Part III. Administrative, Procedural, and Miscellaneous

Further Extension of Effective Date of Normal Retirement Age Regulations for Governmental Plans

Notice 2009–86

I. Purpose

The Service and Treasury intend to extend the time by which a governmental plan must comply with final regulations on distributions from a pension plan upon attainment of normal retirement age (“the NRA regulations”) beyond the date previously announced in Notice 2008–98, 2008–2 C.B. 1080. These regulations were published in the Federal Register as T.D. 9325, 2007–1 C.B. 1386 (72 FR 28604) on May 22, 2007. Taking into account this extension, the NRA regulations will be effective for a governmental plan (as defined in § 414(d) of the Internal Revenue Code) for plan years beginning on or after January 1, 2013. This notice does not change the effective date of the NRA regulations for a plan that is not a governmental plan or modify the relief previously provided in Notice 2007–69, 2007–2 C.B. 468.

II. Background

Section 411(a)(8) provides that the term “normal retirement age” means the earlier of (A) the time a plan participant attains normal retirement age under the plan or (B) the later of age 65 or the fifth anniversary of the time a plan participant commenced participation in the plan. A plan’s normal retirement age is relevant for a number of purposes, including for purposes of determining the date at which a participant is eligible to receive his or her normal retirement benefit and calculating the amount of the benefit received.

Section 1.401(a)–1(b)(1)(i) of the Income Tax Regulations requires a pension plan to be maintained primarily to provide systematically for the payment of definitely determinable benefits after retirement. The NRA regulations amended § 1.401(a)–1(b)(1)(i) to provide an exception to the rule that pension benefits be paid only after retirement by permitting a

pension plan to commence payment of retirement benefits to a participant after the participant has attained normal retirement age even if the participant has not yet had a severance from employment with the employer maintaining the plan.

The NRA regulations require a pension plan’s normal retirement age to 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. The NRA regulations provide that a normal retirement age of 62 or later (or age 50 or later, in the case of a plan in which substantially all of the participants are qualified public safety employees (within the meaning of § 72(t)(10)(B))) is deemed to satisfy this requirement, and a normal retirement age lower than 55 is presumed not to satisfy the requirement unless the Commissioner determines otherwise on the basis of facts and circumstances. Whether a normal retirement age that is at least 55 but below 62 satisfies the requirement is based on facts and circumstances.

The NRA regulations were generally effective May 22, 2007, with a later effective date for governmental plans and certain collectively bargained plans. For governmental plans, the NRA regulations were originally effective for plan years beginning on or after January 1, 2009.

Notice 2007–69 provided temporary relief for certain plans that may have had to change their definition of normal retirement age to satisfy the NRA regulations. The relief was available to certain plans that might otherwise have been required to be amended to raise the plan’s normal retirement age effective before the first day of the first plan year beginning after June 30, 2008. Because the NRA regulations were not originally effective for governmental plans until 2009, the relief in Notice 2007–69 did not apply to governmental plans.

Notice 2007–69 pointed out that the NRA regulations do not contain a safe harbor or other guidance with respect to a normal retirement age conditioned on the completion of a stated number of years of service, stating that a plan under which a participant’s normal retirement age changes to an earlier date upon comple

tion of a stated number of years of service typically will not satisfy the vesting or accrual rules of § 411. The notice asked for comments from sponsors of plans that are not subject to the requirements of § 411, such as governmental plans, on whether such a plan may define normal retirement age based on years of service. Specifically, comments were requested on whether and how a pension plan with a normal retirement age conditioned on the completion of a stated number of years of service satisfies the requirement in § 1.401(a)–1(b)(1)(i) that a pension plan be maintained primarily to provide for the payment of definitely determinable benefits after retirement or attainment of normal retirement age and how such a plan satisfies the pre-ERISA vesting rules. A number of comments were received in response to Notice 2007–69, including comments relating to the effect of the NRA regulations on governmental plans.

In Notice 2008–98, the Service and Treasury announced their intention to amend the NRA regulations to change the effective date for governmental plans to plan years beginning on or after January 1, 2011.

III. Further Extension of Effective Date of NRA Regulations for Governmental Plans

The Service and Treasury intend to amend the NRA regulations to change the effective date for governmental plans to plan years beginning on or after January 1, 2013. Governmental plan sponsors may rely on this notice with respect to the extension until such time as the NRA regulations are so amended. This extension will provide additional time for the Service and Treasury to consider comments received with respect to the effect of the NRA regulations on governmental plans.

DRAFTING INFORMATION

The principal author of this notice is James P. Flannery of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this notice, please

November 16, 2009 629 2009–46 I.R.B.

POSSIBLE CHANGES

The Internal Revenue Service is considering modifying the requirement that an eligible individual receive advance permission from the Internal Revenue Service for the trustee to make the income tax return on behalf of the eligible individual prior to filing the eligible individual’s income tax return. Under the possible modifications being considered by the Internal Revenue Service:

terest in a blind trust that meets the requirements of section 102(f)(3) of the Appendix to Title 5 of the United States Code (or any successor provision of the United States Code) would request permission, in writing, for the trustee of the blind trust to execute and file the Federal income tax return of the eligible individual.

sion and a power of attorney (or copy thereof) that grants the trustee authority to sign the return, to receive (but not endorse or collect) a refund check, to execute a waiver of restriction on assessment or collection, to execute a waiver of notice of disallowance, to execute a consent to extend the period for assessment or collection, and to execute a closing agreement would be submitted to the Internal Revenue Service with the eligible individual’s Federal income tax return when the tax return is filed.

interest in a blind trust that meets the requirements of section 102(f)(3) of the Appendix to Title 5 of the United States Code (or any successor provision of the United States Code) and who submits the written request for permission and power of attorney consistent with these procedures, would be considered to have shown good cause for having the return filed by the trustee, and would be deemed to have been granted such permission.

separate request for permission for the trustee to execute and file the Federal income tax return each taxable year.

contact Mr. Flannery via e-mail at retirementplanquestions@irs.gov.

