{"data":{"id":"us-ky/krs-78.5540","jurisdiction":"us-ky","citation":"KRS 78.5540","heading":"Retired member who returns to work with participating employer --","body":"Combination of accounts -- Employment within 12 months of retirement date -\n- Independent contractors and leased employees -- Reemployment on or after\nSeptember 1, 2008 -- Voided retirement -- Absence of prearranged agreement -\n- Volunteer services -- Mayors and members of city legislative bodies --\nAdministrative regulations.\n(1) A retired member whose disability retirement was discontinued pursuant to KRS\n78.5528 and who  is reemployed by an employer participating in the system or the\nKentucky Retirement Systems prior to his or her normal retirement date shall have\nhis or her accounts combined upon termination for determining eligibility for\nbenefits. If the member is elig ible for retirement, the member's service and\ncreditable compensation earned as a result of his or her reemployment shall be used\nin the calculation of benefits, except that the member's final compensation shall not\nbe less than the final compensation last  used in determining his or her retirement\nallowance. The member shall not change beneficiary or payment option\ndesignations.\n(2) (a) If a retired member accepts employment or begins serving as a volunteer with\nan employer participating in the systems admi nistered by Kentucky\nRetirement Systems or the County Employees Retirement System within\ntwelve (12) months of his or her retirement date, the retired member shall\nnotify the Authority and the participating employer shall submit the\ninformation required or requested by the Authority to confirm the individual's\nemployment or volunteer status. The retired member shall not be required to\nnotify the Authority regarding any employment or volunteer service with a\nparticipating agency that is accepted after twelve (12) months following his or\nher retirement date.\n(b) If the retired member is under a contract to provide services as an independent\ncontractor or leased employee to an employer participating in the systems\nadministered by Kentucky Retirement Systems or the County Employees\nRetirement System within twelve (12) months of his or her retirement date,\nthe member shall submit a copy of that contract to the Authority, and the\nAuthority shall determine if the member is an independent contractor or\nleased employee for purposes of retirement benefits. The retired member and\nthe participating employer shall submit the information required or requested\nby the Authority to confirm the individual's status as an independent\ncontractor or leased employee. The retired mem ber shall not be required to\nnotify the Authority regarding any services entered into as an independent\ncontractor or leased employee with a participating agency that the employee\nenters into after twelve (12) months following his or her retirement date.\n(3) Retired members of the County Employees Retirement System who returned to\nwork with an employer that participates in the County Employees Retirement\nSystem or Kentucky Retirement Systems prior to September 1, 2008, shall be\ngoverned by the provisions of KRS 61.637(1) to (16).\n(4) The following shall apply to retired members of the County Employees Retirement\nSystem who are reemployed on or after September 1, 2008, by an agency\nparticipating in the systems administered by the County Employees Retirement\nSystem or the Kentucky Retirement Systems:\n(a) If a retired member is receiving a retirement allowance from the County\nEmployees Retirement System, or has filed the forms required to receive a\nretirement allowance from the County Employees Retirement System , and is\nemployed in a regular full -time position required to participate in the County\nEmployees Retirement System or one (1) of the systems administered by the\nKentucky Retirement Systems or is employed in a position that is not\nconsidered regular full -time with an employer participating in the County\nEmployees Retirement System or in one (1) of the systems administered by\nthe Kentucky Retirement Systems within one (1) month following the\nmember's initial retirement date, the member's retirement shall be voided, and\nthe member shall repay to the system all benefits received, including any\nhealth insurance benefits. If the retired member is returning to work in a\nregular full -time position required to participate in the County Employees\nRetirement System:\n1. The member shall contribute to a member account established for him or\nher in the County Employees Retirement System or in one (1) of the\nsystems administered by the Kentucky Retirement Systems, and\nemployer contributions shall be paid on behalf of the m ember by the\nparticipating employer to the system; and\n2. Upon subsequent retirement, the member shall be eligible for a\nretirement allowance based upon total service and creditable\ncompensation, including any additional service or creditable\ncompensation earned after his or her initial retirement was voided;\n(b) If a retired member is receiving a retirement allowance from the County\nEmployees Retirement System and is employed in a regular full -time position\nrequired to participate in the County Employees Retirement System or in one\n(1) of the systems administered  by the Kentucky Retirement Systems after a\none (1) month period following the member's initial retirement date, the\nmember may continue to receive his or her retirement allowance during the\nperiod of reemployment subject to the following provisions:\n1. If a member is reemployed by a participating employer within twelve\n(12) months of the member's retirement date, the participating employer\nshall certify in