# COMAR Title 22 — State Retirement and Pension System

## Subtitle 01 — General Regulations

### Chapter 11 — Employment of a Retiree by a Participating Employer

**Authority:** State Personnel and Pensions Article, §§21-110, 21-113, 22-406, 23-407, 25-403, 26-403, 27-406, 28-402, 29-115, and 29-116, Annotated Code of Maryland

**Administrative History:** Effective date: January 1, 1996 (22:26 Md. R. 2031)

**Administrative History:** Effective January 1, 1996, all of Title 22 was repealed and completely new regulations adopted. Codification and organization of the title were also completely changed. Consequently, the Administrative Histories of the revised Title 22 do not reflect regulatory activity before January 1, 1996. Refer to the old version of Title 22 or contact the Maryland State Archives for assistance.

**Administrative History:** Regulation .01B amended effective October 20, 1997 (24:21 Md. R. 1452)

**Administrative History:** Regulation .06 adopted effective October 20, 1997 (24:21 Md. R. 1452)

**Administrative History:** Chapter revised effective April 28, 2003 (30:8 Md. R. 543)

**Administrative History:** Regulations .01—.07 repealed and new Regulations .01—.07 adopted effective January 24, 2022 (49:2 Md. R. 78)

#### Regulation .01 Definitions.

*COMAR 22.01.11.01*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Allowance” means a disability retirement allowance, service retirement allowance, or vested allowance.

  (2) “Earnable compensation” has the meaning stated in COMAR 22.01.01.01B(5).

  (3) “Earnings” means the earnable compensation received by a retiree in a calendar year.

  (4) “Earnings limitation” means the annual amount that a retiree may earn in certain types of re-employment during certain periods of time after retirement, as specified by law, before the retiree’s allowance is subject to a reduction.

  (5) Effective Date of Retirement.

    (a) “Effective date of retirement”, except as provided in §B(5)(b) of this regulation, means the first day of the month in which a retiree commences receipt of an allowance.

    (b) “Effective date of retirement”, for the Judges’ Retirement System, means the first day in which a retiree commences receipt of an allowance.

  (6) “Gross annual compensation” means the total compensation paid in a calendar year, before any deductions are taken.

  (7) “Retiree” means an individual who has separated from employment with a participating employer and receives an allowance.

  (8) Retirement.

    (a) “Retirement” means the commencement of an allowance after separation from employment with a participating employer.

    (b) “Retirement” includes the commencement of a vested allowance that is deferred after separation from employment until the former member is eligible for immediate payment.

#### Regulation .02 Required Break in Service.

*COMAR 22.01.11.02*

A. Separation from Service Required.

  (1) This section does not apply to the Legislative Pension Plan.

  (2) Except as provided by law, an individual shall be separated from all employment with a participating employer at the time of retirement, and may not retire if the individual is employed by the State or other participating employer on any basis, including but not limited to employment on a temporary, permanent, or contractual basis, on the effective date of retirement.

B. 45-Day Rule.

  (1) This section does not apply to:

    (a) The Legislative Pension Plan;

    (b) The temporary assignment of a retiree of the Judges’ Retirement System to sit in a court of this State under the authority of Article IV, §3A, of the Maryland Constitution; or

    (c) A vested allowance.

  (2) An individual who is receiving a service retirement allowance or disability retirement allowance may not be employed within 45 days of the date the individual retired, on a permanent, temporary, or contractual basis, by:

    (a) The State or other participating employer; or

    (b) A withdrawn participating governmental unit, if the retiree was an employee of the withdrawn participating governmental unit while it was a participating employer.

#### Regulation .03 Statutory Reduction if Earnings Exceed Earnings Limitation.

*COMAR 22.01.11.03*

A. This regulation applies to a retiree who is subject to an earnings limitation on employment with a participating employer as set forth in State Personnel and Pensions Article, Division II, Annotated Code of Maryland.

B. On or before January 31 of each year, a participating employer shall submit to the Retirement Agency the following information for the preceding calendar year:

  (1) On request, the participating employer’s tax identification number;

  (2) The name and Social Security number of all employees on any payroll of the employer at any time during the preceding calendar year; and

  (3) The actual gross annual compensation paid to each employee during the preceding calendar year.

C. The participating employer shall submit the information to the Retirement Agency in a manner and format acceptable to the Retirement Agency.

D. On or before May 31 of each year, the Retirement Agency shall review the information received from each participating employer, the Retirement Agency’s records, and any other relevant information to determine whether a retiree has received earnings from a participating employer that exceed the retiree’s earnings limitation.

