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PERS representative: LB 824 shortens separation period to 120 days and bars any service during that time
Summary
A PERS representative told a webinar of school-plan employers that LB 824 cuts the retirement separation period from 180 to 120 days, prohibits any service (including substitute, volunteer, or contractor work) during that period, and becomes effective May 1, 2026.
A PERS representative told a webinar of school-plan employers that LB 824 shortens the statutory separation period required to receive a distribution from 180 days to 120 days and imposes an absolute prohibition on any kind of service during that 120‑day period.
"The rules for the separation period have substantially changed," the PERS representative said, describing the new 120‑day prohibition and listing activities that will violate the separation ("They cannot provide substitute service. They cannot provide temporary service. They cannot volunteer during these 120 days. They cannot be an independent contractor.").
The presenter repeated several practical examples administrators should watch for: coaching is generally considered regular service, so a teacher who terminates their teaching contract but remains a coach could violate termination rules; short‑term tasks such as concession stand work or ticket taking also count if performed during the separation period. The presenter warned that organizations that provide services similar to school employers and that target retirees can blur those lines and create violations.
PERS emphasized enforcement consequences: if a member violates the separation rules, PERS "would be required by law to collect any missed employee and employer contributions and collect back any distributions made to the member." The presenter added that employers—not just members—should be aware because PERS must collect employer makeup contributions as well.
LB 824 takes effect May 1, 2026. The presenter explained how to determine which separation rule applies: if both the termination date and the date PERS receives a valid distribution application are before May 1, 2026, the 180‑day rule applies; if either date is on or after May 1, 2026, the 120‑day rule applies. The presenter noted that some members whose 180‑day separation began before the effective date will remain under the 180‑day rules until that period ends.
Employers were urged to ask terminating employees whether they are requesting a distribution and to confirm the member’s distribution application receipt date (PERS sends a letter confirming receipt). The presenter said PERS has published an LB 824 FAQ, edited eligibility checklists and manuals, and provides an eligibility calculator and other online tools to help employers determine classifications, separation‑period start dates and compliance steps.
The PERS representative closed by reminding attendees that the point of retirement is to retire, advising members not to plan a return that could invalidate a termination and trigger repayment obligations. PERS said it will email materials and updated tools to participants.
