PLR 200833027: Pension plans received approval to use substitute mortality tables
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This page covers one taxpayer's ruling, issued in 2008, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.
Plain-English summary
A taxpayer asked to use substitute mortality tables when applying section 430 to a redacted group of defined benefit pension plans. The IRS approved the male and female tables for non-disabled union and non-union annuitants for up to ten years beginning with a redacted plan year. It found that the submitted rates sufficiently reflected the covered populations' mortality experience. Prescribed tables would continue to apply to nonannuitants and qualifying disabled participants. The approval could end early if credibility, controlled-group, population-change, predictive-accuracy, or replacement-table conditions occurred, and the IRS expressed no view on other submitted calculations.
Ruling snapshot
- Question: Could the pension plans use their proposed substitute mortality tables under section 430?
- Outcome: Approved for the specified annuitant populations, subject to early-termination rules
- Key authorities: IRC § 430(h)(3); ERISA § 303(h)(3); Prop. Treas. Reg. § 1.430(h)(3)-2
Full text (IRS public release)
Significant Index No. 0430.00-00
DEPARTMENT OF THE TREASURY,
INTERNAL REVENUE SERVICE 200833027
WASHINGTON, D.C. 20224
MAY 20 2008
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION
T:EP:RA:A2
Re:
Plans for which substitute mortality tables are requested (“Permissive Group”) =
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 plans in the above Permissive Group has been granted with respect to the populations
specified in this letter, effective for a period of up to 10 years beginning with the
plan year. 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 (“ERISA”).
In granting this approval, we have considered only the development of the substitute mortality rates and whether they sufficiently reflect the mortality experience of the applicable plan populations. 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 herby granted to use the male and female substitute mortality rates
shown in the tables below:
2
200833027
Non-Disabled Union Annuitants | Non-Disabled Non-Union Annuitants Age | Males | Females | Males | Females 1 | 0.0005758 | 0.0005161 | 0.0005758 | 0.0005161 2 | 0.0003887 | 0.0003363 | 0.0003887 | 0.0003363 3 | 0.0003227 | 0.0002513 | 0.0003227 | 0.0002513 4 | 0.0002513 | 0.0001880 | 0.0002513 | 0.0001880 5 | 0.0002305 | 0.0001699 | 0.0002305 | 0.0001699 6 | 0.0002206 | 0.0001591 | 0.0002206 | 0.0001591 7 | 0.0002115 | 0.0001491 | 0.0002115 | 0.0001491 8 | 0.0001952 | 0.0001329 | 0.0001952 | 0.0001329 9 | 0.0001889 | 0.0001265 | 0.0001889 | 0.0001265 10 | 0.0001916 | 0.0001275 | 0.0001916 | 0.0001275 11 | 0.0001980 | 0.0001293 | 0.0001980 | 0.0001293 12 | 0.0002061 | 0.0001338 | 0.0002061 | 0.0001338 13 | 0.0002169 | 0.0001401 | 0.0002169 | 0.0001401 14 | 0.0002308 | 0.0001479 | 0.0002308 | 0.0001479 15 | 0.0002444 | 0.0001568 | 0.0002444 | 0.0001568 16 | 0.0002580 | 0.0001641 | 0.0002580 | 0.0001641 17 | 0.0002735 | 0.0001715 | 0.0002735 | 0.0001715 18 | 0.0002871 | 0.0001752 | 0.0002871 | 0.0001752 19 | 0.0003007 | 0.0001762 | 0.0003007 | 0.0001762 20 | 0.0003134 | 0.0001762 | 0.0003134 | 0.0001762 21 | 0.0003260 | 0.0001762 | 0.0003260 | 0.0001762 22 | 0.0003359 | 0.0001781 | 0.0003359 | 0.0001781 23 | 0.0003459 | 0.0001817 | 0.0003459 | 0.0001817 24 | 0.0003522 | 0.0001864 | 0.0003522 | 0.0001864 25 | 0.0003576 | 0.0001929 | 0.0003576 | 0.0001929 26 | 0.0003668 | 0.0002015 | 0.0003668 | 0.0002015 27 | 0.0003725 | 0.0002099 | 0.0003725 | 0.0002099 28 | 0.0003833 | 0.0002212 | 0.0003833 | 0.0002212 29 | 0.0004018 | 0.0002335 | 0.0004018 | 0.0002335 30 | 0.0004330 | 0.0002511 | 0.0004330 | 0.0002511 31 | 0.0004866 | 0.0002949 | 0.0004866 | 0.0002949 32 | 0.0005481 | 0.0003362 | 0.0005481 | 0.0003362 33 | 0.0006154 | 0.0003766 | 0.0006154 | 0.0003766 34 | 0.0006846 | 0.0004137 | 0.0006846 | 0.0004137
