Governmental Plans under Internal Revenue Code Section 401(a)


Under Internal Revenue Code (IRC) Section 414(d), a governmental plan is an IRC Section 401(a) retirement plan established and maintained for the employees of:

  • the United States or its agency or instrumentality,
  • a state or political subdivision, or its agency or instrumentality, or
  • an Indian tribal government or its subdivision, or its agency or instrumentality (participants must substantially perform services essential to governmental functions rather than commercial activities).

Other types of governmental plans include:

  • 403(b) tax-sheltered annuity plans,
  • 457 deferred compensation plans,
  • Certain grandfathered 401(k) plans adopted by a governmental entity before May 6, 1986.

Recent developments

Published guidance, determination letter rules and other developments affecting governmental plans

Normal retirement age

The IRS and Department of Treasury issued Notice 2012-29 PDF to announce their intent to issue guidance on the applicability of Treas. Reg. Section 1.401(a)-1(b) (the 2007 Normal Retirement Age regulations) to IRC Section 414(d) governmental plans.

The guidance under consideration would:

  • clarify that governmental plans don't need to have a definition of normal retirement age if they don't provide for in-service distributions before age 62, and
  • expand the age-50 safe harbor rule in the 2007 NRA regulations, which currently applies only for plans in which substantially all of the participants are qualified public safety employees, to also apply to a group substantially all of whom are qualified public safety employees (see Treas. Reg. Section 1.401(a)-1(b)(2)(v)). This would mean that a governmental plan could satisfy the normal retirement age requirement by using an NRA as low as 50 for qualified public safety employees, and a later NRA that otherwise satisfies the requirements in the 2007 NRA regulations for other participants.

The notice also states the IRS and Treasury's intention to extend the effective date of the 2007 NRA regulations for governmental plans to annuity starting dates that occur in plan years beginning on or after the later of:

  • January 1, 2015, 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 Notice 2012-29 for the extension until the 2007 NRA regulations are amended.

REG–147310–12, 2016-07 I.R.B. 336 contains proposed regulations that would provide rules on determining whether the normal retirement age under a governmental pension plan satisfies IRC Section 401(a) and whether the payment of definitely determinable benefits that commence at the plan's normal retirement age satisfies these requirements. These rules would affect governmental pension plans sponsors, administrators and participants.


  • Memorandum PDF – Processing of Governmental Plans Determination Letter Applications with respect to Vesting Issues (April 30, 2012)

Possible approaches to governmental plan guidance

The IRS and Department of Treasury solicited comments in 2012 on possible standards for determining if a retirement plan is a governmental plan under section 414(d) of the Internal Revenue Code and have announced guidance under consideration that would affect normal retirement age rules and extend the effective date of the 2007 NRA regulations.

Apply for a determination letter

How and why to request a determination as to whether the form of a governmental plan document satisfies applicable tax qualification requirements

Correct plan errors

Find, fix and avoid mistakes in governmental plans

Additional resources