Plan may use substitute male mortality tables

Plain-English summary

A single-employer defined benefit plan asked to use substitute mortality tables for its male population when making computations under section 430. The IRS approved the request for up to ten years beginning with the plan year starting January 1, 2016. The approved rates were based on the plan's mortality experience from 2010 through 2013 and used 2011 as the base year. The approval may end early if the population loses credible mortality experience, controlled-group requirements are not met, the covered population changes significantly, the table stops predicting mortality accurately, or replacement-table guidance applies. The IRS reviewed the development and fit of the mortality rates but did not approve the accuracy of other calculations or submitted material.

Ruling snapshot

• Question: May the plan use substitute mortality tables for its male population under section 430?
• Outcome: Yes, for up to ten years beginning with the 2016 plan year, subject to early-termination rules.
• Key authorities: IRC § 430(h)(3); Treas. Reg. §§ 1.430(h)(3)-1 and 1.430(h)(3)-2

Full text (IRS public release)

Significant Index No. 0430.00-00

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

NOV 19 2015

Re:

         EIN:                 , Plan No.         (the “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 male
subpopulation of the Plan 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
commencing January 1, 2016. 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 hereby granted to use the male substitute mortality rates shown in the
following table:

Age     Males       Age     Males       Age     Males       Age     Males
 1      0.000510     10     0.000170     19     0.000268     28     0.000372
 2      0.000344     11     0.000175     20     0.000279     29     0.000390
 3      0.000286     12     0.000183     21     0.000292     30     0.000420
 4      0.000223     13     0.000192     22     0.000303     31     0.000472
 5      0.000204     14     0.000206     23     0.000316     32     0.000532
 6      0.000195     15     0.000218     24     0.000326     33     0.000597
 7      0.000187     16     0.000230     25     0.000337     34     0.000664
 8      0.000173     17     0.000244     26     0.000354     35     0.000732
 9      0.000167     18     0.000256     27     0.000362     36     0.000796


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Age     Males       Age     Males       Age     Males       Age     Males
37      0.000856     58     0.003854     79     0.045520    100     0.343266
38      0.000902     59     0.004278     80     0.051642    101     0.358489
39      0.000945     60     0.004743     81     0.058213    102     0.371800
40      0.000988     61     0.005252     82     0.065129    103     0.382901
41      0.001034     62     0.005804     83     0.071920    104     0.391499
42      0.001089     63     0.006528     84     0.078657    105     0.397297
43      0.001153     64     0.007445     85     0.086043    106     0.400000
44      0.001231     65     0.008528     86     0.094779    107     0.400000
45      0.001321     66     0.009752     87     0.105753    108     0.400000
46      0.001410     67     0.011091     88     0.118952    109     0.400000
47      0.001509     68     0.012489     89     0.134079    110     0.400000
48      0.001619     69     0.013964     90     0.150839    111     0.400000
49      0.001739     70     0.015599     91     0.168938    112     0.400000
50      0.001870     71     0.017476     92     0.188079    113     0.400000
51      0.001983     72     0.019681     93     0.207966    114     0.400000
52      0.002136     73     0.022084     94     0.228305    115     0.400000
53      0.002330     74     0.024631     95     0.248800    116     0.400000
54      0.002559     75     0.027512     96     0.269155    117     0.400000
55      0.002825     76     0.030919     97     0.289075    118     0.400000
56      0.003129     77     0.035043     98     0.308263    119     0.400000
57      0.003471     78     0.039952     99     0.326426    120     1.000000

The above tables will be used for all males in the Plan The above rates were developed
based on an experience study period from January 1, 2010, through December 31,
2013, and were calculated using the Karup-King method. The base year for the
resulting tables is 2011. The Internal Revenue 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 populations within the Plan.

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 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 regulations, requiring that the groups for which
    substitute mortality tables is 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 regulations, regarding the requirement that other plans
    and populations in the controlled group must use substitute mortality tables


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    unless it can be demonstrated that they do not have credible mortality
    experience,

(3) 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 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),

(4) 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 Commissioner or as certified by the plan’s
    actuary to the satisfaction of the Commissioner, and

(5) The date specified in guidance published in the Internal Revenue Bulletin
    pursuant to a replacement of 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 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
Baltimore, Maryland and to the Manager, EP Compliance Unit in Chicago, Illinois.

If you require further assistance in this matter, please contact
(ID#           ) at (     )       -        .

                                           Sincerely,


                                           David M. Ziegler, Manager
                                           Employee Plans Actuarial Group 2

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