Distributions During Working Retirement

Consolidated Appropriations Act, 2021

Under the Consolidated Appropriations Act, 2021, a pension plan will not fail to meet qualification requirements solely because it provides for a distribution to an employee who has attained 59 ½ (age 55 for certain employers in the building and construction industry) and who is not separated from employment at the time of the distribution.

In other words, a pension plan may allow for a distribution to an employee who has attained 59 ½ (age 62 for plan years beginning before 2020) and who continues to work. For participants in certain multiemployer plans in the building and construction industry, who were participants of such plan before April 30, 2013, the age for in-service distributions may be 55 instead of 59 ½.

Note that a qualified plan is not required to provide for in-service distributions at any particular age or at all. For example, a plan that provides for in-service distributions commencing at age 62 is not required to be amended to provide for in-service distributions commencing at age 59 ½. A change in the in-service distribution minimum age in accordance with the reduced minimum age does not mean the normal retirement age changes as well. Any change to a pension plan’s definition of normal retirement age must continue to satisfy the requirements.

The changes for distributions in working retirement apply to distributions made before, on, or after the date of the enactment of the Consolidated Appropriations Act, 2021.

If you have any questions related to this or any other provision of the Consolidated Appropriations Act, 2021, please call our office. We are here to help!

Call us at 214-731-7664 or email info@afairchildcpa.com