/she will only be able to return to reemployment in regular or Casual Status within 12 months if approved by the President and Director of the Institution due to extenuating circumstances.
Reemployment of Post-Normal Retirement Person A Post-Normal Retirement Person may not be considered for reemployment in regular or casual status unless:
  • at least 6 months have elapsed between the date of the individual’s last day of employment in regular or casual status and the date of his/her application or other request for reemployment in regular or casual status, and
  • an Acknowledgment Form signed by the individual seeking reemployment in regular or casual status is on record with Human Resources.  The Acknowledgment Form must have been signed no later than one  month after the individual elected to receive a distribution under the Retirement Plan and must state that: 
he/she has not formally or informally requested of any employee or other representative of the Institution that he/she be reemployed in regular or casual by the Institution subsequent to payment of his/her Retirement Plan benefit, and

there is no express or implied agreement between any employee or other representative of the Institution and him/her that he/she be reemployed by the Institution in regular or casual status subsequent to payment of his/her Retirement Plan benefit,

he/she understands he/she is not eligible for reemployment with the Institution in regular or casual status for at least 6 months following payment of his/her Plan benefit; and

if he/she wishes to return to regular or casual status within 6 months, his/her application for reemployment in regular or casual status will be reviewed and analyzed on an individual basis, and

he/she will only be able to return to active employment within 6 months if approved by the President and Director of the Institution due to extenuating circumstances.
Reemployment Procedures Reemployment, if any, will be per the Institution’s procedures which may be amended at any time.  Any reemployment within 12 months of termination of employment for Pre-Normal Retirement Person, or within 6 months for a Post-Retirement Person will be analyzed on an individual basis, and must be approved by the President and Director of the Institution.
Exceptions Exceptions to the 12-month standards under this Policy for Pre- Normal Retirement Persons, or the 6-month standard under this Policy for Post-Normal Retirement Persons, may be made only by the President and Director of the Institution. Exceptions may be made only if the President and Director of the Institution finds that: (1) due to significant and unforeseen circumstances that occurred after the Member took a distribution from the Retirement Plan such that reemployment would not be inconsistent with the purposes of this Policy; and (2) the Member acted in good faith based on the circumstances at the time that he/she signed the appropriate Acknowledgment Form.

Exceptions to the requirement to have signed an Acknowledgment Form within one month after electing to receive a distribution may be made only if the President and Director of the Institution finds that: (1) an exception would not be inconsistent with the purposes of this Policy; and (2) the failure to sign an Acknowledgment Form in a timely manner was not due to the existence of a prohibited express or implied agreement or any effort to avoid the restrictions of this Policy.

This Policy does not apply to unpaid Volunteers. Volunteer arrangements must be made through the Volunteer Program of the Woods Hole Oceanographic Institution coordinated by the Information Office. Information about volunteer procedures is available at x2252 or information@whoi.edu.
Effective Date At all times, it would be a violation of this Policy for the employee or other representative of the Institution and any Member to have any agreement, express or implied, for reemployment, if a purpose of such agreement is to evade the restrictions on distributions established by the Retirement Plan and applicable law. The 12-month restrictions on Pre-Normal Retirement Persons and, the 6-month restrictions on Post-Normal Retirement Persons, apply to Members who took distributions under the Retirement Plan either before or after the date of issuance of this Policy. The requirement for signing an appropriate Acknowledgment Form applies only to Members who elect to take distributions under the Retirement Plan after the date of issuance of this Policy.

Forms
Forms Use
Pre-Normal Retirement Age Acknowledgement Form Signed form on record with the Human Resources Office, satisfying the criteria for a Pre-Normal Retirement Age Person, as described above.
Post-Normal Retirement Age Acknowledgement Form Signed form on record with the Human Resources Office, satisfying the criteria for a Post-Normal Retirement Age Person, as described above.
Express Disclaimer Document that expressly disclaims assurance of future employment.


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Last updated: March 16, 2017
 


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