200833027
Non-Disabled Union Annuitants | Non-Disabled Non-Union Annuitants Age | Males | Females | Males | Females
35 | 0.0007539 | 0.0004494 | 0.0007539 | 0.0004494 36 | 0.0008202 | 0.0004839 | 0.0008202 | 0.0004839
37 | 0.0008816 | 0.0005189 | 0.0008816 | 0.0005189
38 | 0.0009354 | 0.0005573 | 0.0009354 | 0.0005573 39 | 0.0009858 | 0.0006008 | 0.0009858 | 0.0006008 40 | 0.0010365 | 0.0006546 | 0.0010365 | 0.0006546 41 | 0.0011003 | 0.0007047 | 0.0011059 | 0.0007177 42 | 0.0012278 | 0.0008048 | 0.0012477 | 0.0007900 43 | 0.0014190 | 0.0009551 | 0.0014619 | 0.0008688 44 | 0.0016740 | 0.0011553 | 0.0017463 | 0.0009541
45 | 0.0019928 | 0.0014057 | 0.0021009 | 0.0010369 46 | 0.0023753 | 0.0017061 | 0.0025246 | 0.0011225 47 | 0.0028216 | 0.0020567 | 0.0030153 | 0.0012191
48 | 0.0033316 | 0.0024572 | 0.0035729 | 0.0014237 49 | 0.0039053 | 0.0029079 | 0.0041955 | 0.0017314 50 | 0.0045429 | 0.0034086 | 0.0048828 | 0.0021514 51 | 0.0050805 | 0.0039594 | 0.0050224 | 0.0022685 52 | 0.0056579 | 0.0045603 | 0.0051017 | 0.0024668 53 | 0.0062790 | 0.0052112 | 0.0051722 | 0.0027254 54 | 0.0069483 | 0.0059123 | 0.0052400 | 0.0030337 55 | 0.0076700 | 0.0066633 | 0.0053649 | 0.0033920 56 | 0.0084491 | 0.0071649 | 0.0055923 | 0.0038087 57 | 0.0092904 | 0.0077286 | 0.0059146 | 0.0042765 58 | 0.0101992 | 0.0083594 | 0.0063608 | 0.0047992 59 | 0.0111813 | 0.0090620 | 0.0069051 | 0.0053941
60 | 0.0122435 | 0.0098421 | 0.0075610 | 0.0060465 61 | 0.0133939 | 0.0107056 | 0.0083459 | 0.0067477 62 | 0.0146414 | 0.0116590 | 0.0091934 | 0.0074987 63 | 0.0159971 | 0.0127095 | 0.0102056 | 0.0082984 64 | 0.0174738 | 0.0138648 | 0.0112922 | 0.0091625 65 | 0.0190873 | 0.0151332 | 0.0125056 | 0.0101075 66 | 0.0208567 | 0.0165240 | 0.0139264 | 0.0111305 67 | 0.0228039 | 0.0180474 | 0.0154176 | 0.0122296 68 | 0.0249543 | 0.0197149 | 0.0169612 | 0.0134302 69 | 0.0273366 | 0.0215401 | 0.0187365 | 0.0147779 70 | 0.0299818 | 0.0235392 | 0.0205898 | 0.0163276 71 | 0.0329228 | 0.0257315 | 0.0227817 | 0.0180283
200833027
Non-Disabled Union Annuitants | Non-Disabled Non-Union Annuitants Age | Males | Females | Males | Females
72 | 0.0361942 | 0.0281404 | 0.0257265 | 0.0200524 73 | 0.0398326 | 0.0307931 | 0.0281443 | 0.0221772 74 | 0.0438756 | 0.0337211 | 0.0308885 | 0.0242633 75 | 0.0483627 | 0.0369609 | 0.0340027 | 0.0264891 76 | 0.0533344 | 0.0405539 | 0.0375381 | 0.0289239 77 | 0.0588329 | 0.0445468 | 0.0415555 | 0.0316136 78 | 0.0649026 | 0.0489907 | 0.0461267 | 0.0346137 79 | 0.0715912 | 0.0539417 | 0.0513370 | 0.0379906 80 | 0.0789498 | 0.0594596 | 0.0572876 | 0.0418215 81 | 0.0870342 | 0.0656076 | 0.0640973 | 0.0461955 82 | 0.0959057 | 0.0724514 | 0.0719042 | 0.0512145 83 | 0.1056318 | 0.0800576 | 0.0808665 | 0.0569953 84 | 0.1162875 | 0.0884932 | 0.0911629 | 0.0636723 85 | 0.1279570 | 0.0978258 | 0.1029931 | 0.0713995 86 | 0.1407341 | 0.1081233 | 0.1165798 | 0.0803514 87 | 0.1547239 | 0.1194558 | 0.1321701 | 0.0907240 88 | 0.1700441 | 0.1318992 | 0.1500371 | 0.1027361 89 | 0.1868266 | 0.1455398 | 0.1704820 | 0.1166303 90 | 0.2052185 | 0.1604760 | 0.1938385 | 0.1326751 91 | 0.2253839 | 0.1768210 | 0.2204763 | 0.1511673 92 | 0.2475035 | 0.1947040 | 0.2508054 | 0.1724357 93 | 0.2678363 | 0.2118120 | 0.2706980 | 0.1913994 94 | 0.2867169 | 0.2281762 | 0.2891697 | 0.2095386 95 | 0.3041450 | 0.2437965 | 0.3062205 | 0.2268533 96 | 0.3201209 | 0.2586730 | 0.3218504 | 0.2433434 97 | 0.3346443 | 0.2728057 | 0.3360595 | 0.2590091 98 | 0.3477155 | 0.2861946 | 0.3488476 | 0.2738502 99 | 0.3593343 | 0.2988396 | 0.3602148 | 0.2878669 100 | 0.3695007 | 0.3107409 | 0.3701611 | 0.3010590 101 | 0.3782148 | 0.3218983 | 0.3786865 | 0.3134266 102 | 0.3854765 | 0.3323118 | 0.3857910 | 0.3249697 103 | 0.3912859 | 0.3419816 | 0.3914746 | 0.3356884 104 | 0.3956430 | 0.3509075 | 0.3957373 | 0.3455825 105 | 0.3985477 | 0.3590896 | 0.3985791 | 0.3546520 106 | 0.4000000 | 0.3665278 | 0.4000000 | 0.3628971 107 | 0.4000000 | 0.3732223 | 0.4000000 | 0.3703177 108 | 0.4000000 | 0.3791729 | 0.4000000 | 0.3769138
