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<nobr>Feb 11, 2005</nobr>
ERIC Files Comments on Proposed Rule Regarding Distributions From a Pension Plan Under a Phased Retirement Program
The ERISA Industry Committee (ERIC) recommended a series of changes in response to the Treasury Department's proposed regulations on pension plan distributions under a phased retirement plan.
Growing numbers of employers and employees have expressed interest in phased retirement programs that allow employees who are approaching, or who are have reached, retirement age to receive retirement benefits while working a reduced schedule. For employees, phased retirement offers myriad benefits including: - a smoother and more gradual transition during an important life stage;
- the opportunity to try retirement before fully retiring; and
- an income stream even as the number of hours on the job are reduced.
Meanwhile, phased retirement plans allow employers to maintain the services of valued senior workers they would otherwise lose.
ERIC’s comments respond to proposed regulations published in the Nov. 10, 2004, Federal Register (69 Fed. Reg. 65,108). Among the issues addressed in the comments:- the age of an employee covered under a phased retirement plan;
- the administration of Treasury’s proposed “pro rata” rule;
- the handling of part-time employees under a phased retirement plan;
- the administration of nondiscrimination rules under phased retirement plans;
- the handling of “highly compensated” workers entering into phased retirement.
“Treasury’s proposal represents a good first step in providing the guidance Baby Boomers and employers interested in phased retirement options will need,” said Mark Ugoretz, ERIC’s president. "However, the regulations will require substantial revision to provide a framework that is workable for employers and employees. We look forward to working with Treasury toward that end."
For further information or an interview with ERIC professional staff, please contact Rita Zeidner at 202-789-1400
Websites:
ERIC Comments on Distributions from a Pension Plan under a Phased Retirement Program
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