HCPOA NEWS

IRS Further Delays Implementation of New Rule on "Normal Retirement Age"

Nov 10, 2009 (03:11:15)

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Chuck Canterbury, National President of the Fraternal Order of Police, welcomed last week's news that the Internal Revenue Service (IRS) has again delayed implementation of a new rule which would have negatively impacted law enforcement officers by creating a new definition of "normal retirement age." "We expected this," Canterbury said. "We've been working in concert with other stakeholder groups since the rule was proposed and, in fact, will be meeting with IRS officials in a few weeks to talk about this and other issues." Defined benefit plans of State and local governments typically define their normal retirement age as the date or age when participants qualify for normal or unreduced retirement benefits under the plan. Typically, this age is tied to years of service, usually ranging from 20 to 25 years. The Federal government has never prohibited this practice for governmental pension plans. In fact, the IRS routinely approved service-based normal retirement ages through the determination letter process. However, a new rule, proposed in 2007, would require 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." For plans in which "substantially all" of the participants are public safety officers, the new "normal retirement age" would be 50. "This rule was originally to have gone into effect in January of this year," Canterbury explained. "But efforts by the FOP and others pushed back the implementation to 2011 and, last week, the IRS announced they were going to further delay the implementation of the rule until 2013. It is our goal to remove this provision entirely from the regulations." Had the rule gone into effect, it would have had an immediate and certainly very negative impact on many individuals as well as pension plans, many of which are governed by State statutes or State Constitutions and others which could be part of an existing labor contracts. You can view a copy of IRS Notice 2009-86 on the IRS website: http://www.irs.gov/pub/irs-drop/n-09-86.pdf 11/06/2009

For more information, please contact the FOP's National Legislative Office at 202-547-8189 or via e-mail at natlfop@fop.net.

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