Federal Register / Vol. 81, No. 17 / Wednesday, January 27, 2016 / Proposed Rules 4599 

1Letter from American Petroleum Institute (Jan. 

7, 2016). Comments are available on the 

Commission’s Web site at http://www.sec.gov/

comments/s7-25-15/s72515.shtml. 

the inclusion in the comment file of any 

such materials will be made available 

on the SEC’s Web site. To ensure direct 

electronic receipt of such notifications, 

sign up through the ‘‘Stay Connected’’ 

option at www.sec.gov to receive 

notifications by email. 

FOR FURTHER INFORMATION CONTACT: 

Shehzad K. Niazi, Special Counsel; 

Office of Rulemaking, Division of 

Corporation Finance, at (202) 551–3430; 

or Elliot Staffin, Special Counsel; Office 

of International Corporate Finance, 

Division of Corporation Finance, at 

(202) 551–3450, U.S. Securities and 

Exchange Commission, 100 F Street NE., 

Washington, DC 20549. 

SUPPLEMENTARY INFORMATION: The 

Commission has requested comment on 

a release proposing new Rule 13q–1 and 

an amendment to Form SD to 

implement Section 1504 of the DoddFrank Wall Street Reform and Consumer 

Protection Act. Section 1504 added 

Section 13(q) to the Securities Exchange 

Act of 1934, which directs the 

Commission to issue rules requiring 

resource extraction issuers to include in 

an annual report information relating to 

any payment made by the issuer, a 

subsidiary of the issuer, or an entity 

under the control of the issuer, to a 

foreign government or the Federal 

Government for the purpose of the 

commercial development of oil, natural 

gas, or minerals. Section 13(q) requires 

a resource extraction issuer to provide 

information about the type and total 

amount of payments made for each 

project related to the commercial 

development of oil, natural gas, or 

minerals, and the type and total amount 

of payments made to each government. 

In addition, Section 13(q) requires a 

resource extraction issuer to provide 

certain information regarding those 

payments in an interactive data format, 

as specified by the Commission. 

The Commission originally requested 

that initial comments on the release be 

received by January 25, 2016 and that 

reply comments, which may respond 

only to issues raised in the initial 

comment period, be received by 

February 16, 2016. The Commission has 

received a request for an extension of 

time for public comment on the 

proposal to, among other things, allow 

for the collection of information and to 

improve the quality of responses.1 The 

Commission believes that providing the 

public additional time to consider 

thoroughly the matters addressed by the 

release and to submit comprehensive 

responses to the release would benefit 

the Commission in its consideration of 

final rules. Therefore, the Commission 

is extending the comment period for 

Release No. 34–76620 ‘‘Disclosure of 

Payments by Resource Extraction 

Issuers’’ until February 16, 2016 for 

initial comments and until March 8, 

2016 for reply comments. 

By the Commission. 

Dated: January 21, 2016. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2016–01545 Filed 1–26–16; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–147310–12] 

RIN–1545–BM22 

Applicability of Normal Retirement Age 

Regulations to Governmental Pension 

Plans 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations under section 

401(a) of the Internal Revenue Code 

(Code). These regulations would 

provide rules relating to the 

determination of whether the normal 

retirement age under a governmental 

plan (within the meaning of section 

414(d) of the Code) that is a pension 

plan satisfies the requirements of 

section 401(a) and whether the payment 

of definitely determinable benefits that 

commence at the plan’s normal 

retirement age satisfies these 

requirements. These regulations would 

affect sponsors and administrators of 

governmental pension plans, as well as 

participants in such plans. 

DATES: Comments and requests for a 

public hearing must be received by 

April 26, 2016. 

ADDRESSES: Send submissions to 

CC:PA:LPD:PR (REG–147310–12), Room 

5205, Internal Revenue Service, P.O. 

Box 7604, Ben Franklin Station, 

Washington, DC 20044. Submissions 

may be hand-delivered Monday through 

Friday between the hours of 8 a.m. and 

4 p.m. to CC:PA:LPD:PR (REG–147310– 

12), Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue NW., 

Washington, DC 20224, or sent 

electronically via the Federal 

eRulemaking Portal at 

www.regulations.gov (IRS REG–147310– 

12). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Pamela Kinard at (202) 317–4148 or 

Robert Walsh at (202) 317–4102; 

concerning the submission of comments 

or to request a public hearing, 

Oluwafunmilayo (Funmi) Taylor, (202) 

317–7180 or (202) 317–6901 (not tollfree numbers). 

SUPPLEMENTARY INFORMATION: 

Background 

I. Normal Retirement Age Generally 

This document contains proposed 

regulations under section 401(a) of the 

Internal Revenue Code (Code). Section 

401(a) sets forth the qualification 

requirements for a trust forming part of 

a stock bonus, pension, or profit-sharing 

plan of an employer. Several of these 

qualification requirements are based on 

a plan’s normal retirement age, 

including the regulatory interpretation 

of the requirement that the plan provide 

for definitely determinable benefits 

(generally after retirement). Final 

regulations defining normal retirement 

age for the definitely determinable 

requirement were published in the 

Federal Register as TD 9325 on May 22, 

2007 (72 FR 28604) (2007 NRA 

regulations). 

Section 1.401(a)–1(b)(1) of the 2007 

NRA regulations generally requires that 

a pension plan be established and 

maintained primarily to provide 

systematically for the payment of 

definitely determinable benefits over a 

period of years, usually for life, after 

retirement. The 2007 NRA regulations 

include two exceptions to the general 

rule that payments commence after 

retirement: (1) Payments can commence 

after attainment of normal retirement 

age; and (2) in accordance with section 

401(a)(36), payments can commence 

after an employee reaches age 62. 