Obtaining Permission for a Trustee to Make the Income Tax Return of an Eligible Individual

Notice 2009–87

PURPOSE

This notice invites public comments on possible modifications to the conditions established in Rev. Proc. 80–59, 1980–2 C.B. 855, under which a trustee of a blind trust that meets the requirements of section 102(f)(3) of the Appendix to Title 5 of the United States Code (or any successor provision of the United States Code) may execute and file an income tax return on behalf of any individual described in section 101(f) of the Appendix to Title 5 of the United States Code (or any successor provision of the United States Code) (“eligible individual”).

BACKGROUND

Section 102(f)(4)(B) of the Appendix to Title 5 of the United States Code provides that, in the case of a trust created for the benefit of an eligible individual, an asset placed in trust will not be considered a financial interest of the individual for purposes of section 208 of Title 18 of the United States Code, and any other conflict of interest statutes or regulations, if certain requirements are met, including giving the trustee the power to prepare on behalf of the individual the personal income tax return and similar returns which may contain information relating to the trust.

Section 1.6012–1(a)(5) of the Income Tax Regulations, concerning returns made by agents, permits a return to be made by an agent if the taxpayer requests permission, in writing, and the appropriate IRS official determines that good cause exists for permitting an agent to make the return. That section provides that whenever a return is made by an agent it must be accompanied by a power of attorney (or copy thereof) authorizing the agent to represent the principal in making the return.

Section 601.504(a) of the Conference and Practice Requirements, Statement of

Procedural Rules, provides that a power of attorney is required when the taxpayer wishes to authorize a recognized representative to represent the taxpayer before the Internal Revenue Service or perform the following acts on behalf of the taxpayer: (1) offer or execute either a waiver of restriction on assessment or collection of a deficiency in tax or a waiver of notice of disallowance of a claim for credit or refund on behalf of the taxpayer, (2) execute a consent to extend the statutory period for assessment or collection of a tax on behalf of the taxpayer, (3) execute a closing agreement on behalf of the taxpayer, (4) receive (but not endorse or collect) a check in payment of any refund of taxes, penalties or interest on behalf of the taxpayer, or (5) sign a tax return under a certain conditions.

Section 601.506(a) of the Conference and Practice Requirements, Statement of Procedural Rules, provides that any notice or communication (or a copy thereof) required or permitted to be given to a taxpayer in any matter before the Internal Revenue Service shall be given to the taxpayer and, unless restricted by the taxpayer, to the taxpayer’s recognized representative.

Revenue Procedure 80–59, 1980–2 C.B. 855, requires an eligible individual to receive advance written permission from the appropriate IRS official for the trustee to make the income tax return on behalf of the eligible individual prior to filing of the eligible individual’s income tax return. The trustee must submit the letter granting the trustee permission to file the eligible individual’s return when the trustee files the return. In addition, the return and letter must be accompanied by a power of attorney (or copy thereof) that grants the trustee authority to sign the return, to receive (but not endorse or collect) a refund check, to execute a waiver of restriction on assessment or collection, to execute a waiver of notice of disallowance, to execute a consent to extend the period for assessment or collection, and to execute a closing agreement. Finally, notwithstanding the provisions of section 601.506(a) of the Conference and Practice Requirements, Statement of Procedural Rules, all notices or other written communication required or permitted to be given to the eligible individual are given only to the trustee.

2009–46 I.R.B. 630 November 16, 2009

the subject line of any electronic communications.

Comments, if any, must be received by November 30, 2009. All comments will be available for public inspection and copying.

DRAFTING INFORMATION

The principal author of this notice is Richard S. Goldstein of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this notice, contact Richard S. Goldstein at (202) 622–3400 (not a toll-free call).

REQUESTS FOR PUBLIC COMMENT

The Internal Revenue Service requests comments on whether the existing procedures for an eligible individual to receive permission from the Internal Revenue Service for a trustee to make the eligible individual’s income tax return should be modified. The Internal Revenue Service is particularly interested in receiving comments on whether taxpayer burden will be reduced if the requirement that an eligible individual receive advance permission from the Internal Revenue Service for the trustee to make the income tax return on behalf of the eligible individual is eliminated and any other ways that the Internal

Revenue Service can reduce taxpayer burden or simply these procedures.

Written comments should be sent to: CC:PA:LPD:PR (Notice 2009–87), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044. Alternatively, comments may be hand delivered between the hours of 8:00 a.m. and 4:00 p.m. Monday to Friday to CC:PA:LPD:PR (Notice 2009–87), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington, D.C. Comments may also be transmitted electronically via the following e-mail address: Notice.Comments@irscounsel.treas.gov. Please include “Notice 2009–87” in

November 16, 2009 631 2009–46 I.R.B.