Collecting An Annuity While Working for the Y It is inappropriate and not in the spirit of the existing law to engage in a pre-arranged strategy to collect retirement benefits while still employed. This is a violation of the Fund’s Retirement Plan rules as well as federal tax law. YMCA Retirement Plan Document Section 5.1 “A Participant’s eligibility to receive benefits under the Retirement Plan… must be the first day of a month subsequent to the cessation of Compensation and the severance from YMCA employment.” Section 6.3 “In no event shall any Participant who is employed by a Participating YMCA have the right to a withdrawal of his/her Accumulated Basic Participant Contributions or his/her YMCA Account Balance.” Treasury Regulations Treasury Regulation Section 1.401(a)-1(b)(1)(i) “In order for a pension plan to be a qualified plan under section 401(a), the plan must be established and maintained by an employer primarily to provide systematically for the payment of definitely determinable benefits to its employees over a period of years, usually for life, after retirement or attainment of normal retirement age.” IRS Rev. Rul. 74-254 “Revenue Ruling 56-693, as modified by Rev. Rul. 60-323, holds that a pension plan fails to meet the requirements for qualification under section 401(a) of the Code if it permits employees to withdraw prior to normal retirement any part of the funds accumulated on their behalf, which consist of employer contributions or increments thereon prior to the severance of employment or the termination of the plan. Therefore, a pension plan does not qualify if it permits distributions prior to normal retirement and prior to termination of employment or termination of the plan.” Retirees Returning to Work There are certain legitimate situations where an individual may become re-employed by a Y after he or she begins receiving a lifetime annuity, or has taken a lump sum distribution from the Fund. Whether they are hired by any Y in the future is entirely at the discretion of the employing Y. In order to avoid potential problems, it is recommended that the retiree and Y discuss specific situations with their legal counsels and secure written legal opinions prior to taking any action. Here are three examples of acceptable situations: Jerry retired as a Branch Executive Director and began collecting his retirement benefit. Negotiations with his replacement fell through, and subsequently the Board asked him to return as the Branch Executive in an interim capacity while a new search is undertaken. Mary retired as Secretary of the Membership Department and began collecting her retirement benefit. After gardening and fixing up her home, she became bored, applied for and was accepted for a part-time position in the development office at another Y. George terminated his Y employment because he was relocating from his hometown to another state to be closer to his sister. He applied for and received a lump sum distribution from the Retirement Plan. Since George and his sister were not getting along, he moved back to his hometown, applied for and was accepted for another position at the Y. Here are three examples of unacceptable situations: A very difficult personal situation necessitated that Brad find a way to add to his household income. Accordingly, he arranged with his supervisor that he would retire, begin collecting his retirement benefit then be rehired to his existing job. Lucy was all set to retire as the CEO, but the Board had not yet found her replacement. The Board asked her to stay on for three extra months while they extended their search. She agreed, with the understanding that she would continue earning her salary and also start her retirement annuity. Because Robin needed money to pay off her bills, she arranged with her supervisor that she would terminate employment, take a distribution from the Fund then be rehired to her existing job.