writing on a form prescribed by the Authority that no\nprearranged agreement existed between the emplo yee and employer\nprior to the employee's retirement for the employee to return to work\nwith the participating employer. If the participating employer fails to\ncomplete the certification or the Authority determines a prearranged\nagreement exists, the member 's retirement shall be voided and the\nprovisions of paragraph (a) of this subsection shall apply to the member\nand the employer. For purposes of this paragraph:\na. If an elected official is reelected to a new term of office in the\nsame position as the elec ted official held prior to retirement and\ntakes office within twelve (12) months of his or her retirement\ndate, he or she shall be deemed by the Authority as having a\nprearranged agreement; and\nb. Employment that is accepted by the retired member after twe lve\n(12) months following the member's retirement date shall not\nconstitute a prearranged agreement under this paragraph;\n2. Notwithstanding any other provision of KRS Chapter 78 to the contrary,\nthe member shall not contribute to the system and shall not earn any\nadditional benefits for any work performed during the period of\nreemployment;\n3. Except as provided by KRS 70.291 to 70.293, 95.022, and 164.952 and\nexcept for any retiree employed as a school resource officer as defined\nby KRS 158.441 or as a Ken tucky guardian as defined by KRS\n158.4431, the employer shall pay employer contributions as specified by\nKRS 78.5536 and 78.635 on all creditable compensation earned by the\nemployee during the period of reemployment. The additional\ncontributions paid shall be used to reduce the unfunded actuarial liability\nof the system; and\n4. Except as provided by KRS 70.291 to 70.293, 95.022, and 164.952 and\nexcept for any retiree employed as a school resource officer as defined\nby KRS 158.441 or as a Kentucky guardian a s defined by KRS\n158.4431, the employer shall be required to reimburse the system for the\ncost of the health insurance premium paid by the system to provide\ncoverage for the retiree, not to exceed the cost of the single premium.\nEffective July 1, 2015, loc al school boards shall not be required to pay\nthe reimbursement required by this subparagraph for retirees employed\nby the board for eighty (80) days or less during the fiscal year. Effective\nAugust 1, 2024, the Department of Education shall pay for the he alth\nreimbursements required by this subparagraph for a retiree who\nparticipated in a hazardous position prior to July 1, 2003, in the County\nEmployees Retirement System or in one (1) of the systems administered\nby the Kentucky Retirement Systems, and who is reemployed by a local\nschool board;\n(c) Notwithstanding paragraphs (a) and (b) of this subsection, a retired member\nwho qualifies as a volunteer for an employer participating in the County\nEmployees Retirement System or the Kentucky Retirement Systems a nd who\nis receiving reimbursement of actual expenses, a nominal fee for his or her\nvolunteer services, or both, shall not be considered an employee of the\nparticipating employer and shall not be subject to paragraphs (a) and (b) of\nthis subsection if:\n1. Prior to the retired member's most recent retirement date, he or she did\nnot receive creditable compensation from the participating employer in\nwhich the retired member is performing volunteer services;\n2. Any reimbursement or nominal fee received prior to the retired\nmember's most recent retirement date has not been credited as creditable\ncompensation to the member's account or utilized in the calculation of\nthe retired member's benefits;\n3. The retired member has not purchased or received service credit un der\nany of the provisions of KRS 78.510 to 78.852 for service with the\nparticipating employer for which the retired member is performing\nvolunteer services; and\n4. Other than the status of volunteer, the retired member does not become\nan employee, leased e mployee, or independent contractor of the\nemployer for which he or she is performing volunteer services for a\nperiod of at least twelve (12) months following the retired member's\nmost recent retirement date.\nIf a retired member, who provided volunteer ser vices with a participating\nemployer under this paragraph violates any provision of this paragraph, then\nhe or she shall be deemed an employee of the participating employer as of the\ndate he or she began providing volunteer services and both the retired member\nand the participating employer shall be subject to paragraphs (a) and (b) of\nthis subsection for the period of volunteer service;\n(d) Notwithstanding any provision of this section, any mayor or member of a city\nlegislative body shall not be required to  resign from his or her position as\nmayor or as a member of the city legislative body in order to begin drawing\nbenefits from the systems administered by the Kentucky Retirement Systems\nor the County Employees Retirement System or subject to any provision of\nthis section as it relates solely to his or her service as a mayor or member of\nthe city legislative body, if the mayor or member of a city legislative body:\n1. Has not participated in the County Employees Retirement System prior\nto retirement, but is o therwise eligible to retire from the Kentucky\nEmployees Retirement System or the State Police Retirement System; or\n2. Has been or is participating in the County Employees Retirement\nSystem and is at least sixty-two (62) years of age. If a mayor or member\nof a city legislative body who is at least sixty -two (62) years of age\nretires from the systems administered by Kentucky Retirement Systems\nor the County Employees Retirement System but