COVID-related labor shortages and hiring retirees
Posted on November 17, 2021
To help address COVID-related labor shortages, the IRS wants employers to know that in general, it will not jeopardize the tax status of their pension plans if they rehire retirees.
Following the COVID-19 pandemic, many employers are looking for ways to encourage retirees to return to the workforce to fill open positions — and experienced employees to stay on the job.
To help answer FAQs, the IRS is providing new guidance on the IRS website to these employers (LINK: two new frequently asked questions (FAQs). The FAQs highlight existing ways that employers can meet their employment objectives and still comply with the plan qualification rules.
- An employer can generally choose to address unforeseen hiring needs by rehiring former employees, even if those employees have already retired and begun receiving pension benefit payments.
- If permitted under plan terms, those employees may continue receiving the benefits after they are rehired.
- An employer can generally choose to make retirement distributions available to existing employees who have reached age 59 ½ or the plan’s normal retirement age.
All of this information has been especially prepared by the IRS to assist in the retention of employees eligible for retirement. Further details can be found in the two new FAQs now posted on IRS.gov, or by calling Teipen CPA Group with specific questions.