March 3, 2016

IRS Accepts 55 and Older NRAs in Collectively Bargained Multiemployer Plans

The Internal Revenue Service (IRS) has just released an internal memorandum instructing its agents to accept normal retirement ages (NRAs) that are 55 or older in multiemployer plans, provided that the plan is maintained pursuant to at least one collective bargaining agreement.

The memorandum is described as interim guidance and is directed to IRS agents reviewing determination letters and conducting audits. It is both dated and effective February 23, 2016, and has an expiration date of February 22, 2018. 

In the first Cycle D, multiemployer plans with NRAs between 55 and 62 (low NRAs) generally provided plan-specific substantiating data for their low NRAs and received favorable letters. In reviewing second Cycle D determination letter submissions, and in recent audits, the IRS has been asking these plans to provide industry-wide information as additional substantiation. That industry-wide information generally is not available, and plans were being asked to choose among changing their NRAs, accepting a caveat on the issue in their determination letters and appealing the issue to a higher level in the IRS. This memorandum appears to resolve the problem for most multiemployer plans at this time.  

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Serena Simons

Serena Simons

SVP, National Retirement Compliance Practice Leader