10-year approval of substitute mortality tables for two pension plans

Plain-English summary

A pension plan sponsor asked to use plan-specific substitute mortality tables for two defined benefit plans when calculating minimum funding under Code section 430. The IRS approved the tables for up to 10 plan years beginning January 1, 2026, for male and female annuitants and non-annuitants, excluding disabled participants. Disabled participants must continue using the standard mortality tables because their experience was not credible. The sponsor based the new tables on mortality experience from 2018 through 2022 because regulatory changes prevented continued use of its previously approved tables after 2025. The IRS found that the sponsor incorrectly included special 2020 through 2022 mortality adjustments in its benefit dispersion factor, but concluded that correcting the error would have an immaterial effect and did not require revised tables. The approval requires generational application, continued accuracy, annual actuarial certifications after significant coverage changes, and supporting information with those certifications.

Ruling snapshot

• Question: May the sponsor use plan-specific base substitute mortality tables for two defined benefit plans under section 430?
• Outcome: Approved (up to 10 plan years beginning January 1, 2026, for the specified non-disabled populations)
• Key authorities: IRC § 430(h)(3)(C); ERISA § 303(h)(3)(C); Treas. Reg. § 1.430(h)(3)-2; Rev. Proc. 2024-32

Full text (IRS public release)

Index No. 0430.00-00

[illegible]

AUG 22 2025

Release Number: 202552043
Release Date: 12/26/2025

Re: Ruling request for base substitute mortality tables

Taxpayer =
EIN: -

Plans for which substitute mortality tables are requested:

Plan 1 =
EIN: - (Plan No. )

Plan 2 =
EIN: - (Plan No. )

Dear

This letter is to inform you that the Taxpayer's request to use substitute mortality tables for
making computations under section 430 of the Internal Revenue Code (“Code”) for Plan 1 and
Plan 2 has been granted with respect to the populations specified in this letter. This ruling is
effective for a period of up to 10 plan years beginning with the plan year commencing January
1, 2026 for Plan 1 and Plan 2. The Taxpayer's request has been granted in accordance with
section 430(h)(3)(C)(i) of the Code and section 303(h)(3)(C)(i) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA’).

This approval applies to the following specific populations:

e Male annuitants of Plan 1 and Plan 2, excluding disabled annuitants
e Female annuitants of Plan 1 and Plan 2, excluding disabled annuitants

« Male non-annuitants of Plan 1 and Plan 2, excluding disabled non-annuitants

« Female non-annuitants of Plan 1 and Plan 2, excluding disabled non-annuitants

The Taxpayer has received two prior rulings. The first ruling, dated April 11, 2019, granted the
use of base substitute mortality tables for Plan 1 and Plan 2, effective for a period up to 10
plan years beginning with the plan year commencing January 1, 2019. The experience study

period used to construct these base substitute mortality tables was the period from January 1,
2014 through December 31, 2016.

The Taxpayer then submitted a request for a ruling to use base substitute mortality tables for
Plan 1+ and Plan 2 for the plan year beginning January 1, 2023. The experience study period
used to construct these base substitute mortality tables was the period from January 1, 2017
through December 31, 2020. This request was approved November 17, 2022, effective for a
period up to 10 plan years commencing January 1, 2023. The approved use of the base
substitute mortality tables currently being used will expire on December 31, 2032. However, in
accordance with section 1.430(h)(3)-2(g) of the Treasury Regulations (“Regulations”), these
previously approved substitute mortality tables can no longer be used beginning January 1,
2026 because they were developed under the previous section 1.430(h)(3))-2 of the
Regulations. Therefore, the Taxpayer submitted this new request for a ruling to use base
substitute mortality tables for Plan 1 and Plan 2 for the plan year beginning January 1, 2026,
based on an experience study period from January 1, 2018 through December 31, 2022, with
a base year of 2020.

The Taxpayer's request is made in accordance with section 430(h)(3)(C)(i) of the Code,
section 303(h)(3)((C)(i) of ERISA, section 1.430(h)(3)-2 of the Regulations, and Revenue
Procedure 2024-32.

Section 430(h)(3)(C)(i) of the Code states, in relevant part, that upon request by the plan
sponsor and approval by the Secretary, a mortality table which meets the requirements of
clause (iii) shall be used in determining any present value or making any computation under
section 430 of the Code during the period of consecutive plan years (not to exceed 10)
specified in the request.

Section 430(h)(3)(C ii) of the Code states, in relevant part, that notwithstanding clause (i), a
mortality table described in clause (i) shall cease to be in effect as of the earliest of—
(1) the date on which there is a significant change in the participants in the plan by reason
of a plan spinoff or merger or otherwise, or
(1) the date on which the plan actuary determines that such table does not meet the
requirements of clause (iii).

Section 430(h)(3)(C)(iii) of the Code states, in relevant part, that a mortality table meets the
requirements of this clause if—

(I) there is a sufficient number of plan participants, and the pension plans have been
maintained for a sufficient period of time, to have credible information necessary for
purposes of subclause (Il), and

(II) such table reflects the actual experience of the pension plans maintained by the
sponsor and projected trends in general mortality experience.

Section 1.430(h))((3)-2(c)(3)(i) of the Regulations states that a plan’s substitute mortality tables
must be generational mortality tables. A plan's substitute mortality tables are determined using
the plan's base substitute mortality tables developed pursuant to paragraph (d) or (e) of this
section and the mortality improvement factors described in paragraph (c)(3)(ii) of this section.

Section 1.430(h)(3)-2(c)(3)(ii) of the Regulations states, in relevant part, that the mortality
improvement factor for an age and gender is the cumulative mortality improvement factor
determined under section 1.430(h)(3)-1(b)(2)(ii) for that age and gender for the applicable
period. The applicable period is the period beginning with the base year for the base substitute
mortality table determined under paragraph (d) or (e) of this section and ending in the calendar
year in which the individual attains the age for which the probability of death is being
determined. The base year for the base substitute mortality table is the calendar year that
contains the day before the midpoint of the experience study period.

Section 1.430(h)(3)-2(c)(6)( ii) of the Regulations states, in relevant part, that a plan's substitute
mortality tables must not be used beginning with the earliest of —

(A) For a plan using a substitute mortality table for only one gender because of a lack of
credible mortality information with respect to the other gender, the first plan year for
which there is credible mortality information with respect to the gender that had lacked
credible mortality information (unless an approved substitute mortality table is used for
that gender);

(B) The first plan year for which the plan fails to satisfy the requirements of paragraph (c)(1)
of this section (regarding use of substitute mortality tables for all plans in the controlled
group), taking into account the rules of paragraph (f)(3) of this section (regarding the
(transition period for newly-affiliated plans);

(C)The second plan year following the plan year for which there is a significant change in
individuals covered by the plan as described in paragraph (c)(6)(iii) of this section;

(D)The first plan year following the plan year for which a substitute mortality table used for
a 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, or

(E)The date specified in guidance published in the Internal Revenue Bulletin (see §
601.601(d) of this chapter) in conjunction with a reptacement of mortality tables
specified under section 430(h)(3)(A) and § 1.430(h)(3)-1 (other than changes to the
mortality improvement rates under § 1.430(h)(3)-1(b)(1 iii) or annual updates to the
static mortality tables issued as noted in § 1.430(h)(3)-1(c)(1)(iv)).

Section 1.430(h)(3)-2(c)(6)(iii) of the Regulations states, in relevant part, that:

(A) For purposes of applying the rules of paragraph (c)(6)ii)(C) of this section, a significant
change in the individuals covered by a substitute mortality table for a plan year occurs if
the number of individuals covered by the substitute mortality table for the plan year ts
less than 80 percent or more than 120 percent of the average number of individuals in
that population over the years covered by the experience study on which the substitute
mortality tables are based. However, a change in coverage is not treated as significant if
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 that population (taking into account the effect of the change in the
population).

(B) For purposes of applying the rules of paragraph (c)(6)((ii)(C) of this section, a significant
change in the individuals covered by a substitute mortality table for a plan year occurs if
the number of individuals covered by the substitute mortality table for the plan year is
less than 80 percent or more than 120 percent of the number of individuals covered by

the substitute mortality table in a plan year for which a certification described in
paragraph (c)(6)((iii)(A) of this section was made on account of a prior change in
coverage. However, a change in coverage is not treated as significant if the plan's
actuary certifies in writing to the satisfaction of the Commissioner that the substitute
mortality tables used by the plan with respect to the covered population continue to be
accurately predictive of future mortality of that population (taking into account the effect
of the change in the population).

Section 1.430(h)(3)-2(d)(2)(i) of the Regulations states, in relevant part, that the base
substitute mortality table for a gender or other population must be developed from an
experience study of the mortality experience of that population that is collected over an
experience study period. The experience study period must consist of 2, 3, 4, or 5 consecutive
12-month periods, and must be the same period for all populations except as provided in
paragraph (c)(5)(t) of this section

Section 1.430(h)(3)-2(d)(2)(ii) of the Regulations states, in relevant part, that:

(A) Except as provided in paragraph (d)(2)(ii)(B) of this section, the last day of the
experience study period must be less than 3 years before the first day of the first plan
year for which the substitute mortality tables are to apply. For example, if January 1,
2019 is the first day of the first plan year for which the substitute mortality tables will be
used, then an experience study using calendar year data generally must include data
collected for a period that ends no earlier than December 31, 2016.

