The Internal Revenue Service is asking for public comments about the best way to help older workers ease into collecting pension benefits.

IRS officials are asking for the comments in IRS Notice 2007-8, “In-Service Benefits Permitted to be Provided at Age 62 by a Pension Plan,” a discussion of IRS efforts to implement Section 905 of the Pension Protection Act.

Section 401(a)(36) of the Internal Revenue Code, a provision added by the PPA, will permit defined benefit pension plans to pay benefits to workers who have reached age 62 but have not yet reached the normal retirement age and have not retired.

IRC Section 401(a)(36) takes effect for plan years starting after Dec. 31.

The IRS proposed phased retirement pension benefits regulations in November 2004, and it held a public hearing on the issue in March 2005.

Comments on the new in-service benefits questions are due April 16, 2007.

Officials start off by asking for comments about limits on pension benefit amounts for workers who are still with their employers.

The IRS could cap early pension benefits at the amount the participant would collect at the normal retirement age, “reduced in accordance with reasonable actuarial assumptions,” officials write.

Officials also asked whether subsidized phased retirement benefits should be treated as if they were subsidized early retirement benefits, even though the participant is still with the employer.

“If the subsidized benefits are not treated as a subsidized early retirement benefit, should the subsidized benefits be treated as a part of the participant’s accrued benefit, or is there some other characterization of the subsidized benefits?” IRS officials ask.

A copy of the IRS phased retirement notice is on the Web at Document Link