IRS approves a pension plan's own substitute mortality tables for funding calculations, for up to 10 years

Plain-English summary

A company that sponsors a single-employer defined benefit pension plan asked the IRS for permission to use its own substitute mortality tables, rather than the standard tables, when calculating the plan's minimum funding obligations under Code section 430. Substitute tables let a plan base its funding math on the mortality experience of its own participants. The IRS granted the request for one plan (Plan 1), for up to 10 plan years starting January 1, 2026, covering a combined male and female, annuitant and non-annuitant population. The request followed a 2024 merger of another plan into Plan 1, which triggered a coverage-change rule in Revenue Procedure 2024-32 that required a fresh submission. The tables were built from an experience study covering 2021 through 2023, with a 2022 base year. The IRS noted that the taxpayer's actuary had made a calculation error (incorrectly folding in the pandemic-era adjustment factors for 2020, 2021, and 2022), but ruled that the impact was insignificant and approved the tables as submitted, while warning that the same error could cause other requests to be denied or corrected. The approval checks only that the tables were developed in accordance with the regulations; it does not vouch for the underlying numbers, and the plan must file annual actuarial certifications to keep using the tables.

Ruling snapshot

• Question: May the plan sponsor use plan-specific substitute mortality tables under section 430(h)(3) for computing minimum funding, for up to 10 plan years?
• Outcome: approved (granted for Plan 1's combined population, effective for plan years beginning January 1, 2026)
• Key authorities: IRC § 430(h)(3); ERISA § 303(h)(3); Treas. Reg. § 1.430(h)(3)-2; Rev. Proc. 2024-32

Full text (IRS public release)

Significant Index No. 0430.00-00

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

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION
                                                        JAN 16 2026

Release Number: 202614040
Release Date: 4/3/26

Re: Substitute Mortality Table Ruling

Taxpayer =
EIN: -
EIN: -
Plan 1 =
EIN: - , PN:

Other Plans for Which Other Substitute Mortality Tables Are Requested Separately

Plan 2 =
EIN: - , PN:
Plan 3 =
EIN: - , PN:
Plan 4 =
EIN: - , PN:

Other Plans For Which the Substitute Mortality Tables Are Not Intended to Be Used

Plan 5 =
EIN: - , PN:

Other Plans No Longer Existing
Plan 6 =
EIN: - ; PN:

Plan 7 =
EIN: - , PN:

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 ("Code") for the above Plan 1
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 years commencing January 1, 2026
for Plan 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 ("ERISA").

This approval applies to the following specific populations Plan 1:
• Combined data for male and female, annuitant and non-annuitant tables

This request is made in accordance with section 430(h)(3)(C) of the Code, section 303(h)(3) of
the ERISA, section 1.430(h)(3)-2 of the Treasury Regulations ("Regulations"), and Revenue
Procedure 2024-32.

According to information received, Plan 7 merged completely into Plan 1, effective December
31, 2024'. Prior to the merger, Plan 7 and Plan 7 each had been approved to use separate
plan specific substitute mortality tables on October 30, 2018, for up to 10-plan plan years
commencing January 1, 2018. To reflect this merger, Taxpayer requested approval from the
Internal Revenue Service ("Service") to continue to use the gender-specific substitute mortality
tables approved only for Plan 1, post-merger. On November 14, 2024, the Service granted
approval for Plan 1 to continue using its previously approved tables, for up to 3-plan years
commencing January 1, 2025. However, the Service also noted that section 12.2 of Revenue
Procedure 2024-32 provides that if a substitute mortality table was first approved for use for a
plan year that began before January 1, 2025, and the number of individuals covered by the
substitute mortality table is less than 80 percent or more than 120 percent of the average
number of individuals in that population over the 12-month periods covered by the experience
study, then the substitute mortality table may not be used for a plan year beginning on or after
January 1, 2026. Taxpayer's current submission for Plan 1 has been made pursuant to this
requirement.