Section 1.401(a)–1(b)(2)(i) of the 2007 

NRA regulations provides that, as a 

general rule, a normal retirement age 

under a pension plan 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 (reasonably representative 

requirement). Section 1.401(a)– 

1(b)(2)(ii) of the 2007 NRA regulations 

provides that a normal retirement age of 

age 62 or later is deemed to satisfy the 

reasonably representative requirement. 

Under section 1.401(a)–1(b)(2)(iii) of the 

2007 NRA regulations, whether a 

normal retirement age that is not earlier 

than age 55 but is below age 62 satisfies 

the reasonably representative 


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4600 Federal Register / Vol. 81, No. 17 / Wednesday, January 27, 2016 / Proposed Rules 

1Section 411(f) provides a special normal 

retirement age rule that applies only to certain 

defined benefit plans that are subject to section 

411(a) through (d). Section 411(f) was added to the 

Code on December 16, 2014 by Section 2 of 

Division P of the Consolidated and Further 

Continuing Appropriations Act, 2015, Public Law 

113–235 (128 Stat. 2130 (2014)), which also made 

a corresponding change to section 204 of the 

Employee Retirement Income Security Act of 1974, 

Public Law 93–406 (88 Stat. 829 (1974)), as 

amended (ERISA). Under section 101 of 

Reorganization Plan No. 4 of 1978 (92 Stat. 3790), 

the Secretary of the Treasury has interpretive 

jurisdiction over the subject matter addressed in 

section 411(f) for purposes of ERISA, as well as the 

Code. 

2The term governmental plan also includes a 

plan that is established and maintained by an 

Indian tribal government (as defined in section 

7701(a)(40)), a subdivision of an Indian tribal 

government (determined in accordance with section 

7871(d)), or an agency or instrumentality of either, 

and all the participants of which are employees of 

such entity substantially all of whose services as 

such an employee are in the performance of 

essential governmental functions but not in the 

performance of commercial activities (whether or 

not an essential government function). In addition, 

the term governmental plan includes any plan to 

which the Railroad Retirement Act of 1935 or 1937 

(49 Stat. 967, as amended by 50 Stat. 307) applies 

and which is financed by contributions required 

under that Act and any plan of an international 

organization that is exempt from taxation by reason 

of the International Organizations Immunities Act, 

Public Law 79–291 (59 Stat. 669). 

3Normal retirement age may also be relevant to 

participant eligibility for certain favorable tax 

treatment, including section 402(l) (providing an 

income exclusion of up to $3,000 annually for 

certain distributions for health insurance and longterm care insurance premiums to eligible retired 

public safety officers who separate from service by 

reason of disability or attainment of normal 

retirement age) and the special catch-up provisions 

under § 1.457–4(c)(3)(v)(A). 

4Even though Rev. Rul. 71–147 was superseded 

by Rev. Rul. 80–276, 1980–1 C.B. 131, for plans 

subject to section 411(a)(8), Rev. Rul. 71–147 

remains valid guidance for purposes of the preERISA vesting rules. 

requirement is based on a facts and 

circumstances analysis. Section 

1.401(a)–1(b)(2)(iv) of the 2007 NRA 

regulations provides that a normal 

retirement age that is lower than age 55 

is presumed not to satisfy the 

reasonably representative requirement 

unless the Commissioner determines 

otherwise on the basis of facts and 

circumstances. Under § 1.401(a)– 

1(b)(2)(v) of the 2007 NRA regulations, 

in the case of a pension plan in which 

substantially all of the participants are 

qualified public safety employees 

(within the meaning of section 

72(t)(10)(B)), a normal retirement age of 

age 50 or later is deemed to satisfy the 

reasonably representative requirement. 

As previously explained, normal 

retirement age is used by a pension plan 

in a variety of circumstances relating to 

plan qualification. Generally, in the case 

of a pension plan that is not a 

governmental plan under section 414(d) 

and is subject to the rules of section 

411(a) through (d), normal retirement 

age is used in applying the rules under 

section 411(b) that are designed to 

preclude avoidance of the minimum 

vesting standards through the 

backloading of benefits (such as a 

benefit formula under which the rate of 

benefit accrual is increased 

disproportionately for employees with 

longer service). Normal retirement age is 

also relevant for such a plan for other 

purposes, including the application of 

the rules relating to suspension of 

benefits under section 411(a)(3)(B), plan 

offset rules under section 

411(b)(1)(H)(iii), and the minimum 

benefit rules applicable to non-key 

employee participants in the case of a 

top-heavy defined benefit plan under 

section 416. In addition, for such a plan, 

section 411(a)(8) defines the term 

normal retirement age as the earlier of 

(a) the time a participant attains normal 

retirement age under the plan or (b) the 

later of the time a plan participant 

attains age 65 or the 5th anniversary of 

the time a plan participant commenced 

participation in the plan.1

II. Normal Retirement Age Under a 

Governmental Plan 

A. Application of Section 411 to 

Governmental Plans 

Section 414(d) of the Code provides 

that the term governmental plan 

generally means a plan established and 

maintained for its employees by the 

Government of the United States, by the 

government of any State or political 

subdivision thereof, or by any agency or 

instrumentality of any of the foregoing.2

See sections 3(32) and 4021(b)(2) of 

ERISA for definitions of the term 

governmental plan for purposes of title 

I and title IV of ERISA, respectively. 

