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taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 407
Experience:  Licensed CPA, MA, MST with 29 year's experience. Teach Accounting and Tax courses at Masters level.
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I retired from a municipality in Illinois and am drawing a

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I retired from a municipality in Illinois and am drawing a pension from an Article 3 pension. I accepted a position with the same municipality and am contributing to a different (IMRF) pension system. I am now being told that this can not be done, as the municipality could lose their tax exempt status on the Article 3 pension, because of some IRS rule saying that an employee cannot draw a pension from and work for the same entity. Your thoughts?
Submitted: 1 year ago.
Category: Tax
Expert:  taxmanrog replied 1 year ago.
Welcome to Just Answers! Thank you for the opportunity to answer your question! I will do my best to help!

You heard correctly! Once you retire from a municipality, you cannot go back to work for that same municipality. I personally ran across this situation. I used to be a trustee for a municipality. Our fire chief was going to retire, and was offered a job as building inspector by the same village. He could not accept it because once you retire from the village, you could not go back to work and still collect your pension. However, he left and went to work for another village as their fire chief, and is collecting a pension from village #1 while receiving a salary (and eventually a pension) from village #2. I also have a client who did the same thing. He was a commanding level police officer for one southwest suburban police department, and once he retired, he went to work as police chief for another suburb. He is now totally retired, and collecting pensions from two suburbs.

So in short, you are correct. An employee cannot both work for and collect a pension from the same municipal entity.

I hope this helps! If you have found my answer helpful, please rate me highly. I would appreciate it!

Again, thanks and have a great weekend!
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 407
Experience: Licensed CPA, MA, MST with 29 year's experience. Teach Accounting and Tax courses at Masters level.
taxmanrog and 3 other Tax Specialists are ready to help you
Customer: replied 1 year ago.

So what is the basis for this decision? My police pension is separate from the IMRF pension. I could see if they were the same pension plans but they are totally separate.

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taxmanrog
taxmanrog
Tax Professional
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Licensed CPA, MA, MST with 29 year's experience. Teach Accounting and Tax courses at Masters level.