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Does your DB plan allow rehire after retirement??
Benefits & Compensation
Does your DB plan allow rehire after retirement??
Exchange ideas about health plans, retirement, work/life benefits, and employee assistance.
Our DB plan has a lump-sum payout and allows for rehire after retirement. We are considering establishing criteria for rehire eligibility (e.g., 6-month wait). Has anyone had experience designing/impl
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Forums » Topic Forums » Benefits & Compensation » Does your DB plan allow rehire after retirement??
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Does your DB plan allow rehire after retirement??
posted at 7/23/2009 3:59 AM EDT
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Posts: 45
First: 12/30/2005 Last: 9/14/2011 |
Our DB plan has a lump-sum payout and allows for rehire after retirement. We are considering establishing criteria for rehire eligibility (e.g., 6-month wait). Has anyone had experience designing/implementing rehire after retirement criteria and is willing to provide guidance or reference material?
Thank you! |
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Does your DB plan allow rehire after retirement??
posted at 7/23/2009 4:19 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
I would think that the DB plan would not be the only one you would need to worry about. You would also need to consider other benefits such as health insurance, 401k, etc. In other words I don't think I would create the rehire plan around the DB plan ONLY.
You might need to also take into account other business needs...i.e. WHY does the company NEED to rehire a retired employee? Can the company afford to wait 6 months to do so? What if that employee is supposed to retire July 30th but needs to finish up a project in August? Do you really want the DB plan rules to stop that from happening when there are business needs for it? I would work with your DB consultant to see how it is best to handle for your situation. Because I don't think there is a "one size" answer for this question -- too many details play into the answer. |
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Does your DB plan allow rehire after retirement??
posted at 7/23/2009 4:53 AM EDT
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Posts: 45
First: 12/30/2005 Last: 9/14/2011 |
Thank you for the response.
I wasn't clear on my post. We have rehire criteria for our other benefits; we just don't have them for our DB plan and it's the one we are looking at. As I mentioned, our pension plan allows a lump-sum payout. The reason we are looking at rehire criteria for our DB plan is because several employees have recently expressed interest in retiring simply so they could collect their lump-sum distribution and then be rehired immediately. They don't wish to retire yet -- they just want the cash now. We have an aging employee population and many of them will have a very generous pension awaiting them when they retire. The potential burden on the plan and the company would be financially disastrous if they all were allowed to "retire" just so they could take their lump-sum distributions. We have discussed this with our DB consultant who suggested amending the plan to include rehire after retirement eligibility criteria to dissuade false retirement. I just would like to get a feel for what other companies have done. |
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Does your DB plan allow rehire after retirement??
posted at 7/23/2009 10:04 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Actually I have seen this happen of 401k plans too. Where employees terminate to get their money and then get immediately rehired. It is one reason why some companies refuse to rehire at all.
If this happens to much and the DOL/PBGC get wind of it, it can cause issues for plan disqualification. I forget the legal term for it. I might suggest posting your message on the BenefitsLink forums. They are much more detailed benefit-based knowledge than anyone out here generally has (http://benefitslink.com/boards/) |
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Does your DB plan allow rehire after retirement??
posted at 7/28/2009 8:36 AM EDT
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Posts: 12
First: 5/23/2007 Last: 11/24/2010 |
With our company, once an employee retires and if they are rehired we do not give them the option to go back into the DB plan at that point they are only able to go into the DC plan. |
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