Section 411(e)(1) of the Code provides 

that the provisions of section 411, other 

than section 411(e)(2), do not apply to 

a governmental plan. Under section 

411(e)(2), a governmental plan is treated 

as meeting the requirements of section 

411, for purposes of section 401(a), if 

the plan meets the vesting requirements 

resulting from the application of 

sections 401(a)(4) and 401(a)(7) as in 

effect on September 1, 1974 (pre-ERISA 

vesting rules). The only requirements 

under section 411 that apply to a 

governmental plan are the pre-ERISA 

vesting rules under section 411(e)(2). 

Thus, the definition of normal 

retirement age under section 411(a)(8) 

does not apply to a governmental plan. 

In addition, other rules of section 411, 

including section 411(a)(3)(B) (related to 

suspension of benefits), section 

411(b)(1) (related to backloading of 

benefits in a defined benefit plan), and 

section 411(b)(1)(H)(iii) (related to 

offsets after normal retirement age) do 

not apply to a governmental plan. 

Therefore, except for specific 

circumstances in which in-service 

benefit payments are permitted under 

§ 1.401(a)–1(b)(1), the definition of 

normal retirement age need not be used 

by a governmental plan for the same 

purposes that apply to a plan subject to 

section 411(a) through (d).3

B. Pre-ERISA Vesting Requirements for 

Governmental Plans 

Under section 411(e)(2), a normal 

retirement age under a governmental 

plan must satisfy the pre-ERISA vesting 

rules. The pre-ERISA vesting rules 

applicable to governmental plans 

contain two basic components: (a) Rules 

relating to vesting and (b) rules relating 

to the right to commence benefits 

without reduction for early 

commencement. Rev. Rul. 66–11, 1966– 

1 C.B. 71, and Rev. Rul. 68–302, 1968– 

1 C.B. 163, illustrate the interplay 

between normal retirement age under 

the pre-ERISA vesting rules and section 

401(a). As described in these rulings, to 

satisfy the requirements of section 

401(a), a plan that is subject to the preERISA vesting rules must provide for 

full vesting of the contributions made to 

or benefits payable under the plan for 

any employee who has attained normal 

retirement age under the plan and 

satisfied any reasonable and uniformly 

applicable requirements as to length of 

service or participation described in the 

plan. For more information about these 

rules, see Part 5(c) of Publication 778, 

Guides for Qualification of Pension, 

Profit-Sharing, and Stock Bonus Plans 

(Pub. 778). 

Rev. Rul. 71–24, 1971–1 C.B. 114, 

illustrates the application of the preERISA vesting rules to benefits provided 

under a pension plan for employees 

who continue employment after normal 

retirement age. Rev. Rul. 71–24 includes 

an example under which benefits are 

permitted to commence during 

employment after normal retirement 

age. 

As described in Rev. Rul. 71–147,4

1971–1 C.B. 116, the normal retirement 

age in a pension or annuity plan under 

the pre-ERISA vesting rules is generally 

the lowest age specified in the plan at 

which the employee has the right to 

retire without the consent of the 

employer and receive retirement 

benefits based on the amount of the 

employee’s service to the date of 

retirement at the full rate set forth in the 


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Federal Register / Vol. 81, No. 17 / Wednesday, January 27, 2016 / Proposed Rules 4601 

plan (that is, without actuarial or similar 

reduction because of retirement before 

some later specified age). Rev. Rul. 71– 

147 does not explicitly require a plan to 

include a provision defining normal 

retirement age. Instead, a plan’s normal 

retirement age may be deduced from 

other plan provisions. As described in 

Rev. Rul. 71–147, although normal 

retirement age under a pension or 

annuity plan is ordinarily age 65, a plan 

may specify a lower age at which the 

employee has the right to retire without 

the consent of the employer and to 

receive retirement benefits based on the 

amount of the employee’s service at the 

full rate set forth in the plan if this 

lower age would be an age at which 

employees customarily retire in the 

particular company or industry, and if 

the provision permitting receipt of 

unreduced benefits at this age is not a 

device to accelerate funding. For more 

information about these rules, see also 

Part 5(e) of Pub. 778. 

III. Application of the 2007 NRA 

Regulations to Governmental Plans 

Notice 2007–69, 2007–2 C.B. 468, 

asked for comments ‘‘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.’’ Comments were received on a 

variety of issues, including comments 

that guidance should be issued to (1) 

clarify that governmental plans are not 

required to define normal retirement 

age, (2) provide safe harbor rules that 

would permit a governmental plan to 

define normal retirement age that 

includes a service component, and (3) 

provide that the age-50 safe harbor rule 

in § 1.401(a)–1(b)(2)(v) for qualified 

public safety employees can apply to 

these employees even if less than 

substantially all of a plan’s participants 

are qualified public safety employees. 

The 2007 NRA regulations provided 

that, in the case of governmental plans, 

the regulations would be effective for 

plan years beginning on or after January 

1, 2009. Notices 2008–98, 2008–44 

I.R.B. 1080, and 2009–86, 2009–6 I.R.B. 

629, provided that the Department of 

the Treasury and the IRS intended to 

amend the 2007 NRA regulations to 

change the effective date of the 2007 

NRA regulations for governmental plans 

to January 1, 2013. 

