IRS Proposes Rule on Applicability of Normal Retirement Age Regs to Governmental Plans
The IRS has issued a proposed rule
on the determination of whether the normal retirement age under a governmental pension plan under Internal Revenue Code Section 414(d) satisfies the requirements of Code Section 401(a) and whether the payment of definitely determinable benefits that begin at the plan’s normal retirement age (NRA) satisfies them. These regulations would affect sponsors and administrators of governmental pension plans, as well as the participants.
These proposed regulations would apply the reasonably representative requirement in the 2007 NRA regulations to governmental plans. Thus, the normal retirement age under a governmental plan must be an age that is not earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed.
These proposed regulations, when finalized, would provide guidance on the determination of whether the NRA under a governmental plan satisfies the requirements of Section 401(a) by amending the 2007 NRA regulations to provide additional rules for governmental plans.
The proposed regulations also would include a minor change to the 2007 NRA regulations to reflect the addition of Code Section 411(f), which provides a special rule for determining a permissible normal retirement age that applies only to certain defined benefit plans that are not governmental plans.
These regulations are proposed to be effective for employees hired during plan years beginning on or after the later of Jan. 1, 2017 or the close of the first regular legislative session of the legislative body with the authority to amend the plan that begins on or after the date that is three months after the final regulations are published in the Federal Register.
Governmental plan sponsors may rely on these proposed regulations for periods preceding the effective date, pending the issuance of final regulations. Any provisions of the final regulations that are more restrictive than the rules in these proposed regulations will not be retroactive. Comments Welcome
The IRS will accept comments and requests for a public hearing through April 27, 2016.
Comments and requests should be sent to:
Internal Revenue Service,
P.O. Box 7604,
Ben Franklin Station,
Washington D.C. 20044
Submissions may be hand-delivered Monday through Friday between 8:00 a.m. and 4:00 p.m. to:
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC, 20224
Comments and requests also can be sent electronically via the federal eRulemaking Portal; refer to IRS REG-147310-12.