Rolly: Utah retirement reform throws some retirees into debt
Since the Utah Legislature passed sweeping reforms of the state's retirement system three years ago, one unintended consequence has thrust some retirees under a mountain of debt because they took a part-time job to supplement their incomes.
The most egregious example, said Sen. Todd Weiler, R-Woods Cross, is that of a state employee who began working part time at a quasi-government recreation center after he retired. Because that is considered double-dipping under the new law, he must repay the Utah Retirement System $38,000 from the benefits he has drawn for a year and a half that now are deemed illegal.
Weiler, chairman of the Legislative Retirement Committee, says he has heard of a number of cases in which retired employees took part-time jobs after they began collecting their retirement benefits, only to find out they violated terms of their retirement and have to repay the money.
It's a result of a section in the retirement-reform bill sponsored by former Sen. Dan Liljenquist in 2010 designed to put the responsibility of investing in retirement accounts on the employee rather than the state. The change means that the state still pays into the employee's retirement account, but it will no longer be responsible for a set payment to the employee after he or she retires. Instead, the employee must invest the money in his or her own 401(k).
The section biting retirees now is the part that ends so-called double dipping, in which employees retire, then get another job with the government while drawing retirement benefits. After it was determined that privilege was being abused, the legislation ended the practice, requiring employees to pay back benefits if they get another government job in retirement.
Weiler is floating a proposal that would require retirees to pass a test posted online to be eligible for retirement benefits.
Weiler says the proposal isn't as draconian as it sounds. The test would simply have the employee acknowledge that he or she understands the rules to avoid getting caught in the no-double-dipping net after retirement. The rules are spelled out in documents the employee signs upon retirement now, Weiler said. But too often the employee doesn't read all the language. The online explanation would scream loud and clear what the employee can and cannot do.
Pretty bad timing • When a patron went to the Internal Revenue Service Office in Provo on April 8 to pick up tax forms, she was greeted with a sign in the window that stated: "Closed due to illness."
So the office was closed a week before tax deadline in the first year that tax forms were not mailed out.
Correction • In my column Friday about the plight of African immigrant Victoria Sethunya, who could face deportation due to a series of bureaucratic bungles, I said her deportation hearing is this Friday. It actually is scheduled for Thursday.