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IRS Updates Mortality Improvement Rates, Seeks Comments

DEC. 10, 2019

Notice 2019-67; 2019-52 IRB 1

DATED DEC. 10, 2019
DOCUMENT ATTRIBUTES
Citations: Notice 2019-67; 2019-52 IRB 1

Updated Mortality Improvement Rates and Static Mortality Tables for Defined Benefit Pension Plans for 2021

PURPOSE

This notice specifies updated mortality improvement rates and static mortality tables to be used for defined benefit pension plans under § 430(h)(3)(A) of the Internal Revenue Code (Code) and section 303(h)(3)(A) of the Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406, as amended (ERISA). These updated mortality improvement rates and static tables, which are being issued pursuant to the regulations under § 430(h)(3)(A), apply for purposes of calculating the funding target and other items for valuation dates occurring during the 2021 calendar year.

This notice also includes a modified unisex version of the mortality tables for use in determining minimum present value under § 417(e)(3) of the Code and section 205(g)(3) of ERISA for distributions with annuity starting dates that occur during stability periods beginning in the 2021 calendar year.

BACKGROUND

Section 412 of the Code provides minimum funding requirements that generally apply for defined benefit plans. Section 412(a)(2) provides that § 430 sets forth the minimum funding requirements that apply to defined benefit plans that are not multiemployer plans or CSEC plans. Section 430(a) defines the minimum required contribution for such a plan by reference to the plan's funding target for the plan year. Under § 430(d)(1), a plan's funding target for a plan year generally is the present value of all benefits accrued or earned under the plan as of the first day of that plan year.

Section 430(h)(3) provides rules regarding the mortality tables that generally are used under § 430. Under § 430(h)(3)(A), except as provided in § 430(h)(3)(C) or (D), the Secretary is to prescribe by regulation mortality tables to be used in determining any present value or making any computation under § 430. Those tables are to be based on the actual experience of pension plans and projected trends in that experience. Section 430(h)(3)(B) requires the Secretary to revise any table in effect under § 430(h)(3)(A) at least every 10 years to reflect the actual experience of pension plans and projected trends in that experience.

Section 430(h)(3)(C) provides that, upon request by a plan sponsor and approval by the Secretary, substitute mortality tables that meet the applicable requirements may be used in lieu of the standard mortality tables provided under §430(h)(3)(A). Section 430(h)(3)(D) provides for the use of separate mortality tables with respect to certain individuals who are entitled to benefits on account of disability.

Mortality Tables for Purposes of § 430

Section 1.430(h)(3)-1 provides rules regarding the mortality tables used under § 430(h)(3)(A) for plan years beginning on or after January 1, 2018. The mortality tables used under § 430(h)(3)(A) are based on the tables in the RP-2014 Mortality Tables Report,1 adjusted for mortality improvement. Section 1.430(h)(3)-1(d) sets forth base mortality tables with a base year of 2006.

Section 1.430(h)(3)-1(a) permits plan sponsors to apply the projection of mortality improvement in either of two ways: through use of static tables that are updated annually to reflect expected improvements in mortality or through use of generational tables. Section 1.430(h)(3)-1(a)(2)(i)(C) provides that, for valuation dates occurring in years after 2018, updated mortality improvement rates that take into account new data for mortality improvement trends of the general population, along with static mortality tables that reflect those updated mortality improvement rates, will be provided through guidance published in the Internal Revenue Bulletin. Notice 2018-2, 2018-2 I.R.B. 281, and Notice 2019-26, 2019-15 I.R.B. 943, provide mortality improvement rates and static mortality tables that apply for valuation dates occurring during 2019 and 2020, respectively.

Section 1.430(h)(3)-2 provides rules for the use of substitute mortality tables that are based on the mortality experience of the plan. Pursuant to § 1.430(h)(3)-2(c)(3)(ii), substitute mortality tables are developed using the mortality improvement rates used under § 1.430(h)(3)-1.

Application of These Tables for Other Funding Rules

Section 431 provides the minimum funding standards for multiemployer plans described in § 414(f) that are subject to § 412. Section 431(c)(6)(D)(iv) provides that the Secretary may by regulation prescribe mortality tables to be used in determining current liability for purposes of § 431(c)(6)(B). Section 1.431(c)(6)-1 provides that the same mortality assumptions that apply for purposes of § 430(h)(3)(A) and § 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 § 431(c)(6). For this purpose, a multiemployer plan may apply either the static mortality tables or the generational mortality tables (as updated pursuant to § 1.430(h)(3)-1(a)(2)(i)(C) and (a)(3)).

Section 433 provides the minimum funding standards for CSEC plans described in § 414(y). Section 433(h)(3)(B)(i) provides that the Secretary may by regulation prescribe mortality tables to be used in determining current liability for purposes of § 433(c)(7)(C). Section 1.433(h)(3)-1(a) provides that the mortality tables described in § 430(h)(3)(A) are to be used to determine current liability under § 433(c)(7)(C).

Application of Mortality Tables for Minimum Present Value Requirements under § 417(e)(3)

Section 417(e)(3) generally provides that the present value of certain accelerated forms of benefit under a qualified pension plan (including single-sum distributions) must not be less than the present value of the accrued benefit using applicable interest rates and the applicable mortality table. Section 417(e)(3)(B) defines the term “applicable mortality table” as the mortality table specified for the plan year under § 430(h)(3)(A) (without regard to § 430(h)(3)(C) or (D)), modified as appropriate by the Secretary.

Rev. Rul. 2007-67, 2007-2 CB 1047, provides that, except as otherwise stated in future guidance, the applicable mortality table under § 417(e)(3) is a static mortality table set forth in published guidance that is developed based on a fixed blend of 50 percent of the static male combined mortality rates and 50 percent of the static female combined mortality rates used under § 1.430(h)(3)-1Rev. Rul. 2007-67 also provides that the applicable mortality table for a calendar year applies to distributions with annuity starting dates that occur during stability periods that begin during that calendar year.

MORTALITY IMPROVEMENT RATES FOR 2021

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/).

STATIC MORTALITY TABLES FOR 2021

The static mortality tables that apply under § 430(h)(3)(A) for valuation dates occurring during 2021 are set forth in the appendix to this notice. The mortality rates in these tables have been developed from the methodology and base mortality rates set forth in § 1.430(h)(3)-1(c) and (d) using the mortality improvement rates specified in the previous section of this notice.

The static mortality table that applies under § 417(e)(3) for distributions with annuity starting dates occurring during stability periods beginning in 2021 is set forth in the appendix to this notice in the column labeled “Unisex.” The mortality rates in this table are derived from the mortality tables specified under § 430(h)(3)(A) for 2021 in accordance with the procedures set forth in Rev. Rul. 2007-67.

REQUEST FOR COMMENTS

As provided in § 430(h)(3)(B), the Department of the Treasury (Treasury Department) is required to revise the mortality tables used under § 430(h)(3)(A) at least every 10 years to reflect the actual mortality experience of pension plans and projected trends in that experience.2 On October 23, 2019, RPEC released the Pri-2012 Private Retirement Plans Mortality Tables Report (the Pri-2012 Mortality Tables Report).3 The mortality tables in that report are based on a study of mortality experience of private-sector defined benefit pension plans in the United States covering calendar years 2010 through 2014. Comments are requested as to 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 § 430.4 For example, should the mortality tables under § 430(h)(3)(A) be developed taking into account studies that examine the mortality experience of individuals covered by large public-sector pension plans, such as RPEC's Pub-2010 Public Retirement Plans Mortality Tables Report?5 In addition, comments are requested as to which of the tables in the Pri-2012 Mortality Tables Report should be used to develop § 430(h)(3)(A) mortality tables, if the Pri-2012 Mortality Tables Report were to be used for that purpose. For example, should the § 430(h)(3)(A) mortality tables include separate retiree and contingent survivor tables, as are provided in the Pri-2012 Mortality Tables Report?

Any comments must be received by February 28, 2020. Taxpayers may submit comments electronically via the Federal eRulemaking Portal at www.regulations.gov (indicate IRS and Notice 2019-0053). Alternatively, taxpayers may submit hard copy submissions to:

CC:PA:LPD:PR (Notice 2019-67), Room 5203, Internal Revenue Service
P.O. Box 7604
Ben Franklin Station
Washington, D.C., 20044

Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to:

CC:PA:LPD:PR (Notice 2019-67), Courier's Desk, Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, D.C. 20224
Attn: CC:PA:LPD:PR

All comments received will be available for public inspection on www.regulations.gov.