Notice 2012–29, 2012–18 I.R.B. 872, 

announced that the Department of the 

Treasury and the IRS intend to modify 

provisions of the 2007 NRA regulations 

as applied to governmental plans in two 

ways. First, Notice 2012–29 announced 

the intent to modify the regulations to 

clarify that a governmental plan that is 

not subject to section 411(a) through (d) 

and does not provide for the payment of 

in-service distributions before age 62 

will not fail to satisfy the requirement 

that the plan provide definitely 

determinable benefits to employees after 

retirement or attainment of normal 

retirement age merely because the 

pension plan does not have a definition 

of normal retirement age or does not 

have a definition of normal retirement 

age that satisfies the requirements of the 

2007 NRA regulations. 

Second, Notice 2012–29 announced 

the intent to modify the 2007 NRA 

regulations to provide that the rule 

deeming age 50 or later to be a normal 

retirement age that satisfies the 2007 

NRA regulations will apply to a group 

of employees substantially all of whom 

are qualified public safety employees, 

whether or not the group of qualified 

public safety employees are covered by 

a separate plan. Thus, under the 

intended modification, a governmental 

plan would be permitted to satisfy the 

reasonably representative requirement 

using a normal retirement age as low as 

50 for a group substantially all of whom 

are qualified public safety employees 

and a later normal retirement age that 

otherwise satisfies the 2007 NRA 

requirements for all other participants. 

Notice 2012–29 requested comments 

from governmental stakeholders on the 

guidance under consideration. Specific 

comments were requested on whether a 

new rule should be provided under 

which retirement after 20 to 30 years of 

service may be a normal retirement age 

that is reasonably representative of the 

typical retirement age for the industry in 

which qualified public safety employees 

are employed because these employees 

tend to have career spans that 

commence at a young age and continue 

over a limited number of years. Many 

commenters wrote that such a rule 

would be helpful and appropriate. 

Several commenters requested a rule 

that would permit a governmental plan 

to use the completion of 20 or more 

years of service as a normal retirement 

age for public safety employees. 

Comments were also requested on 

whether there are other categories of 

governmental employees who have 

career spans similar to qualified public 

safety employees for whom a rule 

should be provided that is similar to the 

safe harbor for qualified public safety 

employees. Many commenters 

recommended a rule that would permit 

governmental plans to use the 

completion of a number of years of 

service as a normal retirement age for all 

employees, not just qualified public 

safety employees. 

Notice 2012–29 also requested 

information on the overall retirement 

patterns of employees in government 

service to assist the Department of the 

Treasury and the IRS in determining the 

earliest age that is reasonably 

representative of the typical retirement 

ages for the industry in which these 

employees are employed. One 

commenter provided data on the 

retirement patterns and median normal 

retirement ages for participants in a 

state retirement system. 

Notice 2012–29 also provided that the 

Department of the Treasury and the IRS 

intend to amend the 2007 NRA 

regulations to modify the effective date 

of the 2007 NRA regulations for 

governmental plans to annuity starting 

dates that occur in plan years beginning 

on or after the later of (1) January 1, 

2015 or (2) the close of the first regular 

legislative session of the legislative body 

with the authority to amend the plan 

that begins on or after the date that is 

3 months after the final regulations are 

published in the Federal Register. 

Explanation of Provisions 

I. Overview 

These proposed regulations would 

provide guidance with respect to the 

applicability of the 2007 NRA 

regulations to governmental plans. 

These proposed regulations, when 

finalized, would provide guidance 

relating to the determination of whether 

the normal retirement age under a 

governmental plan satisfies the 

requirements of section 401(a) by 

amending the 2007 NRA regulations to 

provide additional rules for 

governmental plans. In addition, these 

proposed regulations would also 

include a minor change to the 2007 

NRA regulations to reflect the addition 

of section 411(f), which provides a 

special rule for determining a 

permissible normal retirement age that 

applies only to certain defined benefit 

plans that are not governmental plans. 

II. Use of Years of Service as a 

Component of the Pre-ERISA Vesting 

Rules 

In response to Notice 2012–29, the 

Department of the Treasury and the IRS 

received a range of comments regarding 

the pre-ERISA vesting rules that apply 

to a governmental plan’s normal 

retirement age. In particular, the 

Department of the Treasury and the IRS 

received many comments requesting 


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4602 Federal Register / Vol. 81, No. 17 / Wednesday, January 27, 2016 / Proposed Rules 

rules that would permit governmental 

plans to define normal retirement age by 

reference to a period of service. 

Comments also focused on whether a 

governmental plan is required to 

include an explicit definition of normal 

retirement age. 

As previously stated, a normal 

retirement age under a governmental 

plan must satisfy the pre-ERISA vesting 

rules. The Department of the Treasury 

and the IRS generally agree with those 

commenters who indicated that the preERISA vesting rules applicable to 

normal retirement age may be read to 

permit a governmental plan to use a 

normal retirement age that reflects a 

period of service. Under pre-ERISA 

vesting rules, use of a period of service 

to determine normal retirement age 

under a governmental plan would be 

permissible if the period of service used 

is reasonable and uniformly applicable 

and the other pre-ERISA rules related to 

normal retirement age are satisfied. One 

of the pre-ERISA rules permits a 

governmental plan to specify a normal 

retirement age that is lower than age 65 

if that age represents the age at which 

employees customarily retire in the 

industry. 

Under the pre-ERISA rules related to 

normal retirement age, the terms of a 

governmental plan are not required to 

include an explicit definition of the 

term normal retirement age in order to 

satisfy section 401(a). However, in the 

absence of an explicit definition of 

normal retirement age, the terms of the 

plan must specify the earliest age at 

which a participant has the right to 

retire without the consent of the 

employer and to receive retirement 

benefits based upon the amount of the 

participant’s service on the date of 

retirement at the full rate set forth in the 

plan (that is, without actuarial or similar 

reduction because of retirement before 

some later specified age). That age (the 

earliest age described in the preceding 

sentence) will be considered the plan’s 

normal retirement age for purposes of 

any statutory or regulatory requirements 

based on a normal retirement age. 

