An employee must have a “Bona Fide Separation of Service” in order to be exempt from the 10% early distribution tax.
Minimum of 4-6 weeks between separation and rehire.
No written or verbal agreement of guaranteed rehire before, during or after initial separation.
Must of meet the qualifying years of minimal service for your respective state retirement plan. (20 or 25 years)
You must be returning to work for the same employer. Same employer does not necessarily mean the same agency or division.
Employee must complete the 10-99R form from MPERS when received, certifying that they meet the “IRS standard that there be no explicit understanding between the employer and employee that the employee would return to work.”
Any collective bargaining agreement/MOA/MOU or other type of agreement should not list a mandatory obligation of the employer to rehire an employee. Should list “may”.
Employee may return to his/her previous position if all the other above provisions are met and if the current collective bargaining agreement does not prevent it.
Agreement in place on who is responsible for the 5% MPERS surcharge.