Taxpayer represents that there are no other plans subject to section 430 of the Code
maintained by the Taxpayer or a member of the controlled group that was spun off from
another plan within the five-year period preceding the date of this request. Taxpayer also
represents that it does not sponsor a multiple employer plan.

Applicable Law
Section 430(h)(3)(A) of the Code states, in relevant part, that the Secretary shall by regulation
prescribe mortality tables to be used in determining any present value of making any
computation under section 430 of the Code.

' While not germane to this ruling, Plan 6 merged completely into Plan 2 on December 31, 2023.

Section 430(h)(3)(C) of the Code states, that upon request by the plan sponsor and approval
by the Secretary, a mortality table 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, a substitute mortality table 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

(2) the date on which the plan actuary determines that such substitute mortality table does
not meet the following requirements of Section 430(h)(3)(C)(iii) of the Code.

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

(1) 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, and

(ii) such substitute mortality 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) of the Regulations states, in relevant part, that 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. Additionally, a plan's substitute mortality tables must be
generational mortality tables.

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 in which the plan fails to satisfy 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 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 Section 1.430(h)(3)-2(c)(6)(iii) of the
Regulations,

(D) The first plan year following the plan year for 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, or

(E) The date specified in guidance published in the Internal Revenue Bulletin in
conjunction with 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 annual updates to
the static mortality tables issued as noted in section 1.430(h)(3)-1(c)(1)(iv) of the
Regulations or changes to the mortality improvement rates under section 1.430(h)(3)-
1(b)(1)(iii) of the Regulations.

Section 1.430(h)(3)-2(c)(6)(iii) of the Regulations states, in relevant part, 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% or more
than 120% of either the average number of individuals in that population over the years
covered by the experience study on which the substitute mortality tables are based, or the
number of individuals covered by the substitute mortality table in a plan year for which a
certification (described below) 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 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).

Section 1.430(h)(3)-2(d)(2) of the Regulations states, in relevant part, that 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.² 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. However, if the plan sponsor submits a request for approval to use of 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, then the experience study is not
treated as failing to satisfy the rule in section 1.430(h)(3)-2(d)(2)(ii)(A) of the Regulations if the
last day of the final year reflected in the experience data is less than 2 years before the date of
submission.

Section 1.430(h)(3)-2(d)(4) of the Regulations states, in relevant part, that the base mortality
rates are determined by multiplying the mortality rate from the standard mortality table by the
mortality ratio. If the simplified rule under section 1.430(h)(3)-2(c)(2)(ii)(B) of the Regulations is
used for the population, then the mortality ratio is determined only taking into account people
who are at least 50 years old and less than 100 years old, but the mortality ratio is applied to
all ages.

Section 1.430(h)(3)-2(d)(4)(iii)(B) of the Regulations require that adjustments be made to the
standard mortality table for any 12-month period in the experience study that begins after
December 31, 2019 and before January 1, 2023. Such adjustment factors are 15% increases
for calendar years 2020 and 2021 and a 7.5% increase for calendar year 2022.

² If two or more plans are aggregated and not all of the plans have the same plan year, then the experience study
period may be a period that is not a multiple of 12 months provided that four criteria under section 1.430(h)(3)-
2(c)(5)(iii) are met.

Section 1.430(h)(3)-2(e)(1) of the Regulations states, in relevant part, that if the actual number
of deaths is at least equal to 100 and is less than the full credibility threshold, then the base
mortality rates are determined using a partial credibility weighting factor as calculated under
section 1.430(h)(3)-2(e)(2).

Facts and Analysis

The substitute mortality tables were developed based on an experience study period from
January 1, 2021 through December 31, 2023, with a base year of 2022. This satisfies the
requirements under sections 1.430(h)(3)-2(c)(3) and (d)(2) of the Regulations.

The 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

    Combined male and
    female annuitants
    and nonannuitants

    Mortality Ratio.
    Credibility Weighting
    Factor

[The mortality ratio and credibility weighting factor values were redacted or
did not survive OCR extraction and are illegible in this transcription. -- transcriber]

These were determined by combining male and female annuitant and nonannuitant
experience.

