The IRS recently released guidance (Notice 2022-22) updating defined benefit plan mortality improvement rates and static mortality tables for 2023. The updated amounts apply to plan calculations of funding targets and other items with valuation dates occurring in 2023.
Plan sponsors are permitted to apply mortality improvement projections through the use of static tables updated annually for expected improvements in mortality, or through the use of generational tables. Multi-employer plans and cooperative and small employer charity pension plans (CSEC plans) may apply the same mortality projections to determine the plan’s current liability under the respective Section 431(c)(6) full-funding rules for multi-employer plans and the Section 433(c)(7)(C) minimum funding rules for CSEC plans.
Notice 2022-22 also includes a modified unisex version of the mortality tables to be used under Section 417(e)(3) in determining minimum present values for plan distributions with annuity starting dates occurring in stability periods beginning in 2023. Section 417(e)(3) generally prescribes that the present value of certain accelerated benefits (including single-sum distributions) under a qualified pension plan must not be less than the present value of the accrued benefit determined by the applicable interest rates and the applicable Section 430(h)(3)(A) mortality table. Rev. Rul. 2007-67 provides additional guidance on how a Section 417(e)(3) applicable mortality table must be drafted, taking into account specific factors related to an individual’s gender and age.
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