Permission Granted to Use Substitute Mortality Tables

Significant Index No.: 0430.00-00
Release Date: 4/9/2021

Date: January 11, 2021

Re: Substitute Mortality Table Ruling

LEGEND:

Taxpayer = * * *
Plan = * * *

Dear * * *:

This letter is to inform you that your request to use substitute mortality tables for making computations under section 430 of the Internal Revenue Code (the “Code”) for the Plan has been granted with respect to the populations specified in this letter. This ruling is effective for a period of up to * * * plan years beginning with the plan year commencing January 1, * * *. Your request has been granted in accordance with section 430(h)(3) of the Code and section 303(h)(3) of the Employee Retirement Income Security Act of 1974.

This approval applies to the following specific populations:

• Male annuitants, including disabled participants

• Female annuitants, including disabled participants

Based on the information provided by the Taxpayer, the following populations do not have credible mortality experience, and therefore the standard mortality tables will be used for calculations under section 430 of the Code:

• Male nonannuitants, including disabled participants

• Female nonannuitants, including disabled participants

In granting this approval, we have only considered whether the substitute mortality rates were developed in accordance with section 1.430(h)(3)-2 of the Treasury Regulations (“Regulations”) and Revenue Procedure 2017-55. Accordingly, we are not expressing any opinion as to the accuracy or acceptability of any calculations or other material submitted with your request.

Permission is hereby granted to use the substitute mortality rates shown in the table below for the Plan:

The above rates were developed based on an experience study period from January 1, * * * through December 31, * * *, with a base year of * * *. The rates were calculated by adjusting the applicable standard mortality tables in section 1.430(h)(3)-1(d) of the Regulations, using the mortality ratio and credibility weighting factor determined by aggregating male and female experience, as shown in the table below.

The Internal Revenue Service has reviewed the substitute mortality rates and supporting information, and has determined that based on the information submitted, the rates were developed in accordance with section 1.430(h)(3)-2 of the Regulations and Revenue Procedure 2017-55.

The above rates must be applied on a generational basis, as provided in section 1.430(h)(3)-2(c)(3) of the Regulations.

Your attention is called to section 430(h)(3)(C)(ii) of the Code and section 1.430(h)(3)-2(c)(6) of the Regulations, which describe the circumstances in which the use of the substitute mortality table will terminate before the end of the * * * year period described above. In general, the substitute mortality tables can no longer be used as of the earliest of:

We draw your attention to the fact that the male and female nonannuitants experienced * * * deaths during the experience study period. Note that this population will have credible mortality experience if it experiences at least * * * deaths during a * * *-year period (corresponding to the length of the experience study used to construct the substitute mortality tables for the other populations). It is important to monitor this population to ensure that appropriate action is taken should this occur, to avoid violating paragraph (2) above.

Also note that section 1.430(h)(3)-2(c)(6)(iii) provides that the use of substitute mortality tables must be discontinued after a significant change in coverage unless the plan's actuary certifies in writing to the satisfaction of the Commissioner that the substitute mortality tables used for the population continue to be accurately predictive of future mortality of the population (faking into account the effect of the change in the population). For this purpose, a significant change in coverage occur if the number of individuals covered by the substitute mortality table for a plan year is less than * * * percent or more than * * * percent of either (1) he average number of individuals in total population over the years covered by the experience study on which the substitute mortality table is based, or (2) the number of individuals covered by the substitute mortality table in a plan year for which a certification described in section 1.430(h)(3)-2(c)(6)(iii)(A) of the Regulations was made.

For reference, the average number of he male and female annuitant of the Plan over the pare covered by the experience study, as well as the most recent number of male and female participants In the submission. are as follows:

A certification must be provided each year that it is required under the Regulations, as described above, signed by the enrolled actuary for the pan and stating that the substitute mortality tables continue to be accurately predictive of the expected future mortality for the plan. The certification must also contain a statement that:

All required certifications must be provided on or before the date Form 5500 is filed for each plan year for which the certification is required and must be accompanied by the supporting information relied upon by the enrolled actuary to make that certification. To the extent possible, please also provide the following supporting information:

This information must be provided to David M. Ziegler (or to another individual designated by the Service), by fax at (202) 317-8811, or to the following address:

Failure to provide this information by the due date may result in a requirement that the standard mortality tables must be used for purposes of section 430 of the Code, beginning with the earlier of (1) the plan year for which the deadline for providing this information is missed or (2) the date required for early termination of the use of the substitute mortality tables pursuant to section 1.430(h)(3)-2(c)(6)(ii) of the Regulations.

This ruling is directed only to the taxpayer that requested it Section 6110(k)(3) of the Code provides that it may not be used or cited by others as precedent.

When filing Form 5500 for the plan years for which the substitute mortality tables are used, please note the information that is required to be attached to Schedule SB (Actuarial Information) in accordance with the instructions to that form.

We have sent a copy of this letter to your authorized representatives pursuant to a power of attorney on file in this office and to the Manager, EP Classification in * * * and to the Manager, EP Compliance Unit in * * *.

If you have any questions regarding this matter, please contact * * * (ID# * * *) at * * *.

Sincerely,

David M. Ziegler, Manager
Employee Plans Actuarial Group 2

cc:
* * *