IRS PROVIDES MORTALITY TABLE FOR DETERMINING CURRENT LIABILITY OF LARGE, SINGLE-EMPLOYER DEFINED BENEFIT PLANS.

Rev. Rul. 95-28

ISSUE

What is the mortality table to be used under section 412(l)(7)(C)(ii)(I) of the Internal Revenue Code, as added by section 751(a) of the Retirement Protection Act of 1994 (RPA)?

LAW AND ANALYSIS

Section 412(l) of the Code provides additional funding requirements for certain underfunded defined benefit pension plans that have more than 100 participants and that are not multiemployer plans. In general, the additional funding requirements are determined based on a plan's unfunded current liability, as defined in section 412(l)(8).

Section 751(a) of RPA, which is part of the Uruguay Round Agreements Act, added section 412(l)(7)(C)(ii) to the Code, effective for plan years beginning after December 31, 1994. Section 412(l)(7)(C)(ii) provides that, for purposes of determining current liability, the mortality table used shall be the table prescribed by the Secretary, and sets forth the basis for establishing a table. For plan years beginning before the effective date of the first tables prescribed under section 412(l)(7)(C)(ii)(II), the table must be based on the prevailing commissioners' standard table (described in section 807(d)(5)(A)) used to determine reserves for group annuity contracts issued on January 1, 1993.

Section 412(l)(7)(C)(ii)(II) of the Code, as added by RPA, states that the Secretary may by regulation prescribe mortality tables to be used in determining current liability for plan years beginning after December 31, 1999.

For purposes of section 807(d)(5) of the Code, Rev. Rul. 92-19, 1992-1 C.B. 227, specifies the prevailing commissioners' standard table used to determine reserves for group annuity contracts issued on January 1, 1993, as the 1983 Group Annuity Mortality Table (1983 GAM).

Section 412(l)(7)(C)(iii)(I) of the Code, as added by RPA, provides that for plan years beginning after December 31, 1995, the Secretary shall establish mortality tables that may be used to determine current liability under section 412(l) for individuals who are entitled to benefits under the plan on account of disability. Under section 412(l)(7)(C)(iii)(III), in the case of any plan year beginning in 1995, the mortality assumption for individuals who are entitled to benefits under the plan on account of disability may be the same mortality assumption used for these individuals in the plan for purposes of section 412, other than for the purposes of determining current liability.

HOLDING

Except as provided in section 412(l)(7)(C)(iii), relating to disabled lives, the following mortality table is the mortality table for purposes of determining current liability under section 412(l)(7)(C)(ii)(I) of the Code for plan years beginning after December 31, 1994, and before the effective date of the first tables prescribed under section 412(l)(7)(C)(ii)(II). The table sets forth the number living based upon a starting population of one million lives at age 5 (lx), and the annual rate of mortality (qx), to be used for each age and each gender.

                  1983 Group Annuity Mortality Table

Section 412(l)(7)(C)(ii)(II), as added by RPA, provides that the Secretary may by regulation prescribe mortality tables to be used in determining current liability for plan years beginning after December 31, 1999. These tables are to be based upon the actual experience of pension plans and projected trends in such experience. In prescribing these tables, the Secretary is to take into account results of available independent studies of mortality of individuals covered by pension plans. The Service requests written comments concerning the mortality table to be used for determining current liability for plan years beginning after December 31, 1999 and information on existing or upcoming independent studies of mortality of individuals covered by pension plans. Comments and information should be sent to Commissioner of Internal Revenue, Attention: CP:E:EP, Washington, D.C. 20224. It is requested that any comments and information be furnished sufficiently early to enable the Secretary to take them into account in prescribing future mortality tables.

DRAFTING INFORMATION

The principal author of this revenue ruling is Donna Prestia of the Employee Plans Division. For further information regarding this revenue ruling, please contact the Employee Plans Division's taxpayer assistance telephone service at (202) 622-6076 between 2:30 and 4:00 Eastern time (not a toll free number) Monday thru Thursday. Ms. Prestia's number is (202) 622-7377 (also not a toll free number).