Note that in determining the credibility weighting factors, 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. We recognize that correcting the calculation of
the credibility weighting factor for this request for this issue would have an insignificant impact
on Taxpayer's proposed base substitute mortality tables and therefore, we have ruled on the
Taxpayer's proposed base substitute mortality tables as provided. However, 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 this incorrect calculation in
the construction of the tables.

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

Substitute Mortality Tables
Approved for use beginning with the plan years commencing
January 1, 2026 for Plan 1

Base year 2022

Age   Males   Females   |   Age   Males   Females   |   Age   Males   Females
[The scanned table lists per-age mortality rates for ages 1 through 120 in
three side-by-side panels (ages 1-40, 41-80, and 81-120), each with a male
column and a female column. The individual rate values did not survive OCR
extraction and are illegible in this transcription. -- transcriber]

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 Regulations and Revenue
Procedure 2024-32. Accordingly, we are not expressing any opinion as to the accuracy or
acceptability of any calculations or other material submitted with your request.

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 2024-32.

The above rates must be applied on a generational basis, as provided in section 1.430(h)(3)-
2(c)(3)(i) 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)(ii) 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) 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),

(2) 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 plans in section
1.430(h)(3)-2(f)(3) of the Regulations),

(3) 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,

(4) The first plan year following the plan year for 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, or

(5) The date specified in guidance published in the Internal Revenue Bulletin in
conjunction with 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 annual updates to
the static mortality tables issued as noted in section 1.430(h)(3)-1(c)(1)(iv) of the
Regulations or changes to the mortality improvement rates under section 1.430(h)(3)-
1(b)(1)(iii) of the Regulations.

Section 1.430(h)(3)-2(c)(6)(iii) of the Regulations 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
(taking into account the effect of the change in the population). As noted on page 4 of this
letter, a significant change in coverage occurs if the number of individuals covered by the
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 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.

The following information was submitted by Taxpayer to demonstrate stability:

                                    Average Number
                                    During Experience     Number as of     Percentage
Population                          Study Period          12/31/2024       Difference

Combined male and female
annuitants and nonannuitants

[The stability figures were redacted or did not survive OCR extraction and
are illegible in this transcription. -- transcriber]

A certification must be provided each year that it is required under the Regulations, as
described above, signed by the enrolled actuary for the plan 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:

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 settlements/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
judgements set forth above and attests to these representations.

All required certifications must be provided on or before the date the 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:

(1) 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.

(2) A table showing the number of expected deaths and actual deaths, reported separately
as of December 31, 2024 and for each plan year beginning with deaths during the plan
year ending December 31, 2024 through the plan year immediately preceding the most
recent actuarial valuation, and in total.

(3) A table similar to the stability demonstration required under section 8.1 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, 2024 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.

(4) A table showing a comparison of (i) the average ages and (ii) percentage of the
population, by the following monthly single life annuity brackets:

a. under $100,
b. between $100 and $250,
c. between $250 to $500,
d. between $500 to $1,000,
e. between $1,000 and $1,500, and
f. $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.

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

This information must be provided to David M. Ziegler, Manager, Actuarial Group 2 (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 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.

Each of the plan mergers discussed earlier may require a ruling for a change in funding
method, unless it meets the requirements for automatic approval under Revenue Procedure
2017-56. Please refer to Revenue Procedures 2017-57 and 2026-4 for the procedures for
obtaining approval from the Service for a change in the funding method if one is required.

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

No opinion is expressed as to the tax treatment of the transaction described herein under the
provisions of any other section of either the Code or Regulations which may be applicable
thereto, as appropriate.

Pursuant to a Power of Attorney and Declaration of Representative (Form 2848) on file with
this office, a copy of this letter ruling is being sent to your authorized representatives.
Additionally, a copy of this letter ruling is being sent to the Manager, Classification Group 4 in
Houston, Texas.

If you require further assistance in this matter, please contact Mr. ____ (ID# ____) at [illegible].

Sincerely,
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: