1 Analyses of this federal-register by attorneys

  1. Final Regulations Update Pension Plan Mortality Tables and Proposed Regulations Address COVID Impact on Substitute Tables

    Groom Law Group, CharteredJoshua ShapiroOctober 27, 2023

    The IRS recently published final regulationsregarding new mortality tables to be used for most qualified defined benefit plans. 88 Fed. Reg. 72,357 (Oct. 20, 2023). The new tables are effective for plan years starting in 2024. On the same day, the IRS also issued proposed regulations regarding the calculation of substitute mortality tables for plans that have sufficiently credible mortality experience. 88 Fed Reg. 72409.Below, we provide a high-level summary of these developments.Final Regulations Updating Mortality TablesFor background, actuaries generally use mortality assumptions when determining the value of pension liabilities. Under the Code, specific rules must be followed with regard to the mortality assumptions, with most qualified single-employer plans needing to use IRS-provided mortality tables to calculate funding requirements and the minimum value of lump sum distributions. The final regulations update the method used to determine those IRS-provided mortality tables.Back in 2017, the regulations updated how the mortality rates were determined. Those regulations provided that mortality rates would be calculated by using a base table, and then applying mortality improvement factors to project future mortality rates. The base tables were the tables from the RP-2014 Mortality Tables Report, and the improvement factors were Scale MP-2016.The final regulations update both the base tables and