Drafting Information

The principal authors of this notice are Arslan Malik and Linda S. F. Marshall of the Office of the Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). For further information regarding this notice, contact Arslan Malik or Linda Marshall at (202) 317-6700 (not a toll-free number).


APPENDIX
Mortality Tables for 2021

Valuation Dates Occurring During 2021 and Distributions Subject to § 417(e)(3) with Annuity Starting Dates During Stability Periods Beginning in 2021

 

Male

Male

Male

Female

Female

Female

Unisex

Age

2021 Non-Annuitant Table

2021 Annuitant Table

2021 Optional Combined Table for Small Plans

2021Non-Annuitant Table

2021 Annuitant Table

2021 Optional Combined Table for Small Plans

2021 Table for Distributions Subject to § 417(e)(3)

0

0.003638

0.003638

0.003638

0.003191

0.003191

0.003191

0.003415

1

0.000213

0.000213

0.000213

0.000200

0.000200

0.000200

0.000207

2

0.000146

0.000146

0.000146

0.000132

0.000132

0.000132

0.000139

3

0.000122

0.000122

0.000122

0.000099

0.000099

0.000099

0.000111

4

0.000096

0.000096

0.000096

0.000075

0.000075

0.000075

0.000086

5

0.000085

0.000085

0.000085

0.000069

0.000069

0.000069

0.000077

6

0.000077

0.000077

0.000077

0.000064

0.000064

0.000064

0.000071

7

0.000069

0.000069

0.000069

0.000060

0.000060

0.000060

0.000065

8

0.000059

0.000059

0.000059

0.000056

0.000056

0.000056

0.000058

9

0.000048

0.000048

0.000048

0.000052

0.000052

0.000052

0.000050

10

0.000041

0.000041

0.000041

0.000049

0.000049

0.000049

0.000045

11

0.000043

0.000043

0.000043

0.000051

0.000051

0.000051

0.000047

12

0.000066

0.000066

0.000066

0.000060

0.000060

0.000060

0.000063

13

0.000087

0.000087

0.000087

0.000068

0.000068

0.000068

0.000078

14

0.000109

0.000109

0.000109

0.000076

0.000076

0.000076

0.000093

15

0.000131

0.000131

0.000131

0.000084

0.000084

0.000084

0.000108

16

0.000153

0.000153

0.000153

0.000091

0.000091

0.000091

0.000122

17

0.000177

0.000177

0.000177

0.000097

0.000097

0.000097

0.000137

18

0.000202

0.000202

0.000202

0.000103

0.000103

0.000103

0.000153

19

0.000230

0.000230

0.000230

0.000107

0.000107

0.000107

0.000169

20

0.000256

0.000256

0.000256

0.000108

0.000108

0.000108

0.000182

21

0.000290

0.000290

0.000290

0.000112

0.000112

0.000112

0.000201

22

0.000324

0.000324

0.000324

0.000114

0.000114

0.000114

0.000219

23

0.000349

0.000349

0.000349

0.000120

0.000120

0.000120

0.000235

24

0.000366

0.000366

0.000366

0.000125

0.000125

0.000125

0.000246

25

0.000356

0.000356

0.000356

0.000129

0.000129

0.000129

0.000243

26

0.000352

0.000352

0.000352

0.000135

0.000135

0.000135

0.000244

27

0.000355

0.000355

0.000355

0.000143

0.000143

0.000143

0.000249

28

0.000364

0.000364

0.000364

0.000151

0.000151

0.000151

0.000258

29

0.000379

0.000379

0.000379

0.000161

0.000161

0.000161

0.000270

30

0.000397

0.000397

0.000397

0.000175

0.000175

0.000175

0.000286

31

0.000420

0.000420

0.000420

0.000189

0.000189

0.000189

0.000305

32

0.000446

0.000446

0.000446

0.000206

0.000206

0.000206

0.000326

33

0.000471

0.000471

0.000471

0.000223

0.000223

0.000223

0.000347

34

0.000494

0.000494

0.000494

0.000241

0.000241

0.000241

0.000368

35

0.000515

0.000515

0.000515

0.000258

0.000258

0.000258

0.000387

36

0.000531

0.000531

0.000531

0.000274

0.000274

0.000274

0.000403

