January 28, 2016

Treasury Proposes New Normal Retirement Age Safe Harbors for Governmental Plans

On January 27, 2016, the Department of the Treasury (Treasury) issued proposed regulations (Proposed Regulations) that provide normal retirement age (NRA) rules tailored to the needs of governmental plans. Governmental plans may, but are not required to, rely on the Proposed Regulations for periods preceding the effective date. If final regulations are more restrictive, the final regulations will be applied without retroactive effect.  

Generally, under the Proposed Regulations, if a governmental plan’s NRA does not satisfy one of the new safe harbors listed below, the NRA must satisfy the basic provisions of the 2007 NRA regulations under which the NRA must 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 (based on all the relevant facts and circumstances, with an age 62 safe harbor). Governmental plans that do not permit in-service distributions before age 62 are not required to comply with either the 2007 NRA regulations or any of the safe harbors under the Proposed Regulations.

Further, under the Proposed Regulations, a governmental plan is not required to state an explicit NRA. In the absence of an explicit NRA the plan’s NRA is the earliest age at which the participant has the right to retire without the consent of the employer and to receive unreduced (for age) retirement benefits.

The safe harbors available to all governmental plans under the Proposed Regulations are as follows:

  1. Age 60 and 5 years of service;
  2. Age 55 and 10 years of service;
  3. Combined age and years of service of 80 or more;
  4. Any age with 25 years of service (in combination with a safe harbor that includes an age).

For qualified public safety officers in a plan, additional NRA safe harbors are as follows:

  1. Age 50;
  2. Combined age and years of service of 70 or more;
  3. Any age with 20 years of service.

Note that a governmental plan may have different NRAs for various employee groups in the plan, including a different NRA for qualified public safety officers, and may use a “pre-age 65 age-only” NRA safe harbor for qualified public safety officers, but not for other participants.

Comments and requests for a public hearing are due April 26, 2016.

Share this page


Compliance Services

Segal helps our clients navigate the maze of federal, state and local laws and regulations related to benefit plans.

Learn more about our compliance services

Contact an Expert

Serena Simons

Serena Simons

SVP, National Retirement Compliance Practice Leader