(B)If the plan sponsor submits a request for approval to use substitute mortality tables
more than 1 year (and less than 2 years) before the first day of the first plan year for
which the substitute mortality tables are to apply, the experience study period is not
treated as failing to satisfy the rule in paragraph (d)(2)(iiA) of this section if the last day
of the final year reflected in the experience data is less than 2 years before the date of
submission. For example, if an application for approval to use substitute mortality tables
that would apply for plan year beginning on or after January 1, 2019 is submitted in
2017, then an experience study using calendar year data may be based on data
collected for a period that ends as early as December 31, 2015.

Section 1.430(h)((3)-2(d)((2)(iii) of the Regulations states, in relevant part, that as provided in
paragraph (d)(4)(i) of this section, the mortality rates under the base substitute mortality tables
are amounts-weighted mortality rates that are derived from the experience study. An
individual's benefit amount (which is used to determine amounts-weighted mortality rates and
for other purposes under this paragraph (d)) is the individual's accrued benefit expressed in the
form of an annual benefit commencing at normal retirement age (or at the current age, if tater)
if an individual has not commenced benefits and the individual's annual payment if the
individual has commenced benefits. Because amounts-weighted mortality rates for a plan are
determined using benefit amounts, the experience study used to develop a base substitute
mortality table may not include periods before the plan was established.

Section 1.430(h)(3)-2(d)(3 ii) of the Regulations states, in relevant part, that the population's
benefit dispersion factor is equal to—
(A) The number of expected deaths for the population during the experience study period
(as defined in paragraph (d)(3)(iii) of this section); multiplied by

(B) The sum of the mortality-weighted squares of the benefits (as defined in paragraph
(d)(3)(iv) of this section); divided by

(C)The square of the sum of the mortality-weighted benefits (as defined in paragraph
(d)(3)(v) of this section).

Section 1.430(h)(3)-2(d)(4 ni)(B) of the Regulations states, in relevant part, that if a 12-month
period in the experience study period that begins after December 31, 2019, and before
January 1, 2023, the probability of death for an individual under paragraph (d)(4)(ii)(A)(2)(/) of
this section is determined as the mortality rate for the individual’s age (at the beginning of the
year) and gender from the standard mortality table determined under paragraph (d)(4)(iii)(A) of
this section multiplied by the adjustment factor in Table 1 for the calendar year that includes
the first day of the 12-month period. For example, for an experience study period that begins
April 1, 2019, and ends March 31, 2023, the probability of death for the year beginning April 1,
2022, for a male annuitant who is age 65 as of that date is the probability of death from the
base mortality table (0.01087), multiplied by the cumulative mortality improvement factor for
the period from 2012 to 2021 (4.02292) and by the adjustment factor for the 2022 calendar
year of 1.075, resulting in a probability of death of 0.01195.

Table 1 to paragraph (d))(4 (iii B)
_ Calendar year | Adjustment factor _

2020 c1m,| 1.15
2021 i 1.15
2022! 1.075

Section 1.430(h)(3)-2(d)(4)(iv) of the Regulations states, in relevant part, that mortality rates for
ages 96 and older under the base substitute mortality table are determined using the rules of
paragraph (d))4)(i) of this section but substituting a modified ratio to the mortality ratio
determined under paragraph (d)(4)(ii) of this section. The modified mortality ratio is determined
as follows—
(A) For ages 96 through 109, if the mortality ratio is greater than 1.0, the modified mortality
ratio is equal to the mortality ratio for the population reduced by 1/15th of the excess of
the mortality ratio over 1.0 for each year that the age exceeds 95.
(B) For ages 96 through 109, if the mortality ratio is less than 1.0, the modified mortality
ratio is equal to the mortality ratio for the population increased by 1/15th of the excess
of 1.0 over the mortality ratio for each year that the age exceeds 95.
(C)For ages 110 and older, the modified mortality ratio is equal to 1.0.

Section 1.430(h)(3)-2(g) of the Regulations states, in relevant part, that:

(1) This section applies for plan years beginning on or after January 1, 2025. Except as
provided in paragraph (g)(2) or (3) of this section, the substitute mortality table used for
a plan for such plan year must comply with the rules of paragraphs (a) through (f) of this
section.