Consistent with Notice 2012–29, the 

proposed regulations would provide 

that a governmental plan that does not 

provide for the payment of in-service 

distributions before age 62 would not 

fail to satisfy § 1.401(a)–1(b)(1) under 

these proposed regulations merely 

because the pension plan has a normal 

retirement age that is earlier than 

otherwise permitted under the 

requirements of § 1.401(a)–1(b)(2) of the 

2007 NRA regulations (as proposed to 

be amended by these proposed 

regulations). Instead, because section 

411(a) through (d) does not apply, the 

earlier normal retirement age under 

such a plan is treated as the age as of 

which an unreduced early retirement 

benefit is payable for purposes of these 

regulations. 

III. Normal Retirement Age Must 

Satisfy the Reasonably Representative 

Requirement 

A. In General 

These proposed regulations would 

apply the reasonably representative 

requirement in the 2007 NRA 

regulations to governmental plans. 

Thus, the normal retirement age under 

a governmental plan 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. 

B. General Safe Harbor 

These proposed regulations would 

apply to governmental plans the safe 

harbor in the 2007 NRA regulations that 

a normal retirement age of at least age 

62 is deemed to satisfy the reasonably 

representative requirement. Thus, a 

governmental plan satisfies this safe 

harbor if the normal retirement age 

under the plan is age 62 or if the normal 

retirement age is the later of age 62 or 

another specified date, such as the fifth 

anniversary of plan participation. 

C. Safe Harbors for Governmental Plans 

To address comments regarding the 

need for additional safe harbors for 

governmental plans, including safe 

harbors that reflect permissible periods 

of service, these proposed regulations 

would provide several additional 

alternative safe harbors that a 

governmental plan could satisfy. The 

safe harbors included in these proposed 

regulations were developed based upon 

feedback provided in comments 

received in response to Notices 2007–69 

and 2012–29. 

1. Age 60 and 5 Years of Service 

Under these proposed regulations, a 

normal retirement age under a 

governmental plan that is the later of 

age 60 or the age at which the 

participant has been credited with at 

least 5 years of service would be 

deemed to satisfy the reasonably 

representative requirement. 

2. Age 55 and 10 Years of Service 

Similarly, a normal retirement age 

under a governmental plan that is the 

later of 55 or the age at which the 

participant has been credited with at 

least 10 years of service would be 

deemed to satisfy the reasonably 

representative requirement. Thus, for 

example, a normal retirement age under 

a governmental plan that is the later of 

age 55 or the age at which the 

participant has been credited with 12 

years of service would satisfy this safe 

harbor. 

3. Combined Age and Years of Service 

of 80 or More 

A normal retirement age under a 

governmental plan that is the 

participant’s age if the sum of the 

participant’s age plus the number of 

years of service that have been credited 

to the participant under the plan equals 

80 or more would also be deemed to 

satisfy the reasonably representative 

requirement. For example, a participant 

in a governmental plan who is age 55 

and who has been credited with 25 

years of service under the plan would 

satisfy this safe harbor. 

4. Any Age With 25 years of Service (in 

Combination With a Safe Harbor That 

Includes an Age) 

A governmental plan would also be 

permitted to combine any of the other 

safe harbors (except for the qualified 

public safety employee safe harbors) 

provided under the proposed 

regulations with 25 years of service, so 

that a participant’s normal retirement 

age would be the participant’s age when 

the number of years of service that have 

been credited to the participant under 

the plan equals 25 if that age is earlier 

than what the participant’s normal 

retirement age would be under the other 

safe harbor(s). For example, a normal 

retirement age under a governmental 

plan would satisfy the reasonably 

representative requirement if the normal 

retirement age 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. Use of 25 years of 

service by a governmental plan for 

normal retirement age generally would 

not satisfy the pre-ERISA vesting 

requirement relating to normal 

retirement age, unless it is used in 

conjunction with an alternative normal 

retirement age that includes an age 

component and that otherwise satisfies 

the pre-ERISA rules. This is because the 

pre-ERISA vesting requirements allow 

for a service component only if that 

component does not unreasonably delay 

full vesting. For example, applying a 25 

years of service requirement (without an 

alternative normal retirement age) to a 

newly-hired 63-year-old employee 

would not be reasonable because it 

would result in a normal retirement age 

of 88. See generally, Rev. Rul. 66–11. 


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5Section 72(t)(10)(B) was amended by section 

2(a) of Defending Public Safety Employees’ 

Retirement Act, Public Law 114–26 (129 Stat. 319) 

(2015)) and section 308 of Protecting Americans 

From Tax Hikes Act of 2015 (PATH Act), enacted 

as part of the Consolidated Appropriations Act, 

2016, Public Law 114–113 (129 Stat. 2422), to 

include federal public safety employees as qualified 

public safety employees for purposes of the rules 

under section 72(t)(10). Thus, for distributions 

made after December 31, 2015, the term qualified 

public safety employee means any employee of a 

State or political subdivision of a State who 

provides police protection, firefighting services, or 

emergency medical services for any area within the 

jurisdiction of such State or political subdivision, 

or any Federal law enforcement officer described in 

section 8331(20) or 8401(17) of title 5, United States 

Code, any Federal customs and border protection 

officer described in section 8331(31) or 8401(36) of 

such title, any Federal firefighter described in 

section 8331(21) or 8401(14) of such title, or any air 

traffic controller described in 8331(30) or 8401(35) 

of such title, any nuclear materials courier 

described in section 8331(27) or 8401(33) of such 

title, any member of the United States Capitol 

Police, any member of the Supreme Court Police, 

and any diplomatic security special agent of the 

Department of State. 

6See section 4(j) of the Age Discrimination in 

Employment Act, 29 U.S.C. 623(j). 

7Notice 2012–29 provided that, under an 

anticipated amendment to the 2007 NRA 

regulations, a governmental plan would be 

permitted to satisfy the reasonably representative 

requirement using a normal retirement age as low 

as 50 for a group substantially all of whom are 

qualified public safety employees and a later 

normal retirement age that otherwise satisfies the 

2007 NRA requirements for all other participants. 

D. Qualified Public Safety Employees 

The proposed regulations include 

three safe harbors specifically for 

qualified public safety employees. The 

safe harbors were developed based upon 

feedback provided in comments 

received in response to Notices 2007–69 

and 2012–29. Consistent with Notice 

2012–29 and in response to comments, 

the proposed regulations would make 

clear that a governmental plan is 

permitted to use one or more of the safe 

harbors for qualified public safety 

employees to satisfy the reasonably 

representative requirement for those 

employees even if a different normal 

retirement age or ages is used under the 

plan for one or more other categories of 

participants who are not qualified 

public safety employees. The safe 

harbors for qualified public safety 

employees are not permitted to be used 

for these other categories of participants; 

a different normal retirement age (or 

ages) must be used for participants in a 

plan who are not qualified public safety 

employees. 

As under the 2007 NRA regulations, 

the term qualified public safety 

employee would be defined by reference 

to section 72(t)(10)(B), under which a 

qualified public safety employee means 

any employee of a State or political 

subdivision of a State who provides 

police protection, firefighting services, 

or emergency medical services for any 

area within the jurisdiction of such 

State or political subdivision.5 Defining 

qualified public safety employee by 

reference to section 72(t)(10)(B) has 

been retained because it is closely 

aligned with the categories of employees 

described in the Age Discrimination in 

Employment Act that an employer may 

refrain from hiring after a certain age.6

Because qualified public safety 

employees typically commence plan 

participation at younger ages, the period 

of service required for full vesting at 

normal retirement age under each of the 

safe harbors for qualified public safety 

employees should be reasonable. 

1. Age 50 

The proposed regulations would 

modify the safe harbor for qualified 

public safety employees that was 

provided in the 2007 NRA regulations 

under which a normal retirement age of 

age 50 or later is deemed to satisfy the 

reasonably representative requirement 

and would expand on the guidance 

under consideration described in Notice 

2012–29. The proposed regulations 

would make clear that a governmental 

plan is permitted to use the safe harbor 

(alone or together with one or both of 

the other safe harbors for qualified 

public safety employees described in 

this preamble) for one or more qualified 

public safety employees in a 

governmental plan without regard to 

any ‘‘substantially all’’ requirement (that 

is, without regard to whether 

substantially all of the participants in 

the plan or substantially all of the 

participants within a group of 

participants are qualified public safety 

employees). 

2. Combined Age and Years of Service 

of 70 or More 

The proposed regulations would add 

a safe harbor under which a normal 

retirement age for qualified public safety 

employees under a governmental plan 

that is the participant’s age when the 

sum of the participant’s age plus the 

number of years of service that have 

been credited to the participant under 

the plan equals 70 or more would be 

deemed to satisfy the reasonably 

representative requirement. 

3. Any Age With 20 Years of Service 

The proposed regulations would also 

add a safe harbor under which a normal 

retirement age for qualified public safety 

employees under a governmental plan 

that is the participant’s age when the 

number of years of service that have 

been credited to the participant under 

the plan equals 20 or more would be 

deemed to satisfy the reasonably 

representative requirement. For 

example, a normal retirement age for 

qualified public safety employees under 

a plan that is 25 years of service would 

satisfy this safe harbor. The Department 

of the Treasury and the IRS agree with 

the comments received in response to 

Notice 2012–29 that indicated that a 

safe harbor based solely on a period of 

service would be appropriate for 

qualified public safety employees 

because these employees typically have 

career spans that commence at a young 

age and continue over a limited period 

of years. 

E. Multiple Normal Retirement Ages in 

a Governmental Plan 

Commenters on Notice 2012–29 stated 

that it is a common practice for 

governmental plans to have a normal 

retirement age that is a combination of 

age and years of service. In light of these 

comments, some of the safe harbors 

proposed in these regulations 

contemplate a combination of age and 

years of service, such as, for example, 

the use of a normal retirement age that 

is the earlier of (1) the participant’s age 

when the participant has been credited 

with 30 years of service under the plan 

or (2) the later of age 60 or the age when 

the participant has been credited with 5 

years of service under the plan. A 

normal retirement age under a 

governmental plan that is consistent 

with the safe harbors in these proposed 

regulations would not fail to satisfy the 

pre-ERISA requirements, including the 

requirement that any period of service 

required for vesting at normal 

retirement age be uniformly applicable 

to all employees in a plan, merely 

because the plan uses such a normal 

retirement age. 

Commenters to Notice 2012–29 also 

stated that governmental plans typically 

provide multiple normal retirement 

ages, often based on different benefit 

structures or classifications of 

employees in a single plan. These 

comments expressed concern that 

certain language in Notice 2012–29 7

could be read to indicate that a 

governmental plan could only have two 

normal retirement ages if one of the 

normal retirement ages covered 

qualified public safety employees and 

the other normal retirement age covered 

all of the other participants in the plan. 

Use of one normal retirement age for 

one classification of employees (such as 

qualified public safety employees) and 

one or more other normal retirement 

ages for one or more different 

classifications of employees would not 


asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
4604 Federal Register / Vol. 81, No. 17 / Wednesday, January 27, 2016 / Proposed Rules 

be inconsistent with these proposed 

regulations and generally would not be 

inconsistent with the applicable preERISA requirements, including the 

requirement that any period of service 

required for full vesting at normal 

retirement age be uniformly applicable. 

