Pre 62 normal retirement age plans

[jkdoll2]

The rules are out that we need to amend the plans that have a normal retirement age of less than 62. I have quite a few plans with 55, 59, and 60. Seems a shame to have to do that when some are really retiring at that early age - one participant doctor or lawyer plans.

Does this apply to DC plans also? It really doesnt specify in the notice. Also - does this include the provisions for early retirement age 55? Does that need to be taken away also?

I have attached the article from ASPPA. Thanks

(Right at the top of the ASPPA ASAP it says it's copyrighted and for internal use only, so I deleted it from your post.)

[Bird]

It applies to all "pension" plans, so that includes money purchase plans (and target benefit plans, which are money purchase plans).

I don't believe it affects other DC plans; it's tied in with in-service distributions being allowed from pension plans after age 62 under PPA.

[JAY21]

I think someone posted that the IRS verbally at least has said they don't have a problem with using NRA of 62 for distribution (in-service) purposes combined with an early retirement age of say 55 where the actuary assumes the participant(s) will retire at the ERA, anyone have any more thoughts on whether this might fly ?

[AndyH]

That was the topic of a gray book Q&A, that, as Bird said, in-service was the target and they don't really care about ERD so that is how you handle contractual benefits, just call them ERD not NRD. Make NRD compliant and irrelevant.

[jkdoll2]

That was the topic of a gray book Q&A, that, as Bird said, in-service was the target and they don't really care about ERD so that is how you handle contractual benefits, just call them ERD not NRD. Make NRD compliant and irrelevant.

Thanks everyone!!!

[John Feldt ERPA CPC QPA]

Befor amending, be sure to look at the effects of the amendment on any DB/DC combo plans - I would not just automatically add an unsubsidized early retirement based on the plan's prior NRA and I'd be careful to pick a new retirement age that still gets you the testing age needed to pass 401(a)(4). FWIW.

[movedon]

Does this requirement (no NRA <62) apply to a profit sharing plan that contains merged money purchase assets?

[jkdoll2]

Does this requirement (no NRA <62) apply to a profit sharing plan that contains merged money purchase assets?

Yes it does. Thanks

[david rigby]

This is the Gray Book item mentioned by AndyH:

Gray Book Q&A 2009-37

PPA: Other DB Plan Issues: Required Change to Normal Retirement Age

Where data is not available, or contractual requirements limit the option of retrenching on a plan’s current low normal retirement date, what options are available for meeting the regulatory requirements for such provisions?

RESPONSE

The regulation on normal retirement dates requires that a normal retirement age be an age, and requires justification for setting the age below age 62 as permitted by PPA. One issue of concern to the Service is allowing in-service payment. Plans may be amended to add an acceptable NRD while adding an early retirement provision based on the current NRD so that participants who actually retire are provided the same benefit as provided by the current plan.

The above Response is a summary, prepared by representatives of the Program Committee, of the oral responses to the question posed to certain staff members of the Treasury and IRS, which represent only personal views of the individuals who provided them. Accordingly, the Response does not necessarily represent the positions of the Treasury or the IRS and cannot be relied upon by any taxpayer for any purpose.

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