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Updated mortality tables for funding defined benefit plans for 2019 released

RFP
In Notice 2018-2, the IRS issued updated defined benefit plan mortality improvement rates and static mortality tables to be used for 2019. The updated amounts apply to plan calculations of funding targets and other items with valuation dates occurring in 2019.

On Oct. 5, the IRS amended Treasury Reg. Sec. 1.430(h)(3)-1 to reflect the revised mortality tables under Section 430(h)(3)(A) for plan years beginning on or after Jan. 1, 2018. Treasury Reg. Sec. 1.430(h)(3)-1 previously prescribed base mortality tables using a base year of 2006. 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. Multiemployer 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 multiemployer plans and the Section 433(c)(7)(C) minimum funding rules for CSEC plans.

Notice 2018-2 also introduces 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 2019. 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.

Contact Eddie Adkins
Partner, Washington National Tax Office
T +1 202 521 1565

Jeffrey Martin
Partner, Washington National Tax Office
T +1 202 521 1526

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