Similarly, the use of one normal 

retirement age under a governmental 

plan for employees hired before a 

certain date and another normal 

retirement age under the plan for 

employees hired on or after that date 

generally would not fail to satisfy the 

applicable pre-ERISA requirements. 

F. Other Normal Retirement Ages 

The proposed regulations would 

provide that in the case of a normal 

retirement age under a governmental 

plan that fails to satisfy any of the 

governmental plan safe harbors, 

whether the normal retirement age 

satisfies the reasonably representative 

requirement would be based on all of 

the relevant facts and circumstances. 

Similar to the treatment of normal 

retirement ages between ages 55 and 62 

under the 2007 NRA regulations, it is 

generally expected that a good faith 

determination of the typical retirement 

age for the industry in which the 

covered workforce is employed that is 

made by the employer will be given 

deference, assuming that the 

determination is reasonable under the 

facts and circumstances and that the 

normal retirement age is otherwise 

consistent with the pre-ERISA vesting 

requirements. 

Proposed Effective Date 

These regulations are proposed to be 

effective for employees hired during 

plan years beginning on or after the later 

of (1) January 1, 2017 or (2) the close of 

the first regular legislative session of the 

legislative body with the authority to 

amend the plan that begins on or after 

the date that is 3 months after the final 

regulations are published in the Federal 

Register. Governmental plan sponsors 

may rely on these proposed regulations 

for periods preceding the effective date, 

pending the issuance of final 

regulations. If and to the extent the final 

regulations are more restrictive than the 

rules in these proposed regulations, 

those provisions of the final regulations 

will be applied without retroactive 

effect. 

Statement of Availability for IRS 

Documents 

For copies of recently issued Revenue 

Procedures, Revenue Rulings, Notices, 

and other guidance published in the 

Internal Revenue Bulletin or Cumulative 

Bulletin, please visit the IRS Web site at 

http://www.irs.gov or the 

Superintendent of Documents, U.S. 

Government Publishing Office, 

Washington, DC 20402. 

Special Analyses 

Certain IRS regulations, including this 

one, are exempt from the requirements 

of Executive Order 12866, as 

supplemented and reaffirmed by 

Executive Order 13563. Therefore, a 

regulatory assessment is not required. It 

has also been determined that 5 U.S.C. 

533(b) of the Administrative Procedure 

Act (5 U.S.C. chapter 5) does not apply 

to these regulations. In addition, 

because no collection of information is 

imposed on small entities, the 

provisions of the Regulatory Flexibility 

Act (5 U.S.C. chapter 6) do not apply 

and a Regulatory Flexibility Analysis is 

not required. Pursuant to section 7805(f) 

of the Internal Revenue Code, these 

regulations have been submitted to the 

Office of Chief Counsel for Advocacy of 

the Small Business Administration for 

comments on its impact on small 

business. 

Comments and Requests for Public 

Hearing 

Before these proposed regulations are 

adopted as final regulations, 

consideration will be given to any 

comments that are submitted timely to 

the IRS as prescribed in this preamble 

under the ADDRESSES heading. All 

comments are available at 

www.regulations.gov or upon request. A 

public hearing will be scheduled if 

requested in writing by any person who 

timely submits written comments. If a 

public hearing is scheduled, notice of 

the date, time, and place of the public 

hearing will be published in the Federal 

Register. 

Drafting Information 

The principal authors of these 

regulations are Sarah R. Bolen and 

Pamela R. Kinard, Office of Associate 

Chief Counsel (Tax Exempt and 

Government Entities). However, other 

personnel from the Department of the 

Treasury and the IRS participated in the 

development of these regulations. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR part 1 is 

proposed to be amended as follows: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 continues to read in part as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

■ Par. 2. Section 1.401(a)–1 is amended 

by: 

■ 1. Revising paragraph (b)(2)(v). 

■ 2. Adding paragraph (b)(2)(vi). 

■ 3. Revising the heading and the 

second sentence of paragraph (b)(4). 

The revisions read as follows: 

§ 1.401(a)–1 Post-ERISA qualified plans 

and qualified trusts; in general. 

* * * * * 

(b) * * * 

(2) * * * 

(v) Rules of application for 

governmental plans—(A) In general. In 

the case of a governmental plan (within 

the meaning of section 414(d)) that 

provides for distributions before 

retirement, the general rule described in 

paragraph (b)(2)(i) of this section may be 

satisfied in accordance with paragraph 

(b)(2)(ii) of this section or this paragraph 

(b)(2)(v). In the case of a governmental 

plan that does not provide for 

distributions before retirement, the 

plan’s normal retirement age is not 

required to comply with the general rule 

described in paragraph (b)(2)(i) of this 

section or this paragraph (b)(2)(v). 

(B) Age 60 and 5 years of service safe 

harbor. A normal retirement age under 

a governmental plan that is the later of 

age 60 or the age at which the 

participant has been credited with at 

least 5 years of service under the plan 

is deemed to be 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. 

(C) Age 55 and 10 years of service safe 

harbor. A normal retirement age under 

a governmental plan that is the later of 

age 55 or the age at which the 

participant has been credited with at 

least 10 years of service under the plan 

is deemed to be 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. 

(D) Sum of 80 safe harbor. A normal 

retirement age under a governmental 

plan that is the participant’s age at 

which the sum of the participant’s age 

plus the number of years of service that 

have been credited to the participant 

under the plan equals 80 or more is 

deemed to be not earlier than the 

earliest age that is reasonably 

representative of the typical retirement 

age for the industry in which the 


asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
Federal Register / Vol. 81, No. 17 / Wednesday, January 27, 2016 / Proposed Rules 4605 

covered workforce is employed. For 

example, a normal retirement age under 

a governmental plan that is age 55 for 

a participant who has been credited 

with 25 years of service would satisfy 

the rule described in this paragraph. 

