Firm Seeks Combination Safe Harbor for Normal Retirement Age Regs

I am writing to you on behalf of clients maintaining qualified governmental plans including specifically public safety retirement plans. On their behalf, I offer the following comments on the proposed regulation.

The Proposed Regulations include a proposed safe harbor at Prop. Treas. Reg. Section 1.401(a)-1(b)(2)(v)(H), i.e., Service-based safe harbor for qualified public safety employees. This safe harbor would be available for a qualified public safety plan where the normal retirement age is the age credited for at least 20 years of service under the plan. However, it is not uncommon for governmental plans in general, and public safety plans in particular to specify as a normal retirement age a date that is the earlier of a fixed age or a number of years of service. For example, such a plan might specify a normal retirement age that is the earlier of age 60 or 25 years of service. We urge the Treasury to include such an alternative safe harbor in its final regulations.

Such a safe harbor would be not unlike the safe harbor already included in the proposed regulations for governmental plans in general set forth at Prop. Labor Reg. Section 1.401(a)-1(b)(2)(v)(E), the Service-based combination safe harbor. The proposed regulations describe this safe harbor as being available for example, where the governmental plan has a normal retirement age that is the earlier of: (1) the participant's age when the participant has been credited with 25 years of service under the plan and (2) the later of age 60 or the age when the participant has been credited with 5 years of service under the plan. Thus, this safe harbor is quite similar to the safe harbor proposed by this comment to be included in any final regulations. However, because the service-based combination safe harbor relies upon the second component being the previously proposed safe harbor of the later of age 60 and 5 years of service, it would not be available to those plans that provide a normal retirement age of the earlier of a fixed age and a specified number of years of service.

Given that such provisions are not uncommon in governmental plans, and particularly in public safety plans and where the two components would be an earlier of, for example, age 60 and 25 years of service would be representative of when employees in the industry actually retire, we ask that such a safe harbor be included as a safe harbor for all governmental plans. Such a provision would allow a single retirement age not just for those actually directly engaged in public safety, but for ancillary personnel and would be representative of the time when such employees generally actually retire in the industry.

Should you have questions, please do not hesitate to contact me.