Retired employees returning to payroll

Question:

We have retired employees that are converting to faculty members and will be returning to our payroll.  Should we code their earnings so that we are able to differentiate them in the system? We want to be able to identify the earnings as a faculty member vs. when they were employees on the payroll.  In addition, they will be receiving a w-2 and are also receiving pension pay. Is it legal to receive a W-2 and a pension 1099?

Answer:

You may set up a special code for your own internal purposes to differentiate these earnings from regular salary earnings. It will make no difference from a tax standpoint because it is taxable income and will appear on the individual's W-2 at year-end.

In general, there is no problem for an individual to receive a W-2 and 1099R for retirement payments. However, one should look at the individual's pension agreement to make sure that the person is not prohibited from receiving a salary while receiving a pension.