(2) lf a plan sponsor has received approval from the Commissioner to use substitute
mortality tables for a plan year beginning in 2025, then the plan's base substitute
mortality tables that were approved are treated as satisfying the requirements of
paragraph (d) or (e) of this section, as applicable, for that plan year.

(3) A written request described in paragraph (b))((1)(i) of this section to use substitute
mortality tables for a plan year that begins during 2025 does not fail to satisfy the timing
requirement of paragraph (b)(1)(ii) of this section if it is submitted no later than October
31, 2024, provided that the plan sponsor agrees to a 90-day extension of the 180-day
review period in accordance with paragraph (b)(2)(iv) of this section.

Revenue Procedure 2024-32 sets forth the procedure by which the sponsor of a defined
benefit plan that is subject to the funding requirements of § 430 of the Code may request
approval from the Internal Revenue Service for the use of plan-specific substitute mortality
tables in accordance with § 430(h)(3)(C) and § 1.430(h)((3)-2 of the Regulations.

The Taxpayer's proposed substitute mortality tables were developed based on an experience
study period from January 1, 2018 through December 31, 2022, with a base year of 2020. This
satisfies the requirements under sections 1.430(h)(3)-2(c)(3) and (d)(2) of the Regulations.

The Taxpayer's proposed base substitute mortality tables were developed by adjusting the
applicable standard mortality tables in section 1.430(h)(3))-1(d) of the Regulations with the
mortality ratio and credibility weighting factors shown below.

Mortality Ratio and Credibility Weighting Factor Table

[illegible]

Note that in determining the benefit dispersion factor under section 1.430(h)(3)-2(d)(3)(ii) of the
Regulations, the Taxpayer incorrectly included the adjustments to the standard mortality table
for 2020, 2021, and 2022 as described in section 1.430(h)(3)-2(d)(4)(iii)(B) of the Regulations.
Based on the facts in this case, it was determined that correcting the dispersion factor would
have an immaterial impact on the Taxpayer's proposed base substitute mortality tables.
Therefore, we have not required a modification of the Taxpayer's proposed base substitute
mortality tables. However, the Taxpayer should be aware that other substitute mortality table
ruling requests may be denied or required to be corrected if the proposed base substitute
mortality tables include an incorrect calculation of the benefit dispersion factor.

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

e Disabled participants of Plan 1 and Plan 2

in granting this approval, we have only considered whether the Taxpayer's proposed base
substitute mortality tables were developed in accordance with section 1.430(h)(3)-2 of the
Regulations and Revenue Procedure 2024-32. Accordingly, we are not expressing any opinion
as to the accuracy or acceptability of any calculations or other materials submitted with the
Taxpayer's request.

Permission is hereby granted to use the base substitute mortality rates shown in the table
below for Plan 1 and Plan 2.

Base Substitute Mortality Tables
Approved for use beginning with the plan year commencing January 1, 2026 for Plan 1 and Plan 2
Base year 2020

[illegible]

The above base substitute mortality tables were developed based on an experience study
period from January 1, 2018 through December 31, 2022, with a base year of 2020. The base
substitute mortality tables listed above were verified by the Taxpayer's authorized
representatives on July 11, 2025

The Internal Revenue Service ("IRS") has reviewed the Taxpayer's proposed base substitute
mortality tables and supporting information, and has determined that based on the information
submitted, the Taxpayer's proposed base substitute mortality tables have been developed in
accordance with section 1.430(h)(3)-2 of the Regulations and Revenue Procedure 2024-32.

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

)(our attention is called to section 430(h)(3)(C)(ii) of the Code and section 1.430(h)(3)-
2(c)(6)(ii) of the Regulations, which describe the circumstances in which the use of the base
substitute mortality tables will terminate before the end of the 10-year period described above.
In general, the base substitute mortality tables can no longer be used as of the earliest of:

(A) For a plan using a substitute mortality table for only one gender, the first plan year for
which there is full or partial credible mortality information with respect to the other
gender that had lacked credible mortality information (unless an approved substitute
mortality table ts used for that gender),

(B) The first plan year in which the plan fails to satisfy the requirements of
section 1.430(h)(3)-2(c)(1) of the Regulations, regarding the requirement that other
plans and populations in the controlled group must also use substitute mortality tables
unless it can be demonstrated that they do not have credible mortality information
(taking into account the transition period for newly affiliated companies in section
1.430(h)(3))-2(f)(3) of the Regulations),

(C) The second plan year following the plan year for which there is a significant change in
individuals covered by the plan as described in section 1.430(h)(3)-2(c)(6)(iii) of the
Regulations,

(D) 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,

11

as determined by the Commissioner or as certified by the plan's actuary to the
satisfaction of the Commissioner, or

(E) 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) of the Code and
section 1.430(h)((3)-1 of the Regulations, other than changes to the mortality
improvement rates under section 1.430(h)(3)-1(b)(1)(iii) of the Regulations or annual
updates to the static mortality tables issued as noted in section 1.430(h)(3)-1(c)( 1)(iv)
of the Regulations.

