IRS provides relief for certain substitute mortality table sponsors

The IRS recently released guidance (Rev. Proc. 2025-21) to provide relief for certain pension plan sponsors that wish to continue using plan-specific mortality tables by narrowing the category of plan sponsors that are required to request approval of new plan-specific substitute mortality tables.

In September 2024, the IRS released final regulations (T.D. 10005) with the requirements for single-employer defined benefit pension plans to obtain IRS approval to substitute the generally applicable mortality tables to calculate minimum funding requirements.

Single-employer pension plans are subject to the minimum funding requirements of Section 430 based on the plan’s funding target. A plan’s funding target for a plan year generally is the present value of all benefits accrued or earned under the plan as of the first day of that plan year.

Single-employer plans generally must use mortality tables prescribed by the IRS in determining the funding target. However, a plan sponsor can request the IRS’s approval to use plan-specific substitute mortality tables that meet certain requirements.

In general, substitute mortality tables must reflect the actual mortality experience of the pension plan for which the tables are to be used, and the mortality experience must be credible. In addition, separate mortality tables must be established for each gender under the plan. However, the final regulations issued in Sept. 2024 allow plan sponsors to develop the separate substitute mortality tables using a single mortality ratio for both genders.

Guidance issued by the IRS at the same time the final regulations were released - Rev. Proc. 2024-32 - also generally provides that, if a substitute mortality table was first approved for use for a plan year that began before Jan. 1, 2025, and if there was a significant change in the number of individuals covered by the substitute mortality table, then the substitute mortality table may no longer be used for a plan year beginning on or after Jan. 1, 2026. For this purpose, there is generally a significant change if the number of individuals covered by a particular table is less than 80% or more than 120% of the average number of individuals in that population over the 12-month periods covered by the experience study.

In addition, if there is a significant change and a plan sponsor would like to continue using plan-specific mortality tables, the plan sponsor generally would have to develop and request approval for the use of a new plan-specific substitute mortality table for plan years beginning on or after Jan. 1, 2026. Rev. Proc. 2025-19 provides immediate relief for some of these plan sponsors by narrowing the category of plan sponsors that are required to request approval of new plan-specific mortality tables.

This relief ꟷ not having to develop and request approval for new substitute mortality tables ꟷ generally applies only if the following three conditions are satisfied:

• The previously approved substitute mortality tables were developed using a single mortality ratio for both genders
• The mortality table for one gender has had a significant change in the number of individuals covered by that table, but there has been no significant change in the number of individuals covered by the plan as a whole
• The plan’s actuary certifies in writing to the satisfaction of the IRS that the substitute mortality tables continue to be accurately predictive of future mortality for the covered population (taking into account the effect of the change in the population).

 The relief provided by Rev. Proc. 2025-19 was issued in response to Executive Order 14219, which was released by the Trump administration on Feb 19, 2025, and was directed government agencies to initiate a review process for the identification and removal of certain regulations and other guidance that meet any of the factors set forth in Executive Order 14219. The IRS determined that the modifications made by Rev. Proc. 2025-19 would reduce burdens and provide immediate relief for certain plan sponsors, which were among the factors specified in the Executive Order.

The relief provided by Rev. Proc. 2025-19 is effective for all requests for approval to use plan-specific substitute mortality tables for plan years beginning on or after Jan. 1, 2026.

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