Beruflich Dokumente
Kultur Dokumente
Gentlemen :
This refers to your letter dated June 15, 1999 stating that your client has a
trusteed retirement plan, with you acting as the trustee; that Section 3 of its Plan Rules
and Regulations provides —
that an employee of your client recently retired; that he is 51 years of age and has
rendered 23 years of continuous service; and that following the provisions of the Plan
Rules, the employee's retirement is not covered by the provision on Early/Optional
Retirement which requires at least 55 years of age or at least 25 years of service.
In reply, please be informed that Section 32(B)(6)(a) of the Tax Code of 1997
provides —
Such being the case, while Sec. 3 of the Retirement Plan Rules and
Regulations of your client provides that upon the attainment of at least age 55 or upon
the completion of twenty-five (25) years of service the employee may be retired at the
option of the company, the employee availing of the early/optional retirement must
have rendered ten (10) years of service to the company or must be at least age fifty
(50) years of age at the time of retirement, otherwise the retirement benefits to be paid
to him shall be subject to income tax and consequently to withholding tax.
Accordingly, the retired employee in this particular case, although he is 51 years of
age and has rendered 23 years of continuous service to the company is still not
covered under the early/optional retirement for failure to comply with the conditions
as provided in Section 3 of the said Plan i.e., attainment of at least age 55 or
completion of twenty-five (25) years of service. In fine, the retirement benefits to be
paid to the said retired employee shall be subject to income tax and consequently to
withholding tax prescribed under Section 57(B) of the Tax Code of 1997, as
implemented by Revenue Regulations No. 2-98.
This ruling is being issued on the basis of the foregoing facts as represented.
However, if upon investigation, it will be disclosed that the facts are different, then
this ruling shall be considered null and void.