To help address COVID-related labor shortages, the Internal Revenue Service today reminded employers that they generally will not jeopardize the tax status of their pension plans if they rehire retirees or permit distributions of retirement benefits to current employees who have reached age 59 ½ or the plan’s normal retirement age.

With 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. The IRS is providing help by offering technical guidance to public and private employers who sponsor pension plans for their employees 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. Also, if permitted under plan terms, those employees may continue receiving the benefits after they are rehired. Moreover, 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. This may assist in the retention of employees eligible for retirement.

Further details can be found in the two new FAQs now posted on IRS.gov.