remains in office after\nhis or her effective retirement date, the mayo r or member of the city\nlegislative body shall not accrue any further service credit or benefits in\nthe systems administered by Kentucky Retirement Systems or the\nCounty Employees Retirement System for any employment occurring\non or after the effective retirement date;\n(e) Notwithstanding any provision of this section, any current or future part -time\nadjunct instructor for the Kentucky Fire Commission who has not participated\nin the Kentucky Employees Retirement System prior to retirement, but who is\notherwise eligible to retire from the County Employees Retirement System,\nshall not be:\n1. Required to resign from his or her position as a part -time adjunct\ninstructor for the Kentucky Fire Commission in order to begin drawing\nbenefits from the County Employees Retirement System; or\n2. Subject to any provision of this section as it relates solely to his or her\nservice as a part -time adjunct instructor for the Kentucky Fire\nCommission;\n(f) If a member is receiving a retirement allowance from the County Employees\nRetirement System and enters into a contract or becomes a leased employee of\nan employer under contract with an employer participating in the County\nEmployees Retirement System or one (1) of the systems administered by the\nKentucky Retirement Systems:\n1. At any time following retirement, if the Authority determines the\nemployment arrangement does qualify as an independent contractor or\nleased employee, the member may continue to receive his or her\nretirement allowance during the period of the contract;\n2. Within one (1) month following the member's initial retirement date, if\nthe Authority determines the employment arrangement does not qualify\nas an independent contractor or leased employee, the member's\nretirement shall be voided in accordance with paragrap h (a) of this\nsubsection;\n3. After one (1) month but within twelve (12) months following the\nmember's initial retirement, if the Authority determines the employment\narrangement does not qualify as an independent contractor or leased\nemployee and that a prearranged agreement existed between the member\nand the agency for the member to return to work with the agency, the\nmember's retirement shall be voided in accordance with paragraph (a) of\nthis subsection;\n4. After a twelve (12) month period following the me mber's initial\nretirement, the member may continue to receive his or her retirement\nallowance during the period of the contract and the member shall not be\nrequired to notify the Authority or submit any documentation for\npurposes of this section to the Authority; and\n5. After twelve (12) months or more following the retired member's\nretirement date, the initiation of a contract or the initial date of the\nleased employment of a retired member by a participating agency shall\nnot constitute a prearranged agreement under this subsection;\n(g) The Authority shall issue a final determination regarding a certification of the\nabsence of a prearranged agreement or the retired member's qualification as\nan independent contractor or leased employee as required under thi s section\nno later than thirty (30) days after the retired member and participating\nemployer provide all required forms and additional information required by\nthe Authority; and\n(h) Retired members of one (1) of the systems administered by Kentucky\nRetirement Systems who are reemployed by an employer in the County\nEmployees Retirement System on or after September 1, 2008, shall not be\neligible to earn a second retirement account in th e County Employees\nRetirement System for his or her service to the employer.\n(5) The Authority shall promulgate administrative regulations to implement the\nrequirements of this section, including incorporating by reference Authority -\nprescribed forms that a  retired member and participating agency shall provide the\nsystems under subsections (1) and (4) of this section.\n(6) (a) \"Reemployment\" or \"reinstatement\" as used in this section shall not include a\nretired member who has been ordered reinstated by the Personnel Board under\nauthority of KRS 18A.095.\n(b) 1. A retired member who has been ordered reinstated without loss of pay\nby the Personnel Board under authority of KRS 18A.095 or by court\norder or by order of the Kentucky Commission on Human Rights and\naccepts employment by an agency participating in the Kentucky\nEmployees Retirement System, State Police Retirement System, or\nCounty Employees Retirement System shall void his or her retirement\nby reimbursing the system in the full amount of his or her retire ment\nallowance payments received, including any health insurance benefits\npaid to or on behalf of the member.\n2. Within twelve (12) months of the date of the final order of the Personnel\nBoard, the Kentucky Commission on Human Rights, or the court, the\nmember shall repay the system the full amount of his or her retirement\nallowance payments and health insurance benefits by lump sum or enter\ninto an agreement with the Authority for repayment by installments.\n3. Once the system has been fully reimbursed for t he benefits paid to the\nmember and on the member's behalf, additional contributions and\nservice credit based on the reinstated employment shall be added to the\nmember's account.","path":["KRS Chapter 78"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=54868","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:39Z","sha256":"56f97b4b0958779524003cedafbc2dc8f2b8755916888226dd9b066b545c355c","source_id":"us-ky","stale":false,"prev":"us-ky/krs-78.5538","next":"us-ky/krs-78.5542"},"notice":"GroundRules: Original legal text. Not legal advice."}