January 23, 2012
Authored by: benefitsbclp
In Private Letter Ruling 201147038, the Internal Revenue Service addressed an issue that surfaces frequently when an employer offers a voluntary retirement program. An employee may want to take advantage of the incentives offered under the program, but he or she may also want to continue working for the employer, and the employer may want the employee to continue working.
In this ruling, a plan proposed a funding rehabilitation plan which included eliminating unreduced early retirement benefits for participants with 20 or more years of service. Once the rehabilitation plan was effective, a participant would no longer be able to retire after 20 years of service with an unreduced benefit. The taxpayer proposed giving participants advance notice of the elimination of this right, along with the ability of affected participants to elect to retire during the notice period and then immediately return to employment. Upon reemployment, their pension benefits