E. If the records referenced in §D of this regulation reflect that a retiree has received earnings that exceed the earnings limitation, the Retirement Agency shall send written notice to the retiree that shall:

  (1) Reflect the:

    (a) Earnings reported by the participating employer for the retiree; and

    (b) Earnings limitation applicable to the retiree;

  (2) Advise the retiree of the amount of the reduction in the retiree’s allowance to recover the portion of the retiree’s allowance paid during the preceding calendar year that exceeded the earnings limitation;

  (3) Advise the retiree of the option to pay all or a portion of the excess earnings to the Retirement Agency in a lump sum on or before July 1 in order to reduce or eliminate the reduction in the retiree’s allowance;

  (4) State that, to the extent the retiree does not pay the excess earnings in a lump sum, the reduction in the retiree’s allowance will begin on July 1 and shall continue until the overpayment is recovered to the extent permitted by law; and

  (5) Notify the retiree of the procedures under Regulation .05 of this chapter for obtaining relief from the offset provisions.

F. Reduction of a Service Retirement Allowance or Vested Allowance.

  (1) This section applies to the reduction of a service retirement allowance or vested allowance for a participant who is subject to an earnings limitation.

  (2) Earnings Limitation.

    (a) Except as provided in §F(2)(b) of this regulation, or as otherwise required by law, the earnings limitation equals an amount determined by subtracting the retiree’s initial annual basic allowance from the retiree’s average final compensation used to compute the individual’s basic allowance.

    (b) For a retiree of the Judges’ Retirement System, the earnings limitation equals an amount determined by subtracting the retiree’s annual retirement allowance from the compensation on which the retirement allowance is based.

  (3) Except as provided in §G of this regulation or as permitted under Regulation .05 of this chapter, on July 1 of each fiscal year, the Retirement Agency shall reduce the service retirement allowance or vested allowance of each retiree who has received earnings during the preceding calendar year that exceed the applicable earnings limitation, in order to recover the full amount of the overpayment.

  (4) Reduction if Earnings Exceed the Earnings Limitation.

    (a) Except as provided in §F(4)(b) of this regulation or as otherwise required by law, the reduction required to enforce the earnings limitation equals the amount by which the sum of the retiree’s initial annual basic allowance and the retiree’s earnings exceeds the average final compensation used to compute the individual’s basic allowance.

    (b) For a retiree of the Judges’ Retirement System, the reduction required to enforce the earnings limitation equals the amount by which the sum of the retiree’s annual retirement allowance and the retiree’s earnings exceeds the amount of the compensation on which the retirement allowance is based.

  (5) The Retirement Agency may not recover more than the allowance paid to the retiree during the applicable calendar year under review.

  (6) Payment of Retiree Medical Insurance Premiums.

    (a) The reduced allowance for a fiscal year shall be an amount at least sufficient to pay the employer-approved deduction for retiree medical insurance premiums.

    (b) Any amounts not reduced from an allowance pursuant to §F(6)(a) of this regulation shall be deducted in the next year, or in future years if needed, until the difference is fully recovered.

G. Reduction of an Ordinary Disability Allowance.

  (1) This section applies to the reduction of an ordinary disability allowance for a retiree who is subject to an earnings limitation, if the retiree is under normal retirement age and has exceeded the retiree’s earnings limitation in the preceding calendar year.

  (2) The earnings limitation equals the amount determined by subtracting the retiree’s basic allowance at retirement from the sum of:

    (a) The retiree’s average final compensation; and

    (b) $5,000, which, beginning in calendar year 2017, shall be adjusted annually by the percentage growth in the Consumer Price Index in the calendar year preceding the fiscal year, with each subsequent adjustment to be made on the amount calculated in the prior fiscal year.

  (3) On July 1 of each fiscal year, the Retirement Agency shall reduce the allowance of each retiree who has received earnings during the preceding calendar year that exceeded the applicable earnings limitation.

  (4) Amount of Pension Reduction.

    (a) The portion of the retiree’s allowance to be reduced under this section is the retiree’s pension derived from employer contributions at retirement, before any reductions based on the retiree’s election of an optional form of allowance, and without any cost-of-living adjustment.

    (b) The Retirement Agency shall reduce the pension of a retiree who has been receiving an allowance for:

      (i) Less than 10 years, by $1 for every $2 that the retiree’s current compensation exceeds the retiree’s earnings limitation; or

      (ii) At least 10 years, by $1 for every $5 that the retiree’s current compensation exceeds the retiree’s earnings limitation.

#### Regulation .04 Suspension of Allowance.

*COMAR 22.01.11.04*

A. Suspension of Allowance for Earnings in Excess of Earnings Limitation.

  (1) This section applies only to a retiree who:

    (a) Serves as the Governor, Comptroller, Treasurer, Attorney General, or Secretary of State, or a Secretary, Deputy Secretary, or Assistant Secretary of a principal department of the Executive Branch of the State government; or

    (b) Is determined, in the sole discretion of the Executive Director, to serve in a position comparable to one described in §A(1)(a) of this regulation for a participating employer.

  (2) Upon employment with a participating employer, if a retiree receives a salary that exceeds the retiree’s earnings limitation in an amount that would require reduction of the retiree’s entire allowance, the retiree may request temporary suspension of the retiree’s allowance during employment, in lieu of the procedures described in Regulation .03 of this chapter.

