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Joint Committee Report JCS-1-16: General Explanation of Tax Legislation Enacted in the 114th Congress

MAR. 1, 2016

JCS-1-16

DATED MAR. 1, 2016
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Citations: JCS-1-16

 

PART FIVE: DEFENDING PUBLIC SAFETY EMPLOYEES' RETIREMENT ACT

 

(PUBLIC LAW 114-26)25

 

 

A. Early Retirement Distributions to Federal Law Enforcement Officers, Firefighters, and Air Traffic Controllers in Governmental Plans (sec. 2 of the Act and sec. 72(t) of the Code)

 

 

Present Law

 

 

An individual who receives a distribution from a qualified retirement plan before age 591-2, death, or disability is subject to a 10percent early withdrawal tax on the amount includible in income unless an exception to the tax applies.26 Among other exceptions, the early distribution tax does not apply to distributions made to an employee who separates from service after age 55 (the "separation from service" exception), or to distributions that are part of a series of substantially equal periodic payments made for the life, or life expectancy, of the employee or the joint lives, or life expectancies, of the employee and his or her beneficiary (the "equal periodic payments" exception).27

Under a special rule for qualified public safety employees, the separation from service exception applies to distributions from a governmental defined benefit pension plan if the employee separates from service after age 50 (rather than age 55). A qualified public safety employee is an employee of a State or political subdivision of a State if the employee provides police protection, firefighting services, or emergency medical services for any area within the jurisdiction of such State or political subdivision.

 

Explanation of Provision28

 

 

The provision revises the special rule for applying the separation from service exception to qualified public safety employees.29 First, the definition of qualified public safety employee is expanded to include Federal law enforcement officers, Federal customs and border protection officers, Federal firefighters, and air traffic controllers.30 In addition, the special rule is extended to distributions from governmental defined contribution plans (rather than just governmental defined benefit plans).31

 

Effective Date

 

 

The provision is effective for distributions after December 31, 2015.
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