CUNA has sent a comment letter to the IRS saying that distributions from a pension plan under a phased retirement program may be beneficial to credit unions, as it retains qualified staff on a less than full-time level. But the letter further notes that some of the IRS rules, as proposed, would be administratively burdensome.
The letter was sent in response to an IRS proposal setting forth requirements for a phased retirement program and permitting distributions to be made from a pension plan under a phased retirement program.
Among the points made in CUNA's letter:
* As the IRS noted in the proposed regulations, these arrangements can be very advantageous in that they permit credit unions and other employers to retain the services of an experienced employee and provide the employee with the opportunity to continue active employment at a level that also allows greater flexibility and time away from work.
* Eligibility to participate in a phased retirement program should be extended to employees who reduce their workload using a standard such as elapsed time methodology or reduction in base pay.
* CUNA is concerned that the periodic testing requirement could be administratively burdensome to employers, and may keep them from adopting a phased retirement program.
* The provision regarding offset for the actuarial value of additional payments does not sufficiently address cash balance plans.
