In New Jersey we have a rule requiring that public employees abide by a “bona fide severance” from public employment for at least 180 days in order to collect pension benefits. They must also vow that there’s no arrangement to be rehired by the same employer after that period.
A lot of public officials in New Jersey are in a quandary over this rule as it was explained:
New Jersey adopted the rule in March 2012 to comply with the federal Internal Revenue Code.…….
State Treasury Department spokesman Christopher Santarelli wrote in an email that after the rule was adopted in 2012, it was “posted online and the Division of Pension and Benefits removed obsolete fact sheets on this issue from their website.”
“The division consulted with local officials when contacted on this issue and directed them to the regulation,” he said. “Due to the complexity of federal regulation over the pension plans, extensive legal and administrative review was required before the memo to certifying officers could be finalized.”
Now I am in a quandary.
An August, 2014 memo states:
The PERS, TPAF, PFRS, SPRS, and JRS are established as qualified governmental defined benefit plans in accordance with Internal Revenue Code (IRC) Sections 401(a) and 414(d). In order to preserve the qualified status of these plans and to protect retirees from a 10% excise tax penalty on their monthly retirement payments, the Division of Pensions and Benefits was required to adopt and to enforce regulations to ensure compliance with the IRC requirements.
(36) Distributions during working retirement.— A trust forming part of a pension plan shall not be treated as failing to constitute a qualified trust under this section solely because the plan provides that a distribution may be made from such trust to an employee who has attained age 62 and who is not separated from employment at the time of such distribution.
If you are allowed to receive a pension even if you are still employed at the job in which you earned that pension then how is New Jersey forced to adopt this”bona fide severance” rule?
About half of you out there are pension experts. Have any of you ever heard of such a 180-day rule or regulation?