Fact sheet updated: May 14, 2025

This Fact Sheet describes the requirements and limitations that apply when a TRS member decides to return to work with a TRS employer in a position reportable to the retirement system. (For details, see TRS Fact Sheet, Which Positions are Reportable to TRS?)

To ensure compliance with these requirements, it is important for both members and employers to understand how active members become retired members and why there must be clear separation between these two phases.

Why is this important?

Montana law requires TRS to be a tax-qualified pension plan, which means TRS must comply with all qualification standards set forth in the Internal Revenue Code (IRC). One such standard prohibits TRS from paying retirement benefits to a member who has not terminated employment in all positions covered by the retirement system. TRS must verify the member has had a bona fide separation from service – i.e., the employer-employee relationship has been completely severed – before paying any benefits.

Retirees who wish to resume employment in a position reportable to the retirement system while continuing to receive their monthly retirement benefit, and TRS employers who wish to hire them, must ensure that all steps have been properly completed. Failure to comply with all requirements and limitations described in this Fact Sheet could result in serious financial consequences for both the retiree and the TRS employer.

How does an active member become a retired member of TRS?

Members who are vested and eligible for a future TRS retirement benefit must terminate all TRS-reportable employment to apply for and receive that benefit. A common question is whether members can resign their primary position (e.g., classroom teaching) and continue performing some duties (e.g., coaching or teaching driver’s education) while applying for a retirement benefit. This is not allowed. A member who has not terminated all employment in all positions reportable to TRS is not eligible to receive a retirement benefit.

When a member applies for retirement, TRS must certify the member’s termination date (i.e., the last date on which the member provided service) with their pre-retirement employer. For contract employees, the termination date may be prior to the contract end date. If the member worked in multiple TRS-reportable positions with one or more TRS employers, the member’s termination date will be the last certified date of termination of employment. 

•  Beware of prohibited prearranged agreements. A member who applies for a retirement benefit before reaching normal retirement age (60) and who has a verbal or written agreement with their same TRS employer to return to work at any time in the future, in any capacity – including to work in a position reportable to the Public Employees’ Retirement System (PERS) – has not terminated employment.
• Beware of returning to work too soon. A newly retired member who returns to TRS-reportable employment before completing the required break in service (below) has not terminated employment. 

The member’s status with TRS does not change from “active member” to “retired member” upon terminating employment and applying for a retirement benefit. The member attains retired member status when they have received the first monthly benefit. (A separate TRS Fact Sheet, Terminating Employment and Retiring with TRS, covers the retirement process in more detail, including information about the timing of benefit payments.)

When can a retired member return to work in a TRS-reportable position?

To avoid ambiguity as to whether the IRS-required bona fide separation from service has taken place, many public retirement systems across the U.S., including TRS, require newly retired members to wait a specified number of days before resuming any kind of employment in any position reportable to the retirement system.

This is called a break-in-service requirement and it applies to every recent TRS retiree, regardless of whether the retiree will provide service as an actual employee of a TRS employer, as an employee of a third party, as an independent contractor, or as an unpaid volunteer, unless a documented exception exists (see Exceptions to the break-in-service requirement, below). The required break in service currently is 120 calendar days, beginning on the day following the member’s last certified date of termination of employment and ending on the 121st calendar day. After processing the member’s application for retirement, TRS will notify the member of the exact date on which the required break in service will end. The retired member also may view that date in My TRS, the secure online member portal.

Why not 90 days? TRS is often asked why the required break in service cannot be shorter, such as 90 days. In Montana’s public school system, most TRS members remain employed over the summer break. If a teacher applies for retirement at the end of the school year and resumes employment 90 days later as a retiree, have they actually terminated employment and retired? Remember, TRS is prohibited from paying retirement benefits if it is not clear whether the employment relationship has been severed.

Exceptions to the break-in-service requirement

1. When the employer has certified that the TRS retiree provides service only in a non-reportable bona fide volunteer position, the break-in-service requirement does not apply. (Note: Criteria for bona fide volunteer positions are specified in TRS Fact Sheet, Volunteer Service.)
2. A recently retired member who has received at least two benefit payments and who meets other criteria for temporary re-employment under “emergency hire” provisions in TRS law (§19-20-732, MCA or §19-20-735, MCA) is exempt from the break-in-service requirement.
3. A recently retired member who has received at least one benefit payment (i.e., who has attained retired member status) may work a maximum of 45 days during the required break in service either as a mentor for a newly hired teacher (effective July 1, 2025) or as a substitute for a regular K-12 classroom teacher who is temporarily absent. (§19-20-734, MCA) 

i. Ineligible positions. A newly retired member may not fill a vacant teaching position or provide service as a coach, administrator, specialist (e.g., school counselor, speech language pathologist), teacher’s aide, or paraprofessional under this exception to the break-in-service requirement.

Must TRS be notified when a retired member goes back to work on a paid or volunteer basis?

