The Trade Priorities and Accountability Act of 2015 (H.R. Bill 2146), also known as the Defending Public Safety Employees’ Retirement Act, became effective December 31, 2015. The new tax law expanded the exemption for many federal public safety employees to include federal law enforcement officers, customs and border protection officers, federal firefighters, and air traffic controllers who have reached age 50. Public safety employees, often referred to as “first responders” are occupations which traditionally require earlier retirement ages due to the high risk nature of the services they provide to the communities they protect. The old tax laws did not address the need for public safety employees to access retirement accounts earlier in life.
What does this legislation mean to public safety employees such as PBSO deputies and Palm Beach County Fire Rescue Professionals? They can now access their entire FRS Investment Plan balances, after age 50, without being subject to a 10% early withdrawal IRS penalty. Prior to the new tax law, only FRS Defined Benefit Plans and 457 Deferred Comp Plans avoided the 10% IRS penalty for early retirement withdrawals. Historically, FRS Investment Plan and DROP account balances were subject to penalties, unless retirees followed a withdrawal regime that complied with IRC section 72(t), which provided for substantially equal withdrawals based on life expectancy.
Tax Law Details for FRS Investment Plan Participants
The HR Bill 2046 amends the Internal Revenue Code and expands exemptions for Palm Beach County Fire Rescue Professionals, who have reached age 50, from a 10% penalty tax on early distributions from retirement plans, to include FRS Investment Plan and DROP accounts. For retired FRS Investment Plan participants, who have begun to make “substantially equal periodic withdrawals from the FRS Investment Plan under IRC 72(t) can now increase the amounts withdrawn without any IRS penalty. In fact, the new rule is retroactive, so a 10% IRS penalty won’t be triggered.
True North Financial Advice
True North Financial Advisors provide investment advisory services for qualified retirement plan participants, including FRS Investment Plan participants, as a fiduciary on a fee-basis. The investment advisory services include third-party money managers that accept full fiduciary responsibility for the development of investment strategies based on client investment objectives, investment time horizon and risk tolerances, which are implemented and monitored through the use of personalized:
• Investment Policy Statement; and
• Asset Allocation Models.
True North Financial Advisors, located in Boca Raton, Florida provides personalized financial planning and investment advisory services through personalized attention. To help with a personalized financial planning experience we provide a web based platform through eMoney Advisor® which is easy for clients to upload and organize their financial information on their own personalized financial website — largely without any assistance. To learn more go to our video library.
This article should not be used for tax advice. In any specific case, the parties involved should seek the guidance and advice of their own tax counsel.