(E) Service-based combination safe 

harbor. A normal retirement age under 

a governmental plan that is the earlier 

of the participant’s age at which the 

participant has been credited with at 

least 25 years of service under the plan 

and an age that satisfies any other safe 

harbor provided under paragraphs 

(b)(2)(v)(B) through (D) of this section is 

deemed to be 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. For 

example, a normal retirement age under 

a governmental plan that is the earlier 

of the participant’s age at which the 

participant has been credited with 25 

years of service under the plan and the 

later of age 60 or the age at which the 

participant has been credited with 5 

years of service under the plan would 

satisfy this safe harbor. 

(F) Age 50 safe harbor for qualified 

public safety employees. A normal 

retirement age under a governmental 

plan that is age 50 or later is deemed to 

be 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 if the participants to which 

this normal retirement age applies are 

qualified public safety employees 

(within the meaning of section 

72(t)(10)(B)). 

(G) Sum of 70 safe harbor for 

qualified public safety employees. A 

normal retirement age under a 

governmental plan that is the 

participant’s age at which the sum of the 

participant’s age plus the number of 

years of service that have been credited 

to the participant under the plan equals 

70 or more, is deemed to be 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 if the 

participants to which this normal 

retirement age applies are qualified 

public safety employees (within the 

meaning of section 72(t)(10)(B)). 

(H) Service-based safe harbor for 

qualified public safety employees. A 

normal retirement age under a 

governmental plan that is the age at 

which the participant has been credited 

with at least 20 years of service under 

the plan is deemed to be 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 if the 

participants to which this normal 

retirement age applies are qualified 

public safety employees (within the 

meaning of section 72(t)(10)(B)). For 

example, a normal retirement age that 

covers only qualified public safety 

employees and that is an employee’s age 

when the employee has been credited 

with 25 years of service under a 

governmental plan would satisfy this 

safe harbor. 

(I) Reserved. 

(J) Other normal retirement ages. In 

the case of a normal retirement age 

under a governmental plan that fails to 

satisfy any safe harbor described in 

paragraph (b)(2)(ii) of this section or this 

paragraph (b)(2)(v), whether the age 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 is 

based on all of the relevant facts and 

circumstances. 

(vi) Special normal retirement age 

rule for certain plans. See section 411(f), 

which provides a special rule for 

determining a permissible normal 

retirement age under certain defined 

benefit plans. 

* * * * * 

(4) Effective/applicability date. * * * 

In the case of a governmental plan (as 

defined in section 414(d)), the rules in 

paragraph (b)(2)(v) of this section are 

effective for employees hired during 

plan years beginning on or after the later 

of: January 1, 2017; or the close of the 

first regular legislative session of the 

legislative body with the authority to 

amend the plan that begins on or after 

the date that is 3 months after the final 

regulations are published in the Federal 

Register. However, a governmental plan 

sponsor may elect to apply the rules of 

paragraph (b)(2)(v) of this section to 

earlier periods. * * * 

John M. Dalrymple, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2016–01639 Filed 1–26–16; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–115452–14] 

RIN 1545–BM12 

Disguised Payments for Services; 

Hearing 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of a public hearing on 

notice of proposed rulemaking. 

SUMMARY: This document provides a 

notice of public hearing on proposed 

regulations relating to disguised 

payments for services under section 

707(a)(2)(A) of the Internal Revenue 

Code. 

DATES: The public hearing is being held 

on Friday, February 26, 2016, at 10:00 

a.m. The IRS must receive outlines of 

the topics to be discussed at the public 

hearing by Monday, February 8, 2016. 

ADDRESSES: The public hearing is being 

held in the IRS Auditorium, Internal 

Revenue Service Building, 1111 

Constitution Avenue NW., Washington, 

DC 20224. Due to building security 

procedures, visitors must enter at the 

Constitution Avenue entrance. In 

addition, all visitors must present photo 

identification to enter the building. 

Send Submissions to CC:PA:LPD:PR 

(REG–115452–14), Room 5205, Internal 

Revenue Service, P.O. Box 7604, Ben 

Franklin Station, Washington, DC 

20044. Submissions may be handdelivered Monday through Friday to 

CC:PA:LPD:PR (REG–115452–14), 

Couriers Desk, Internal Revenue 

Service, 1111 Constitution Avenue NW., 

Washington, DC 20224 or sent 

electronically via the Federal 

eRulemaking Portal at 

www.regulations.gov (IRS REG–115452– 

14). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the proposed regulations, 

Wendy Kribell at (202) 317–6850; 

concerning submissions of comments, 

the hearing and/or to be placed on the 

building access list to attend the hearing 

Oluwafunmilayo Taylor at (202) 317– 

6901 (not toll-free numbers). 

SUPPLEMENTARY INFORMATION: 

The subject of the public hearing is 

the notice of proposed rulemaking 

(REG–115452–14) that was published in 

the Federal Register on Thursday, July 

23, 2015 (80 FR 43652). 

The rules of 26 CFR 601.601(a)(3) 

apply to the hearing. Persons who wish 

to present oral comments at the hearing 

that submitted written comments by 

November 16, 2015, must submit an 

outline of the topics to be addressed and 

the amount of time to be denoted to 

each topic by Monday, February 8, 

2016. 

A period of 10 minutes is allotted to 

each person for presenting oral 

comments. After the deadline for 

receiving outlines has passed, the IRS 

will prepare an agenda containing the 

schedule of speakers. Copies of the 

agenda will be made available, free of 

charge, at the hearing or in the Freedom 


asabaliauskas on DSK5VPTVN1PROD with PROPOSALS