200833027
Non-Disabled Union Annuitants | Non-Disabled Non-Union Annuitants Age | Males | Females | Males | Females 109 | 0.4000000 | 0.3843797 | 0.4000000 | 0.3826853 110 | 0.4000000 | 0.3888426 | 0.4000000 | 0.3876324 111 | 0.4000000 | 0.3925617 | 0.4000000 | 0.3917549 112 | 0.4000000 | 0.3955370 | 0.4000000 | 0.3950530 113 | 0.4000000 | 0.3977685 | 0.4000000 | 0.3975265 114 | 0.4000000 | 0.3992562 | 0.4000000 | 0.3991755 115 | 0.4000000 | 0.4000000 | 0.4000000 | 0.4000000 116 | 0.4000000 | 0.4000000 | 0.4000000 | 0.4000000 117 | 0.4000000 | 0.4000000 | 0.4000000 | 0.4000000 118 | 0.4000000 | 0.4000000 | 0.4000000 | 0.4000000 119 | 0.4000000 | 0.4000000 | 0.4000000 | 0.4000000 120 | 1.0000000 | 1.0000000 | 1.0000000 | 1.0000000
The above tables will be used for all male and female union and non-union annuitants, respectively, in the Permissive Group, except for disabled participants for whom separate mortality tables are permitted to be used under section 430(h)(3)(D) of the Code. The above rates were developed based on an experience study period from January 1, , through December 31, , and were graduated using Lowrie’s variation of the Whittaker Henderson graduation method. The base year for the resulting tables is . The Service has reviewed the substitute mortality rates and supporting information, and has determined that based on the information submitted, the rates sufficiently reflect the mortality experience of the applicable plan populations. Separate mortality tables prescribed under section 430(h)(3)(A) of the Code will be used for all nonannuitant participants, and mortality tables prescribed under 430(h)(3)(D) will be used for those disabled participants described in that section.
Your attention is called to section 430(h)(3)(C)(ii) of the Code, section 303(h)(3)(C)(ii) of ERISA, and section 1.430(h)(3)-2(d)(4) of the proposed regulations, which describe the circumstances in which the use of the substitute mortality table will terminate before the end of the 10-year period described above. In general, the substitute mortality tables can no longer be used as of the earliest of:
(1) The plan year in which the plan fails to satisfy the requirements of paragraph 1.430(h)(3)-2(c)(1) of the proposed regulations, requiring that the groups for which substitute mortality tables are used must have credible mortality experience,
(2) The plan year in which the plan fails to satisfy the requirements of paragraph 1.430(h)(3)-2(d)(1) of the proposed regulations, regarding the requirement that other plans and populations in the controlled group must use substitute mortality
(3)
(4)
(5)
200833027
6
tables unless it can be demonstrated that they do not have credible mortality experience,
The second plan year following the plan year in which there is a significant change in individuals covered by the plan as described in paragraph 1.430(h)(3)-2(d)(4)(ii) of the proposed regulations (generally applicable when there is a change of 20% or more in the number of individuals in the population for which the substitute mortality table is used),
The plan year following the plan year in which a substitute mortality table used for a plan population is no longer accurately predictive of future mortality of that population, as determined by the Service or as certified by the enrolled actuary to the satisfaction of the Service, and
The date specified in guidance published in the Internal Revenue Bulletin regarding any replacement mortality tables specified under section 430(h)(3)(A) and 1.430(h)(3)-1, other than annual updates to the static mortality tables issued pursuant to 1.430(h)(3)-1(a)(3) of the proposed 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 the
If you require further assistance in this matter, please contact
Sincerely,
Rhonda G. Migdail, Acting Manager
Employee Plans Technical
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