Guidance on Taxation of Payments received during Phased Retirement

Notice 2016-39 provides guidance on how retirement benefits received during a phased retirement are to be taxed and the application of Section 72.

Document Excerpt

This notice provides guidance in response to inquiries as to whether payments received by an employee from a qualified defined benefit plan1 during phased retirement are amounts received as an annuity under ยง 72 of the Internal Revenue Code. For purposes of this notice, phased retirement is an arrangement under which a participant in a qualified defined benefit plan commences the distribution of a portion of his or her retirement benefits from the plan while continuing to work on a part-time basis.


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