Yes, if that retired member will provide service to a TRS employer. Both the retired member and employer must complete and submit TRS Form 146, Retired Member’s and Employer’s Notice of Postretirement Employment.

• Note: Form 146 must be submitted to TRS at least annually for as long as the retired member continues to provide service in any capacity (as the TRS employer’s employee, as an independent contractor or consultant, as an employee of a third party, or as a volunteer). Instructions on the form explain circumstances that may necessitate an updated form with supporting documentation.

The TRS employer must report the retired member’s earnings to TRS each month.

Is there a limit on how much the retired member can earn?  

Yes. In nearly all cases, a retired TRS member who works for a TRS employer in a position reportable to the retirement system is subject to an annual earnings limitation. The maximum allowable earnings is the highest amount the retired member may earn in the current fiscal year without affecting their monthly TRS benefit.  

If the member works in multiple TRS positions or works concurrently in a TRS and a PERS position with the same employer, all earnings count toward the annual earnings limit.

Earnings include wages or other compensation paid to or on behalf of the retiree, as well as the value of certain benefits, including payments deferred to a later year. Earnings do not include payroll taxes or health insurance premiums paid by the employer, the value of any housing provided by the employer, travel expenses for which the employer reimburses the member, or de minimis fringe benefits as defined in federal law. (Please call TRS if you are unsure whether a specific payment, expense, or benefit counts toward the annual earnings limit.)

As of July 1, 2023, the maximum allowable earnings amount is the greater of:

• 49% of the retired member’s Average Final Compensation (AFC) used to calculate their monthly retirement benefit, plus annual increases equal to the increase in the Consumer Price Index, OR

• 49% of the median AFC as determined annually by the TRS Board. The median AFC amount is based on all TRS members who retired during the preceding fiscal year and is posted on the TRS website.

Once notified of a retired member’s employment, TRS will determine the earnings limit for the current fiscal year and will notify the member by mail. Retired members also may monitor their own earnings by logging into My TRS and selecting “My Working Retiree Earnings.”

What happens if the working retiree’s earnings exceed the annual limit? 

○ If TRS Form 146 indicates the retired member’s aggregate earnings are expected to exceed the annual limit, TRS will suspend payment of the TRS retirement benefit as of the retired member’s first day of employment.  

○ If the retiree’s aggregate earnings are not expected to exceed the annual limit, TRS will continue paying the retiree’s monthly benefits. If the earnings limit is reached in that fiscal year, TRS will reduce the member’s monthly benefit on a dollar-for-dollar basis. However, if earnings for that fiscal year subsequently exceed the limit by an amount equal to the gross amount of one monthly benefit, TRS will suspend the retired member’s benefit.

○ If TRS has suspended the retirement benefit of a member who is employed by a TRS employer (not by a third party or as an independent contractor), TRS also will return the individual to active member status. The TRS employer must remit employee and employer contributions to TRS for all earnings paid to the member while returned to active member status. TRS will resume payment of the member’s monthly benefit only after the member once again terminates all positions reportable to TRS and applies for reinstatement of their retirement benefit.

Exception to the annual earnings limitation

In limited circumstances, retired members who had 27.00 or more years of service credit with TRS prior to retirement and who meet criteria prescribed in §19-20-732, MCA or §19-20-735, MCA (known as “emergency hire” provisions) may be temporarily re-employed in TRS-reportable positions with no earnings limitation and with no reduction in their monthly retirement benefit. This exception is limited to re-employment with certain TRS employers who demonstrate they have tried and failed to attract qualified, non-retired candidates for key vacancies. 

Important information about PERS or MUS employment

Working in positions covered by the Public Employees’ Retirement System (PERS) 

Public schools in Montana have many non-instructional positions reportable to PERS, including office staff, kitchen and custodial staff, bus drivers and others. Depending on the situation, retired TRS members may be able to work in such positions without restriction. Read the following conditions carefully: 

1. If the PERS position is with a different TRS employer than the employer from which the member retired, the member may work in that position without a break in service or an annual earnings limitation.
2. If the PERS position is with the same TRS employer as the one from which the member retired, and the member had reached normal retirement age (60 or older) at the time they terminated all TRS employment and applied for retirement, the retired member may work in the position without a break in service or an annual earnings limitation.
3. If the PERS position is with the same TRS employer as the one from which the member retired, and the member had not yet reached age 60 at the time they terminated all TRS employment and applied for retirement, then the retired member may work for this employer without restriction only if there was no prearranged agreement to do so. (Prohibited prearranged agreements were described earlier in this Fact Sheet.)
4. If the retired member works concurrently in both a TRS position and a PERS position with a single employer – whether the same TRS employer from which they retired or a different TRS employer – the earnings from both positions will count toward the retiree’s annual allowable earnings limitation.

If TRS has paid retirement benefits that the member was not entitled to receive, TRS must return the member to active member status and the member must repay all overpaid benefits to TRS, plus interest.

Even if an employer believes the work to be performed or the services to be provided are not reportable to TRS, it is important to notify TRS when a retired TRS member fills a paid or volunteer position.