Returning Retirees’ Participation in Retirement Plans

Q. In the state where your client is located, state employees can retire and come back to work six months later without affecting their state retirement as long as they do not earn over a certain amount. If the employer allows it, can such employees then contribute to a 403b, 457, or 401(k)?

A. If the employee would be eligible under the plan’s eligibility, then yes, he or she must be offered the plan. For example, if the 403(b) excludes employees who work less than 20 hours per week and the employee works at least 20 hours per week, then he or she would be offered the plan and could defer from their salary.