B. Temporary Suspension of Disability Allowance.

  (1) This section applies to a retiree who is subject to temporary suspension of a disability allowance under State Personnel and Pensions Article, §29-115, Annotated Code of Maryland.

  (2) A retiree’s allowance is subject to suspension upon the retiree’s re-employment at an annual compensation at least equal to the retiree’s average final compensation at retirement.

  (3) Upon receiving notification or otherwise discovering that a retiree’s allowance is subject to suspension, the Retirement Agency shall promptly suspend the allowance.

C. Recoveries Due to Delayed Discovery or Notice.

  (1) The Retirement Agency shall recover all allowance payments overpaid due to delayed discovery or notice that a retiree’s allowance is subject to suspension.

  (2) After due notice, if a person who has received an improper payment fails to repay the money owed, the Board of Trustees may offset the overpayment from any future monthly payments of that person’s allowance.

  (3) If reduction of an allowance by offset would result in financial hardship to a retiree, the retiree may request relief in accordance with Regulation .05 of this chapter.

#### Regulation .05 Procedures for Obtaining Relief by Extending Period of Reduction or Offset.

*COMAR 22.01.11.05*

A. If financial hardship to a retiree would result from reduction of an allowance under Regulation .03 of this chapter, or offset of an overpaid allowance under Regulation .04 of this chapter, the retiree may request that the Retirement Agency extend the time period of the reduction or offset by submitting a written request to the Executive Director.

B. The request shall:

  (1) Explain the basis for the retiree’s request; and

  (2) Include any relevant documentation or records in support of the retiree’s request.

C. In the Executive Director’s sole discretion, the Executive Director may grant the retiree’s request by extending the time period over which the reduction or offset occurs. The Executive Director may not cancel or waive any amounts that are required to be reduced or offset from a retiree’s allowance.

D. The denial of a request to extend the time period of the reduction or offset is not a contested case under State Government Article, §10-202, Annotated Code of Maryland, for which a hearing is required under COMAR 22.03.04.

E. If a retiree believes that the retiree is not subject to an earnings limitation, or that the retiree’s earnings did not exceed any applicable earnings limitation, under Regulation .03 of this chapter, the retiree shall immediately notify the Executive Director in writing of the basis for the retiree’s claim. If the Executive Director denies the retiree’s claim, the Executive Director shall notify the retiree in writing and shall advise the retiree of the retiree’s right to request a hearing under COMAR 22.03.04.

F. If a retiree believes that the retiree is not subject to a suspension of the retiree’s disability allowance, or that the Agency has incorrectly calculated the amount of the appropriate offset, under Regulation .04 of this chapter, the retiree shall immediately notify the Executive Director in writing of the basis for the retiree’s claim. If the Executive Director denies the retiree’s claim, the Executive Director shall notify the retiree in writing and shall advise the retiree of the retiree’s right to request a hearing under COMAR 22.03.04.

#### Regulation .06 Effect of Retirement for More Than 5 Years.

*COMAR 22.01.11.06*

A. This regulation applies to a retiree who is receiving a service retirement allowance or vested allowance from the:

  (1) Correctional Officers’ Retirement System;

  (2) Employees’ or Teachers’ Retirement System;

  (3) Employees’ or Teachers’ Pension System;

  (4) State Police Retirement System; or

  (5) Judges’ Retirement System.

B. Except as provided in §C or D of this regulation, if a retiree has been retired for 5 years beginning on January 1 after the date the individual retired, the retiree may be employed by a participating employer on a permanent, temporary, or contractual basis without any reduction in retirement allowance.

C. For a retiree whose effective date of retirement was January 1, the 5-year period shall begin on January 1 of the year in which the retiree accepted the allowance.

D. Twelve-Month Reduction for Early Retirement.

  (1) This section applies to a retiree of the Employees’ or Teachers’ Retirement or Pension Systems who retired with an early service retirement allowance or early vested allowance.

  (2) Except as provided in §D(3) of this regulation, an individual who becomes employed by a participating employer within 12 months after receiving an early service retirement allowance or early vested allowance shall be subject to the statutory reduction of the individual’s allowance only until the individual has received an allowance for 12 months.

  (3) An individual who is subject to the 12-month reduction described in §D(2) of this regulation shall, after the individual has received an allowance for 12 months, be subject to an earnings limitation until the individual has received an allowance for 5 years if:

    (a) The individual’s current employer is any unit of State government, including the University System of Maryland, and the individual was employed by a unit of State government immediately prior to retirement; or

    (b) The individual’s current employer is a participating employer other than the State and is the same participating employer that employed the individual immediately prior to retirement.

#### Regulation .07 Exemption from Earnings Limitation for Certain Eligible Retirees.

*COMAR 22.01.11.07*

A. This regulation applies to a retiree who is entitled to an exemption from the earnings limitation for a period of less than 5 years.

B. The exemption applies by calendar year from the start date of employment without proration.

C. If the exemption ends before the 5-year period for the earnings limitation ends, then the Retirement Agency shall apply the annual earnings limitation, without proration, only to the wages earned after the exemption period ends.