If a plan, or the employer sponsoring the plan, imposes a requirement that an employee retire upon reaching a certain age, the normal retirement age may not exceed that mandatory retirement age. The preceding sentence will apply if the employer consistently enforces a mandatory retirement age rule, whether or not set forth in the plan or any related document. For purposes of subdivision (i) of this subparagraph, if an age is not specified by a plan as the normal retirement age then the normal retirement age under the plan is the earliest age beyond which the participant's benefits under the plan are not greater solely on account of his age or service. For purposes of paragraph (b)(1)(ii)(B) of this section, participation commences on the first day of the first year in which the participant commenced his participation in the plan, except that years which may be disregarded under section 410(a)(5)(D) may be disregarded in determining when participation commenced.
Age | Final average computated | Percent accrued benefit | Reduction | Annual benefit |
(1)- | (2)- | (3)- | (4)- | |
60 | $50,000 | 30 | 0.80 | *$12,000 |
61 | 46,600 | 31 | .84 | 12,135 |
62 | 43,200 | 32 | .88 | 12,165 |
63 | 39,800 | 33 | .92 | 12,083 |
64 | 36,400 | 34 | .96 | 11,881 |
65 | 33,000 | 35 | 1.00 | 11,550 |
NOTE. Col. (1) times col. (2) times col. (3) equals col. (4).
The normal retirement benefit is the greater of the benefit payable at normal retirement age or the early retirment benefit. Employee A's normal retirement benefit is $12,165, the greatest annual benefit Employee A would be entitled to.
If the distribution occurs for any other reason, the time for repayment may not end earlier than 5 years after the date of distribution. Nevertheless, a plan provision may provide for a longer period in which the employee may repay. For example, a plan could allow repayments to be made at any time before normal retirement age.
A distribution shall be deemed to be made on termination of participation in the plan if it is made not later than the close of the second plan year following the plan year in which such termination occurs. For purposes of determining the nonforfeitable benefit, the plan may disregard service after the distribution as illustrated in subparagraph (2)(i) of this subparagraph.
A plan is not required to provide for separate accounts provided that account balances are maintained under a method that has the same effect as under this subdivision.
26 C.F.R. §1.411(a)-7
Sec. 411 (88 Stat. 901; 26 U.S.C. 411 )