Benefit-Related Questions

Do employer-sponsored early retirement incentive programs change IPERS benefits?
An early retirement incentive program offered by an employer does not change the IPERS plan. Iowa law governs IPERS eligibility and benefits. Only legislative action can change the IPERS retirement plan.

After someone begins drawing IPERS benefits following an "early out" or early retirement, how long must the person wait before returning to work?
IPERS requires that a member terminate employment and complete the IPERS bona fide retirement period. A member’s right to draw an IPERS pension is not affected by how the member terminates employment, unless the termination is a sham transaction. For example, if an employer and employee had an agreement that the employee would be rehired after completing a bona fide retirement, and this agreement was in place before the employee started drawing IPERS benefits, IPERS would consider that a sham transaction.

An employer may impose additional return-to-work restrictions when offering an early retirement incentive program. These are separate from IPERS. The employer, not IPERS, determines and enforces these restrictions.

What is a bona fide retirement?
The Internal Revenue Service mandates that pension plans like IPERS require a bona fide retirement period. The Iowa Code mandates the length of the IPERS bona fide retirement period.

An IPERS member has a bona fide retirement if the member severs all IPERS-covered employment for the first four months of receiving retirement benefits. In addition, a member cannot work for an employer that participates in IPERS for the first month of those four months, whether or not the actual position is one that is covered by IPERS.

The only exception to the four-month requirement is for certain licensed health care professionals in some public hospitals. The Iowa Legislature in 2006 set a one-month bona fide retirement period for eligible licensed health care professionals working for these public hospitals through June 30, 2010.

How much can an individual earn in a calendar year while drawing an IPERS benefit?
For members who are age 65 and over, there is no IPERS earning limit. For members under age 65, the earnings limit is $30,000 or the current social security limit, whichever is higher. A member’s IPERS benefit will be reduced by 50 cents for each dollar the member earns over the earnings limit for the remainder of the calendar year. The earnings limit is determined annually, using the calendar year.

A member returning to work in an IPERS-covered job will again start contributing to IPERS and accrue service credits. However, the person cannot receive any additional benefits until the person again terminates employment and completes another bona fide retirement period.

Can someone elect not to draw IPERS retirement benefits to avoid reemployment restrictions?
Yes. A member does not begin to receive IPERS benefits automatically, even if the member meets all the qualifications to begin drawing his or her pension. A member must submit a completed application, and the member decides when to do this. However, IRS laws require if a member reaches age 70½ and has terminated employment, the member must start receiving benefits.