Phelan worked under legendary manager Sir Alex Ferguson and returned to the club during Ole Gunnar Solskjaer's tenure. He remained at Old Trafford when Ralf Rangnick took interim charge following Solskjaer's departure.
The Manchester Evening News understand Phelan is on the brink of departing this summer along with three other staff members. Discussions between Phelan and United are ongoing and the club are respectful of the service he has given.
Assistant coach Chris Armas, analyst Ewan Sharp and sports psychologist Sascha Lense will all leave United as part of the shake-up. Armas, Sharp and Lense all arrived in December.
Ten Hag welcomes in Mitchell van der Gaag and Steve McClaren as his two assistants.