IRS Defines Normal Retirement Age - Buckconsultants.com

Volume 30 | Issue 37 | June 6, 2007
and what kind of proof employers will need to maintain to justify an age. It is interesting that this standard
was adopted considering that the IRS eliminated it from its 1978 guidance.
The regulations also provide specific guidelines for NRA as follows –
• An NRA of age 62 is deemed to meet the above definition.
• If an employer uses an NRA of age 55 to 62, the employer’s determination that it meets the industry
standard will be given deference, as long as it is borne out by the facts and circumstances.
• An NRA below age 55 is presumed not to be acceptable, but a case can be made to the IRS and a
determination made that it meets the industry standard.
• An NRA of age 50 for qualified public safety employees is deemed to meet the definition.
BUCK COMMENT. Thus, if a plan’s NRA does not qualify under the above guidelines, it will be a
disqualifying provision, which will need to be changed retroactively by the end of the plan’s remedial
amendment period (e.g., by January 31, 2008 for Cycle B filers).
Effective Dates
The regulations are generally effective May 22, 2007, with later dates applying for governmental and collectively
bargained plans.
Transition Rule for Purposes of Section 411(d)(6)
Compliance with the final regulations may require a plan to provide a later NRA than it currently provides, which
would eliminate a participant’s right to an in-service distribution before reaching the revised NRA in violation of the
Section 411(d)(6) anti-cutback rules. The regulations therefore amend current regulations under Section 411 to
provide that such a plan amendment will not be a violation of Section 411(d)(6), but only for a plan amendment
adopted after May 22, 2007 and on or before the last day of the applicable remedial amendment period.
However, there is no relief with respect to other Section 411 rules.
Conclusion
Most plan sponsors will find that they are in compliance with the new NRA standards. However, some plan
sponsors, particularly those of certain cash balance and hybrid plans, will have to work quickly to redefine their
NRA to avoid plan disqualification.
Buck’s consultants are available to discuss your options under these new rules.
This FYI is intended to provide general information. It does not offer legal advice or purport to treat all the issues surrounding
any one topic.
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