News Briefings - Pension & Benefits

The following article was taken from the 11/2/09 issue of Pension & Benefits Week.

11/3/09 -- IRS again extends effective date for governmental plans' normal retirement age regs

IRS will amend final regs to change the effective date for governmental plans' normal retirement age, to plan years beginning on or after January 1, 2013. This gives governmental plans even more time to comply with the requirements in the normal retirement age regs, IRS said. (Notice 2009-86, 2009-46 IRB)

Background. Code Sec. 411(a)(8) provides that the term "normal retirement age" means the earlier of (A) the time a plan participant attains normal retirement age under the plan, or (B) the later of age 65 or the fifth anniversary of the time a plan participant commenced participation in the plan.

In 2007, IRS issued final regs requiring a pension plan's normal retirement age to 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 (see Pension & Benefits Week, 5/29/2007).

The 2007 final regs generally are effective May 22, 2007, with a later effective date for governmental plans and certain collectively bargained plans. For governmental plans, the 2007 final regs are effective for plan years beginning on or after January 1, 2009.

Notice 2007-69, 2007-35 IRB provided temporary relief for certain plans that may have to change their definition of normal retirement age to satisfy the 2007 final regs (see Pension & Benefits Week, 8/20/2007). However, because of the delayed effective date for governmental plans, IRS did not apply to them. As a result, in 2008, IRS issued Notice 2008-98, 2008-44 IRB stating that IRS intended to change the effective date for governmental plans to plan years beginning on or after January 1, 2011 (see Pension & Benefits Week, 10/20/2008).

Further extension of the effective date. IRS now says it intends to amend the 2007 final regs to change the effective date for governmental plans to plan years beginning on or after January 1, 2013. Governmental plan sponsors may rely on Notice 2009-86 with respect to the extension until such time as the 2007 final regs are so amended. IRS says the extension will give it more time to consider comments on how the regs affect governmental plans.

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