Guidance on Normal Retirement Age Rules for Governmental Plans


The IRS and Department of Treasury recently issued Notice 2012-29 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 Internal Revenue Code 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.