HB432 Alabama 2017 Session

Summary

Primary Sponsor

Jim Patterson

Republican

Session

Regular Session 2017

Title

Retirement System, Employees' Retirement System, Teachers' Retirement System, retirees, surcharge authorized when retiree performs duties for compensation, including independent contractors, for employers participating in ERS and TRS, without suspension of retiree's retirement allowance, certain disclosures required

Summary

HB432 would impose a 5% surcharge on both retirees and their employers when a retiree from the Employees' Retirement System or Teachers' Retirement System performs compensated work for participating employers, with funds sent to the Retirement Systems of Alabama and required disclosures.

What This Bill Does

It creates a 5% surcharge on the retiree's annual gross compensation for any duties performed for an ERS or TRS participating employer, including independent contracting, while the retiree continues to receive retirement benefits. It also imposes a 5% surcharge on the retiree's employer based on the retiree's compensation, with both surcharges paid to the Retirement Systems of Alabama and not reducing or suspending the retiree's retirement allowance. The surcharge is nonrefundable and not credited to the retiree, and the retiree does not receive any service credit for time during which the surcharge is paid. Employers must provide written notice to the retiree at least 30 days before the retiree begins duties (immediate notice if less than 30 days); notices are created by the Retirement Systems of Alabama and include clear language that the surcharge does not benefit the retiree. The initial notice goes to participating employers at least 40 days before collection begins, and modified notices must be distributed to employers and retirees at specified times.

Who It Affects

• Retired individuals under the Employees' Retirement System or Teachers' Retirement System who perform compensated work for participating employers (including independent contractors).
• Employers that participate in the Employees' Retirement System or the Teachers' Retirement System and hire retirees to perform duties for compensation.

Key Provisions

• A 5% surcharge on the retiree's annual gross compensation for duties performed for participating ERS/TRS employers.
• A 5% surcharge on the employer based on the retiree's compensation.
• Surcharges are paid monthly to the Retirement Systems of Alabama and do not suspend or reduce the retiree's retirement allowance.
• No service credit is granted for any period during which the retiree pays the surcharge.
• The surcharge is nonrefundable and not credited to the retiree.
• Disclosures: notices must clearly state that the surcharge does not benefit the retiree; notices to employers and retirees are prepared and distributed by RSA with specific timing requirements (initial notices 40 days before collection; modified notices 10 days before effective date; 30-day retiree notice).
• Effective date is the first day of the third month after the act becomes law; surcharge collection begins at the start of the next fiscal year following the effective date.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Employees' Retirement System