This section does not apply to a retiree who is temporarily assigned to sit in a court of this State under the authority of Article IV, § 3A of the Maryland Constitution. Subject to subsection (e) of this section, a retiree may accept employment in which all or part of the compensation for the employment comes from municipal, county, or State funds, if the retiree immediately notifies the Board of Trustees of: the retiree’s intention to accept the employment; and the compensation that the retiree will receive. Except as provided in paragraph (3) of this subsection, the Board of Trustees shall reduce the retirement allowance of a retiree who accepts employment as provided under subsection (b) of this section if the retiree’s current employer is any unit of State government and the retiree’s employer at the time of the retiree’s last separation from employment with the State before the retiree commenced receiving a service retirement allowance was also a unit of State government. The reduction required under paragraph (1) of this subsection shall equal the amount that the sum of the retiree’s annual retirement allowance and the retiree’s annual compensation exceeds the amount of the compensation on which the retirement allowance is based. The reduction required under paragraph (1) of this subsection does not apply to an individual who: has been retired for 5 years, beginning on January 1 after the date the individual retires; or is employed as a member of the faculty of a public institution of higher education in the State. Any reduction taken under subsection (c) of this section may not reduce the retiree’s allowance to an amount less than the required deduction for the retiree’s monthly State–approved medical insurance premiums. The Board of Trustees shall recover from the retiree any difference between the reduction required under subsection (c) of this section and the reduction taken under paragraph (1) of this subsection. A retiree may not be employed by the State or other participating employer on a permanent, temporary, or contractual basis within 45 days of the date the individual retired.