Termination of employment is a critical component of the Colorado PERA retirement process. There must be a bona fide separation of service that is a distributable event as required by Title 26, 401(a) of the Internal Revenue Code (IRC), PERA plan documents, and the state law governing PERA.
The member must terminate service from all PERA employers. This termination must be an actual severance of the employer/employee relationship and the termination date is considered legally binding.
Employers must certify terminations of employment by signing and completing the Final Six Months’ Salary Report in order for monthly benefit payments to start. The termination date on the report shows verification of separation of service and is considered legally binding.
Even if you are aware that an individual will be returning to work after retirement, you need to make sure that you fully process their separation at the time of their retirement as if they would not be returning to work. This includes processing any leave payouts, terminating employee benefits (including health care, dental, vision, life insurance), etc.
Failure to completely sever the employer/employee relationship will cause an individual to be ineligible for retirement. All benefits paid to an individual who was ineligible for retirement must be paid back to PERA promptly upon discovery.