37

0.000548

0.000548

0.000548

0.000292

0.000292

0.000292

0.000420

38

0.000566

0.000566

0.000566

0.000311

0.000311

0.000311

0.000439

39

0.000586

0.000586

0.000586

0.000332

0.000332

0.000332

0.000459

40

0.000611

0.000611

0.000611

0.000354

0.000354

0.000354

0.000483

41

0.000638

0.000645

0.000638

0.000377

0.000375

0.000377

0.000508

42

0.000672

0.000731

0.000673

0.000403

0.000426

0.000403

0.000538

43

0.000716

0.000866

0.000718

0.000433

0.000506

0.000433

0.000576

44

0.000768

0.001045

0.000773

0.000467

0.000615

0.000467

0.000620

45

0.000830

0.001269

0.000840

0.000505

0.000753

0.000507

0.000674

46

0.000903

0.001538

0.000920

0.000549

0.000922

0.000555

0.000738

47

0.000987

0.001856

0.001015

0.000600

0.001126

0.000613

0.000814

48

0.001082

0.002226

0.001123

0.000656

0.001368

0.000680

0.000902

49

0.001188

0.002656

0.001248

0.000718

0.001652

0.000757

0.001003

50

0.001307

0.003150

0.001390

0.000789

0.001982

0.000849

0.001120

51

0.001440

0.003375

0.001536

0.000869

0.002094

0.000941

0.001239

52

0.001591

0.003617

0.001730

0.000961

0.002234

0.001056

0.001393

53

0.001750

0.003855

0.001951

0.001065

0.002404

0.001192

0.001572

54

0.001929

0.004108

0.002210

0.001183

0.002607

0.001352

0.001781

55

0.002133

0.004386

0.002598

0.001314

0.002845

0.001604

0.002101

56

0.002372

0.004697

0.003110

0.001458

0.003116

0.001932

0.002521

57

0.002655

0.005048

0.003560

0.001614

0.003423

0.002230

0.002895

58

0.002991

0.005442

0.004070

0.001781

0.003766

0.002551

0.003311

59

0.003388

0.005887

0.004634

0.001956

0.004143

0.002910

0.003772

60

0.003850

0.006382

0.005276

0.002140

0.004550

0.003334

0.004305

61

0.004384

0.006930

0.005998

0.002335

0.004990

0.003876

0.004937

62

0.004989

0.007529

0.006793

0.002540

0.005460

0.004467

0.005630

63

0.005668

0.008181

0.007654

0.002757

0.005954

0.005161

0.006408

64

0.006426

0.008892

0.008486

0.002992

0.006490

0.005805

0.007146

65

0.007256

0.009654

0.009374

0.003245

0.007065

0.006512

0.007943

66

0.008085

0.010500

0.010336

0.003594

0.007707

0.007344

0.008840

67

0.008991

0.011430

0.011310

0.003980

0.008416

0.008135

0.009723

68

0.009994

0.012469

0.012380

0.004418

0.009223

0.008994

0.010687

69

0.011119

0.013649

0.013577

0.004912

0.010131

0.009936

0.011757

70

0.012363

0.014964

0.014896

0.005474

0.011166

0.010973

0.012935

71

0.013770

0.016465

0.016402

0.006114

0.012341

0.012151

0.014277

72

0.015355

0.018167

0.018109

0.006839

0.013668

0.013483

0.015796

73

0.017135

0.020093

0.020039

0.007666

0.015174

0.014996

0.017518

74

0.019145

0.022282

0.022233

0.008604

0.016875

0.016707

0.019470

75

0.021407

0.024765

0.024721

0.009670

0.018802

0.018647

0.021684

76

0.023953

0.027591

0.027553

0.010890

0.021010

0.020872

0.024213

77

0.026805

0.030796

0.030765

0.012287

0.023544

0.023429

0.027097

78

0.030008

0.034447

0.034424

0.013870

0.026437

0.026352

0.030388

79

0.033580

0.038586

0.038573

0.015675

0.029768

0.029720

0.034147

80

0.037591

0.043316

0.043316

0.017736

0.033623

0.033623

0.038470

81

0.039501

0.048449

0.048449

0.019500

0.037852

0.037852

0.043151

82

0.043105

0.054292

0.054292

0.022881

0.042662

0.042662

0.048477

83

0.048463

0.060950

0.060950

0.027939

0.048204

0.048204

0.054577

84

0.055612

0.068541

0.068541

0.034693

