The Internal Revenue Service is giving pension plan sponsors more time to comply with new regulations that affect when participants can begin collecting benefits.

The relief, described in IRS Notice 2007-69, will help employers implement a final normal retirement age rule published in May 2007.

The new final rule creates a “safe harbor” for employers that set a plan’s normal retirement age anywhere from age 62 to 65, and the rule states that the IRS will defer to the judgment of an employer that finds that a normal retirement age ranging from 55 to 62 is typical for employers in its industry.

The notice affects manufacturers, construction companies and other employers that want to establish a normal retirement age that is earlier than age 55.

In the notice, IRS officials explain how an employer can apply for an IRS “letter ruling” approving use of an unusually low normal retirement age.

The request for a letter ruling must describe the employer’s industry, and it must present and analyze the data the employer used to determine the typical retirement age for its workers, IRS officials write in the notice.

The notice also explains how an employer can use an unusually low normal retirement age while applying for formal IRS approval of the unusually low normal retirement age.

“If the service determines during the ruling process that the plan’s normal retirement age does not reasonably represent the typical retirement age for the industry in which the covered workforce is employed, the service will require corrective action to be taken prospectively only from the date of issuance of the ruling letter, so that the plan’s normal retirement age will not be required to be raised retroactively,” officials write.

A plan is eligible for temporary relief from the new normal retirement age regulations if it used a normal retirement age below 55 before May 22, 2007 and if no possible plan participant hired at age 18 or older could attain the plan’s normal retirement age before the age of 40, officials write.

In other news regarding the IRS:

–Benefits experts at the Council for Affordable Health Insurance, Alexandria, Va., say a new IRS final rule will be a big help to employers that want to let employees use cafeteria plans to buy individual health insurance.

CAHI came to that conclusion in an analysis of the new IRS and U.S. Treasury Department regulations concerning cafeteria plans.

One section of the final rule makes it clear that insurers and employers can use cafeteria plans to administer “list billing” arrangements, or arrangements to let employees pay for their own individual health coverage through the employer’s payroll deduction system, CAHI says.

Some had questioned whether federal tax regulations really permitted employers to put list billing arrangements in cafeteria plans, CAHI says.

In addition to putting list billing arrangements inside cafeteria plans, cafeteria plans also can reimburse employees for health insurance premiums directly, CAHI says.

–The IRS is preparing an announcement on the definition of insurance, and it also is preparing proposed regulations on hybrid pension plans.

The IRS lists those projects and many others in the 2007-2008 Priority Guidance Plan.

The IRS publishes the priority guidance plan every year to help taxpayers and accountants know what agency officials are working on.

In addition to the insurance definition and hybrid plan projects, both initiated as a result of the enactment of the Pension Protection Act of 2006, the IRS is developing guidance on automatic retirement enrollment programs, guidance on incidental health insurance benefits provided under profit-sharing plans, and guidance on pension plan mortality tables for disabled individuals.