Section 1.430(h)(3)-2(c)( 6)(iii) of the Regulations provides that the use of the base 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 base substitute
mortality tables used for the population continue to be accurately predictive of future mortality
of the population (taking into account the effect of the change in the population). For this
purpose, a significant change in coverage occurs if the number of individuals covered by the
base substitute mortality table for a plan year is less than 80 percent or more than 120 percent
of either:
(1) the average number of individuals in that population over the years covered by the
experience study on which the base substitute mortality tables are based, or
(2) the number of individuals covered by the base substitute mortality tables 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

A certification must be provided each year that it is required under the section 1.430(h)((3)-
2(c)(6)(ii)(C) of the Regulations, as described above, signed by the enrolled actuary for Plan 1
and Plan 2, stating that the base substitute mortality tables continue to be accurately predictive
of the expected future mortality for Plan 1 and Plan 2. This certification must also contain a
statement that:

(A) The enrolled actuary is current with educational requirements set forth by the Joint
Board for the Enrollment of Actuaries as well as any other actuarial designations
asserted;

(B) The enrolled actuary was personally involved in the determination that the substitute
mortality table is still accurately predictive and provides the actuary's best estimate for
the Plan;

(C)In determining that the substitute mortality table is still accurately predictive, the enrolled
actuary took into consideration the effect of business combinations, plan mergers or
spinoffs and settlernents/other risk transfers, and other events that would have similar
effects on the relevant populations; and,

(D) The enrolled actuary has the specific knowledge and experience to make the
judgments set forth above and attests to these representations.

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

12

information relied upon by the enrolled actuary of Plan 1 and Plan 2 to make this certification.
To the extent possible, please also provide the following supporting information:

(A) The number of actual deaths during the experience study period used to develop the
substitute mortality tables and the beginning and ending dates of the experience study
period.

(B)A table showing the number of expected deaths and actual deaths, reported separately
as of December 31, 2023 and for each plan year beginning with deaths during the plan
year ending December 31, 2023 through the plan year immediately preceding the most
recent actuarial valuation, and in total.

(C)A table similar to the stability demonstration required under section 8 of Revenue
Procedure 2024-32, showing the average number of participants in the population
covered by the substitute mortality table during the experience study period and the
number of participants in that population as of the end of each plan year, beginning with
December 31, 2023 through the plan year immediately preceding the most recent
actuarial valuation, expressed both as a headcount and as a percentage of the average
number of participants in the experience study.

(D)A table showing a comparison of (i) the average ages and (ii) percentage of the
population, by the following monthly single life annuity brackets: under $100, between
$100 and $250, between $250 to $500, between $500 to $1,000, between $1,000 and
$1,500, and $1,500 and over, along with the average age and average benefit amount
for the population in total. This information should also be provided for the population in
the experience study and at the end of each plan year, beginning with the valuation date
for the first plan year that the certification is required, through the date immediately
preceding the most recent actuarial valuation at the time the information is reported.

(E) An explanation of any material changes in the population.

This information must be provided to David M. Ziegler (or to another individual designated by
the Service) to the following address:

internal Revenue Service
Attn: Mr. David M. Ziegler
TE/GE: SE:T:EP:RA:T:A2
IR-6213
1111 Constitution Ave. NW
Washington DC 20224-0002

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 letter ruling may be revoked or modified retroactively if there was a misstatement or
omission of controlling facts, the facts at the time of the transaction are materially different from
the controlling facts on which the letter ruling was based, or the transaction involves a

13

continuing action or series of actions and the controlling facts change during the course of the
transaction.

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 the Form 5500 for Plan 1 and Plan 2 for the plan years for which these base
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 ruling to the Taxpayer's authorized representatives pursuant to the
Power of Attorney and Declaration of Representative (Form 2848) on file with the IRS.
Additionally, a copy of this letter ruling is being sent to the Manager, Classification Group 4 in
Houston, Texas.

If you wish to inquire about this ruling, please contact Mr (ID Badge
Number jat( ) -

Sincerely yours,

David M. Ziegler, Manager
Employee Plans Actuarial Group 2

Enclosures
Notice 437, Notice of Intention to Disclose (Rulings)
A deleted copy of the ruling

cc