Pension plan may use substitute mortality tables for annuitants

Plain-English summary

A pension plan sponsor asked to use mortality tables based on its own experience when calculating funding obligations under IRC § 430. The IRS approved substitute tables for Plan 1's combined male and female annuitants for up to 10 plan years beginning November 1, 2026. The IRS found that Plan 1's nonannuitants and the population of Plan 2 lacked credible mortality experience, so standard tables apply to those groups. The approved tables can stop applying early if specified conditions change, including a significant shift in the covered population or loss of predictive accuracy. The IRS said it reviewed how the rates were developed, not the accuracy of every calculation the sponsor submitted.

Ruling snapshot

• Question: May Plan 1 use substitute mortality tables for its annuitants in section 430 calculations?
• Outcome: Approved for combined male and female annuitants, subject to conditions.
• Key authorities: IRC § 430(h)(3)(C); 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

JUL 09 2026

Release Number: 202640011
Release Date: 10/2/26

Re: Substitute Mortality Table Ruling

Taxpayer =
EIN: -

Plan 1 =
EIN: - : PN:

Other Plan For Which Substitute Mortality Tables Are Not Intended to Be Used:

Plan 2 =
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 of 1986 ("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 November 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 of Plan 1:

• Combined male and female annuitants
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.

Taxpayer previously received a ruling, dated January 11, 2021, granting the use of substitute mortality tables for Plan 1, effective with the plan years commencing

November 1, 2020. Taxpayer performed a new experience study and requested use of new tables for a 10-year period effective with the plan year beginning November 1, 2022. This request was approved on September 12, 2022. Due to the amendments to section 1.430(h)(3)-2 of the Regulations published in the Federal Register on July 31, 2024, Taxpayer submitted this new request for a ruling to use substitute mortality tables for the plan years beginning November 1, 2026 for Plan 1.

Based on the information provided by Taxpayer, the combined male and female nonannuitant population of Plan 1 and the total population of Plan 2 lack credible mortality experience. Therefore, the standard mortality tables will be used for calculations under section 430 of the Code for the nonannuitant population of Plan 1 and all of Plan 2. 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.

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)(4) of the Regulations states, in relevant part, that if separate mortality tables are used for certain disabled individuals as permitted under section 430(h)(3)(D) of the Code, then those disabled individuals are disregarded for all purposes under section 1.430(h)(3)-2 of the Regulations, and mortality experience with respect to those individuals must be excluded in developing mortality rates for substitute

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.¹ 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)(ii)(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.

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.

¹ 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)(ii) are met

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.

Population Mortality ratio | Credibility factor

Male and female annuitants

These were determined by combining male and female annuitant (including disabled annuitant) experience.

Based on the information provided by Taxpayer, the combined male and female nonannuitant population of Plan 1 and the total population of Plan 2 lack credible mortality experience. Therefore, the standard mortality tables will be used for calculations under section 430 of the Code for the nonannuitant population of Plan 1 and all of Plan 2.

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.

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 November 1, 2026 for Plan 1 Annuitants: Base year 2022

Age Males Females Age Males Females Age Males Females 15 51 86 16 52 87 17 53 88 18 54 89 19 55 90 20 56 91 21 57 92 22 58 93 23 59 94 24 60 95 25 61 96 26 62 97 27 63 98 28 64 99 29 65 100 30 66 101 31 67 102 32 68 103 33 69 104 34 70 105 35 71 106 36 72 107 37 73 108 38 74 109 39 75 110 40 76 111 41 77 112 42 78 113 43 79 114 44 80 115 45 81 116 46 82 117 47 83 118 48 84 119 49 85 120 50

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:

Population
Average Number During Experience Study Period Number as of 10/31/2025 Percentage Difference
Combined male and female annuitants

A certification must be provided each year that 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, 2025 and for each plan year beginning with deaths during the plan year ending December 31, 2025 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, 2025 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 and $500,
d. between $500 and $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 (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

10

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.

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.

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 ( ) -
Sincerely,
David M. Ziegler, Manager
Employee Plans Actuarial Group 2
Enclosures

Notice 437, Notice of Intention to Disclose (Rulings)
Deleted copy of the letter ruling

cc: