SL 30001.397 Special Considerations for Rehired Annuitants—Ineligibles

A. Retirement System Ineligibles

A retirement system ineligible is an employee who performs services in a position under a retirement system but who is personally ineligible for membership in that system because of a personal disqualification (e.g., age, length of service, number of hours worked, or date of hiring). One reason that an individual may be disqualified from retirement system membership is that they are already receiving or entitled to a pension from the retirement system. SSA determines whether a rehired annuitant is a retirement system ineligible.

In order for a State's Section 218 Agreement to cover retirement system ineligibles, there must be language in the State’s Section 218 Agreement (either in the original Agreement or by a subsequent Modification) which permits the extension of Social Security coverage to retirement system ineligibles.

NOTE:

A handful of States never amended their Section 218 Agreements to permit Section 218 coverage of retirement system ineligibles. Within those States, retirement system ineligibles are not covered under Section 218, and no additional analysis is required. Consider the applicability of the mandatory Social Security under Section 210 and Internal Revenue Service (IRS) rules instead (see SL 30001.396).

Where the State’s Section 218 Agreement permits coverage of retirement system ineligibles, further consideration is needed to determine the rehired annuitant’s Section 218 coverage status. Ask whether the rehired annuitant’s employer, upon rehire, has Section 218 coverage that extends such coverage to ineligibles of the retirement system, including ineligibles in the position into which the rehired annuitant is rehired.

NOTE:

For a general discussion of retirement system ineligibles, see SL 30001.340.

B. Ineligibles covered under Section 218

There are three ways that a rehired annuitant who is ineligible to join the retirement system covering their current position can still be covered for Social Security under Section 218 (refer to SL 30001.340):

1. The rehired annuitant is currently in a position under a retirement system not covered by Social Security, but the State provides coverage for ineligibles by “piggy backing” them onto an absolute coverage group.

A State may extend coverage to ineligibles where a retirement system otherwise does not want additional coverage under Social Security. To do so, the State uses a Section 218 Modification to “piggy back” the ineligibles of that retirement system onto an existing absolute coverage group (see SL 30001.340C). A number of States across the country obtained Social Security coverage for retirement system ineligibles this way prior to the advent of mandatory Social Security.

If the State has covered ineligibles of a particular retirement system through such a Modification, then the ineligible rehired annuitant who is in a position under that retirement system would be covered for Social Security, unless there is an applicable required or optional exclusion (SL 30001.356; SL 30001.357). The rehired annuitant will have to pay Federal Insurance Contributions Act (FICA) taxes.

If the entity does not have Section 218 coverage for ineligibles of the retirement system, it will be necessary to determine of mandatory coverage applies under Section 210 and IRS rules.

2. The rehired annuitant is currently in a position under a majority-vote retirement system group that has Section 218 coverage, but is ineligible to join that retirement system.

Majority-vote retirement system coverage groups include coverage for all “ineligibles” (see SL 30001.324 and SL 30001.340D). A rehired annuitant is covered for Social Security under Section 218 even if they are ineligible to join or rejoin the retirement system in their current position, unless the position falls within a required or optional exclusion (SL 30001.356; SL 30001.357).

3. The rehired annuitant is currently in a position under a divided-vote retirement system coverage group that has Section 218 coverage, but the rehired annuitant is ineligible to join.

Unlike in majority-vote retirement system situations, Section 218 coverage is not automatic for ineligibles of a divided-vote retirement system group (see SL 30001.334A and SL 30001.340E). The State may extend Section 218 coverage to those ineligibles at the time of the relevant Modification by either:

•

Including all ineligibles as part of the “yes” group in the retirement system group’s Section 218 coverage Modification—this is called covering the ineligibles “as part of the retirement system coverage group” (see SL 30001.340E.2) or
•

Including the services of the ineligibles after the divided-vote retirement system group has already been brought under the State’s Section 218 Agreement through an earlier Modification—this is called covering the ineligibles “as an addition to the retirement system coverage group.” This must be done by a separate Modification (see SL 30001.340E.1).

However, the State may choose not to include ineligibles in the divided-vote retirement system coverage group. In this case, if ineligibles are not otherwise “piggy backed” onto the government entity’s Section 218 absolute coverage group through a proper Modification (see SL 30001.340C, SL 30001.396C.5), then the State's Agreement will not cover the ineligible rehired annuitants. In the absence of voluntary coverage under Section 218, it will be necessary to determine if mandatory coverage applies under Section 210 and IRS rules.

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SL 30001.397 - Special Considerations for Rehired Annuitants—Ineligibles - 01/04/2024
Batch run: 01/04/2024
Rev:01/04/2024

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