0.054517

0.054517

0.061529

85

0.064599

0.077116

0.077116

0.043183

0.061669

0.061669

0.069393

86

0.075538

0.086868

0.086868

0.053455

0.069776

0.069776

0.078322

87

0.088387

0.097823

0.097823

0.065541

0.078909

0.078909

0.088366

88

0.103230

0.110093

0.110093

0.079481

0.089101

0.089101

0.099597

89

0.120037

0.123727

0.123727

0.095272

0.100387

0.100387

0.112057

90

0.138867

0.138867

0.138867

0.112950

0.112950

0.112950

0.125909

91

0.154865

0.154865

0.154865

0.126557

0.126557

0.126557

0.140711

92

0.171350

0.171350

0.171350

0.140982

0.140982

0.140982

0.156166

93

0.187876

0.187876

0.187876

0.156090

0.156090

0.156090

0.171983

94

0.204431

0.204431

0.204431

0.171750

0.171750

0.171750

0.188091

95

0.220714

0.220714

0.220714

0.187912

0.187912

0.187912

0.204313

96

0.239277

0.239277

0.239277

0.205461

0.205461

0.205461

0.222369

97

0.258199

0.258199

0.258199

0.223790

0.223790

0.223790

0.240995

98

0.277883

0.277883

0.277883

0.242864

0.242864

0.242864

0.260374

99

0.298113

0.298113

0.298113

0.262598

0.262598

0.262598

0.280356

100

0.318689

0.318689

0.318689

0.282807

0.282807

0.282807

0.300748

101

0.339457

0.339457

0.339457

0.303388

0.303388

0.303388

0.321423

102

0.360080

0.360080

0.360080

0.324029

0.324029

0.324029

0.342055

103

0.380363

0.380363

0.380363

0.344643

0.344643

0.344643

0.362503

104

0.399976

0.399976

0.399976

0.364830

0.364830

0.364830

0.382403

105

0.418469

0.418469

0.418469

0.384680

0.384680

0.384680

0.401575

106

0.436337

0.436337

0.436337

0.404077

0.404077

0.404077

0.420207

107

0.453187

0.453187

0.453187

0.422297

0.422297

0.422297

0.437742

108

0.469111

0.469111

0.469111

0.439597

0.439597

0.439597

0.454354

109

0.483871

0.483871

0.483871

0.455886

0.455886

0.455886

0.469879

110

0.497769

0.497769

0.497769

0.471033

0.471033

0.471033

0.484401

111

0.502821

0.502821

0.502821

0.485228

0.485228

0.485228

0.494025

112

0.502061

0.502061

0.502061

0.498255

0.498255

0.498255

0.500158

113

0.501305

0.501305

0.501305

0.503569

0.503569

0.503569

0.502437

114

0.500602

0.500602

0.500602

0.501604

0.501604

0.501604

0.501103

115

0.500000

0.500000

0.500000

0.500000

0.500000

0.500000

0.500000

116

0.500000

0.500000

0.500000

0.500000

0.500000

0.500000

0.500000

117

0.500000

0.500000

0.500000

0.500000

0.500000

0.500000

0.500000

118

0.500000

0.500000

0.500000

0.500000

0.500000

0.500000

0.500000

119

0.500000

0.500000

0.500000

0.500000

0.500000

0.500000

0.500000

120

1.000000

1.000000

1.000000

1.000000

1.000000

1.000000

1.000000

FOOTNOTES

1The RP-2014 Mortality Tables Report, as revised November 2014, is available at https://www.soa.org/Files/Research/Exp-Study/research-2014-rp-report.pdf.

2The Treasury Department is required to review the mortality tables used to determine the current liability for multiemployer plans and CSEC plans every 5 years under §§ 431(c)(6)(D)(vi) and 433(h)(3)(B)(ii), respectively.

4The mortality tables developed for future use under § 430 would also be used for the other purposes specified in this notice for which the mortality tables under § 430 are used.

5The Pub-2010 Public Retirement Plans Mortality Report is available at https://www.soa.org/globalassets/assets/files/resources/research-report/2019/pub-2010-mort-report.pdf.

END FOOTNOTES

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