If you are part of a government pension plan, the IRS defines reasonable ages for pension distributions. These benefits can be paid out prior to private sector benefits, set at 59 1/2. The IRS is very specific as to what constitutes the proper ages and the reasons for the age limits.
Below Age 55
The IRS generally prohibits pension benefits to be paid out prior to age 55. The Federal Tax Commissioner can, however, make exceptions if he determines that this is appropriate given the circumstances and the nature of the pension. In other words, pension payments under age 55 are at the discretion of the Tax Commissioner. Another exception is made for pension plans where substantially all of the employees are qualified public safety employees. In this case, the normal retirement age is presumed to be 50.
Between Age 55 and 62
Pension distributions between the ages of 55 and 62 are allowed if the pension determines that the normal or expected retirement age of the plan's participants is typically between this age. The employer must support this conclusion with relevant facts about the industry.
62 Years and Older
A normal retirement age of at least 62 years is acceptable for all pension plans. This does not mean, however, that all pensions must pay benefits at age 62. Some benefit plans, such as those for general employees and teachers, have normal retirement ages of 65.
- Wisconsin Department of Employee Trust Funds: IRS Rule on Normal Retirement Age for Governmental Plans
- "Practicing Financial Planning for Professionals, Practitioner's 10th edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
- "Ernst & Young's Personal Financial Planning Guide, 5th Edition"; Martin Nissenbaum, Barbara J. Raasch, Charles L. Ratner; 2004
- Photo Credit retirement worries image by Jale Evsen Duran from Fotolia.com
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