Pension & Benefits News IRS issues updated mortality improvement rates and static mortality tables for 2021
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Thursday, January 16, 2020

IRS issues updated mortality improvement rates and static mortality tables for 2021

By Pension and Benefits Editorial Staff

The IRS has provided the updated mortality improvement rates and static mortality tables to be used under Code Sec. 430(h)(3)(A). These rates are used to calculate the funding target and other items for valuation dates occurring during calendar year 2021. Also included are modified “unisex” mortality tables for use in determining minimum present value under Code Sec. 417(e)(3) for distributions with annuity starting dates that occur during stability periods beginning in calendar year 2021.

Mortality improvement rates. The IRS explains that IRS Reg. §1.430(h)(3)-1 provides the rules for mortality tables used under Code Sec. 430(h)(3)(A) for plan years beginning on or after January 1, 2018. The mortality tables used under Code Sec. 430(h)(3)(A) are based on the tables in the RP-2014 Mortality Tables Report, adjusted for mortality improvement.

The mortality improvement rates for valuation dates occurring during 2021 are the mortality improvement rates in the Mortality Improvement Scale MP-2019 Report (issued by the Retirement Plans Experience Committee (RPEC) of the Society of Actuaries and available at https://www.soa.org/resources/experience-studies/2019/mortality-improvement-scale-mp-2019/).

Multiemployer plans. The same mortality assumptions that apply for purposes of Code Sec. 430(h)(3)(A) and IRS Reg. §1.430(h)(3)-1(a)(2) are used to determine a multiemployer plan’s current liability for purposes of applying the full-funding rules of Code Sec. 431(c)(6). For this purpose, a multiemployer plan is permitted to apply either the annually adjusted static mortality tables or generational mortality tables.

Cooperative and small employer charity plans. The IRS notes that, under Code Sec. 433(h)(3)(B)(i), regulations may be issued to prescribe mortality tables for cooperative and small employer charity (CSEC) plans to be used in determining current liability for purposes of Code Sec. 433(c)(7)(C). IRS Reg. Sec. 1.433(h)(3)-1(a) provides that the mortality tables described in Code Sec. 430(h)(3)(A) are to be used to determine current liability under Code Sec. 433(c)(7)(C).

Comments requested. The IRS is requesting comments on a couple of issues pertaining to mortality rates. The IRS notes that RPEC released the Pri-2012 Private Retirement Plans Mortality Tables Report (the Pri-2012 Mortality Tables Report) on October 23, 2019. The IRS requests comments about whether there are other studies of actual mortality experience of individuals covered by pension plans and projected trends in that experience that should be considered for use in developing mortality tables for future use under Code Sec. 430. In addition, if the Pri-2012 Mortality Tables Report were to be used to develop Code Sec. 430(h)(3)(A) mortality tables, which of the tables in the Pri-2012 Mortality Tables Report should be used?

Source: IRS Notice 2019-67.

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