IRS PLR: Qualified Plan Status Not Jeopardized by Pension Plan Health Benefit Payments for Annuitized Retirees (IRC §401)

The IRS has issued a private letter ruling on I.R.C. § 401(h), concluding that the taxpayer’s proposed transaction to expand eligibility for post-retirement medical benefits to include employees who elect to commence pension benefits at age 59½ while still employed under I.R.C. § 401(a)(36)) does not violate I.R.C. § 401(h) or § 1.401-14 or adversely affect the qualified status of the Pension Plan. The ruling confirms that employees eligible to receive retirement benefits at age 59½ while still employed qualify as “retired employees” for purposes of receiving medical benefits from the 401(h) account. The IRS determined that because these employees ...