Criteria for A Plan to Qualify as an Eligible Pennsylvania Retirement Plan

A plan is considered an eligible Pennsylvania retirement plan if, at a minimum, the plan has the following four characteristics:

The plan is reduced to writing and has been communicated to the participants;

The plan establishes eligibility requirements for separation of service or a combination of old age or infirmity, and long-continued service;

The plan provides for payments to be made at regularly recurring intervals after their separation from service by retirement which continues at least until death. An option for a lump sum payments or payments does not disqualify the retirement nature of the plan as long as the other provisions are provided; and

The plan does not permit the distribution of program benefits to any employee until termination of employment except for incidental disability benefits or the return of the employee’s previously taxed contributions and income or gains if the employee is required to contribute to the pension plan.

Generally, eligible Pennsylvania retirement plans include qualified pension plans under Section 401(a) of the Internal Revenue Code (defined benefit plans and defined contributions plans), IRAs (individual retirement accounts and annuities), Roth IRAs, Simplified Employee Pension Plans (SEPs), and Keogh plans.

For a plan that is not an employer provided plan and has no specific retirement criteria, such as an IRA, the qualifying retirement age is the period after which a distribution will not be subject to penalty for early withdrawal for Federal Income tax purposes (such as age 59 ½, death, disability).