The Internal Revenue Service is moving ahead with efforts to adapt to the new “phased retirement” movement.[@@]
The IRS wants to adjust the way tax regulations and employers handle defined benefit pension benefits for the oldest workers, so that older workers who voluntarily shift to part-time work a few years before the normal retirement age can do so without losing pension benefits.
The IRS discusses public reaction to a phased retirement proposal it released in July 2002 today in the Federal Register.
The discussion includes a draft of a proposed phase retirement pension benefit regulation.
One major goal of the commentators, and the regulation, is to make sure that workers who are participating in phased retirement programs can collect some of their pension benefits once they move to part-time work, according to the IRS officials who wrote the phased retirement discussion.
A second goal is to make sure that the workers can continue to accrue additional pension benefits while they are working part-time, and a third goal is to make sure that workers in phased retirement programs end up with pension benefits based on the income they were earning when they were working full-time, the officials write.
The IRS officials have tried to meet the first goal by letting workers collect a portion of their pension benefits while they are still working part-time in a phased retirement program.
The “pro rata share” of the benefit “is based on the extent to which the employee has reduced hours under the program,” the officials write.