Rev. Rul. 59-26

Numerous inquiries have been received by the Internal Revenue Service for a determination of the "retirement age" for members of the Armed Forces and other uniformed services for the purposes of the provisions of section 105(d) of the Internal Revenue Code of 1954 and Revenue Ruling 58-43, C. B. 1958-1, 45.

Section 105(d) of the Code provides, in part, that wages or payments in lieu of wages received by an employee pursuant to the provisions of a wage continuation plan for a period during which the employee is absent from work on account of personal injuries or sickness are excluable from gross income, subject to the limitations stated in that section.

Section 1.105-4(a)(3)(i) of the Income Tax Regulations provides, in part, as follows:

Section 105(d) applies only to amounts attributable to periods during which the employee would be at work were it not for a personal injury or sickness. Thus, an employee is not absent from work if he is not expected to work because, for example, he has reached retirement age.

Revenue Ruling 58-43, supra, provides, in part, that the provisions of section 402 of the Career Compensation Act of 1949, 63 Stat. 802, and chapter 61 of Title 10 of the United States Code, constitute wage continuation plans for the purpose of section 1.105-4(a)(3)(i) of the Income Tax Regulations. It further holds that disability retirement pay received by a member on the retired list pursuant to those provisions, which is in excess of the amount excluded under section 104(a)(4) of the Code, may be excluded from gross income to the extent provided in section 105(d) of the Code if received before the member reaches retirement age.

The term "retirement age" is defined in Revenue Ruling 57-76, C. B. 1957-1, 66, as the lowest age specified in the appropriate written plan at which the employee, had he not been disabled and had he continued in such employment, would have had the right to retire without the consent of the employer and receive retirement benefits based on service to the date of retirement computed at the full rate set forth in the plan, that is, without actuarial or similar reduction because of retirement before some later specified age.

For the purposes of section 105(d) of the Code, the term "retirement age" as defined in the preceding paragraph, for personnel retired for a physical disability incurred in active service is the time or age indicated in the following tables:

 Army and Air Force: ¹

¹ All statutory references to Army and Air Force are to Title 10, United States Code, 70 A Stat.

² Exceptions to age 60. For Major Generals who at the times of retirement for physical disability have not reached 62 years, the age factor is 62. For Major Generals who at such time have reached 62 years and are serving in a temporary grade above Major General or in a position carrying such higher grade, the age factor is 64. For officers above the rank of Major General, the age factor will be determined by individual rulings where necessary. For Professors in the Military and Air Force Academies, the age factor is 64. (Army, sections 3885, 3886; Air Force, sections 8885, 8886.)

³ Air Force only. The rules applicable to male commissioned officers are also applicable to female commissioned officers designated at time of retirement to perform medical, dental, medical service, judge advocate, or chaplain functions under section 8067.

⁴ All statutory references to Navy, including Marine Corps are to Title 10, United States Code, 70 A. Stat.

⁵ Except that for Naval officers below the rank of Fleet Admiral who are retired for physical disability after the first day of the month following the month in which they have reached age 62, the age factor is 64 (section 6390).