Mortality Tables for Determining Present Value Under Defined Benefit Pension Plans, 72357-72366 [2023-23267]
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Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Rules and Regulations
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Above the Surface of the Earth.
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ANM WY E5
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
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26 CFR Part 1
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Issued in Des Moines, Washington, on
October 13, 2023.
B.G. Chew,
Group Manager, Operations Support Group,
Western Service Center.
[FR Doc. 2023–23123 Filed 10–19–23; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9979]
RIN 1545–BQ81
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[TD 9983]
RIN 1545–BQ14
Mortality Tables for Determining
Present Value Under Defined Benefit
Pension Plans
Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulations.
AGENCY:
This document sets forth final
regulations prescribing mortality tables
to be used for most defined benefit
pension plans. The tables specify the
probability of survival year-by-year for
an individual based on age, gender, and
other factors. The tables are used
(together with other actuarial
assumptions) to calculate the present
value of a stream of expected future
benefit payments for purposes of
determining the minimum funding
requirements for the plan. These
mortality tables are also relevant for
determining the minimum required
amount of a lump-sum distribution from
such a plan. These regulations affect
participants in, beneficiaries of,
employers maintaining, and
administrators of certain defined benefit
pension plans.
DATES:
Effective date: These regulations are
effective October 20, 2023.
Applicability date: These regulations
apply to valuation dates occurring on or
after January 1, 2024.
Incorporation by reference: The
incorporation by reference of certain
publications listed in the rule is
approved by the Director of the Federal
Register as of October 20, 2023.
FOR FURTHER INFORMATION CONTACT:
Concerning the regulations, Arslan
Malik or Linda Marshall at (202) 317–
6700; concerning the construction of the
base mortality tables and the static
mortality tables for 2024, Christopher
Denning at (202) 317–5755 (not toll
free).
SUMMARY:
Section 1.48(e)–1 issued under 26 U.S.C.
48
SUPPLEMENTARY INFORMATION:
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Background
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[FR Doc. C2–2023–17078 Filed 10–19–23; 8:45 am]
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Section 412 of the Internal Revenue
Code (Code) prescribes minimum
funding requirements for defined
benefit pension plans, and section 430
specifies the minimum funding
requirements that apply generally to
defined benefit plans that are not
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multiemployer plans.1 Section 430(a)
defines the minimum required
contribution for a plan by reference to
the plan’s funding target for the plan
year. Under section 430(d)(1), 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.
Section 430(h)(3) provides rules
regarding the mortality tables to be used
under section 430. Under section
430(h)(3)(A), except as provided in
section 430(h)(3)(C) or (D), the Secretary
is to prescribe by regulation mortality
tables to be used in determining any
present value or making any
computation under section 430. Those
mortality tables are to be based on the
actual mortality experience of pension
plan participants and projected trends
in that experience. In prescribing those
mortality tables, the Secretary is
required to take into account results of
available independent studies of
mortality of individuals covered by
pension plans. Under section
430(h)(3)(B), the Secretary is required to
revise any mortality table in effect under
section 430(h)(3)(A) at least every 10
years to reflect actual mortality
experience of pension plan participants
and projected trends in that experience.
Under section 430(h)(3)(C), a plan
sponsor may request the Secretary’s
approval to use plan-specific substitute
mortality tables that meet requirements
specified in the statute rather than the
generally applicable mortality tables. If
approved, the substitute mortality tables
are used to determine present values
and make computations under section
430 during the period of consecutive
plan years (not to exceed 10) specified
in the request.
Section 430(h)(3)(D) provides for the
use of separate mortality tables with
respect to certain individuals who are
entitled to benefits on account of
disability. These separate mortality
tables are permitted to be used with
respect to disabled individuals in lieu of
the generally applicable mortality tables
1 Section 302 of the Employee Retirement Income
Security Act of 1974, Public Law 93–406, 88 Stat.
829 (1974), as amended (ERISA), sets forth funding
rules that are parallel to those in section 412 of the
Code, and section 303 of ERISA sets forth
additional funding rules for defined benefit plans
(other than multiemployer plans) that are parallel
to those in section 430 of the Code. Pursuant to
section 101 of Reorganization Plan No. 4 of 1978,
5 U.S.C. App., as amended, the Secretary of the
Treasury has interpretive jurisdiction over the
subject matter addressed in these regulations for
purposes of ERISA, as well as the Code. Thus, these
Treasury regulations issued under section 430 of
the Code also apply for purposes of section 303 of
ERISA. Similarly, Treasury regulations under
sections 431 and 433 apply for purposes of sections
304 and 306 of ERISA.
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Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Rules and Regulations
provided pursuant to section
430(h)(3)(A). The Secretary is to
establish separate tables for individuals
with disabilities occurring in plan years
beginning before January 1, 1995, and
for individuals with disabilities
occurring in later plan years, with the
mortality tables for individuals with
disabilities occurring in those later plan
years applying only to individuals who
are disabled within the meaning of Title
II of the Social Security Act.2
Section 417(e)(3) generally provides
that the present value of certain benefits
under a qualified pension plan
(including single-sum distributions)
must not be less than the present value
of the accrued benefit using applicable
interest rates and the applicable
mortality table. Section 417(e)(3)(B)
defines the term ‘‘applicable mortality
table’’ as the mortality table specified
for the plan year for minimum funding
purposes under section 430(h)(3)(A)
(without regard to the rules for
substitute mortality tables under section
430(h)(3)(C) or mortality tables for
disabled individuals under section
430(h)(3)(D)), modified as appropriate
by the Secretary. The modifications
made by the Secretary to the section
430(h)(3)(A) mortality table to
determine the section 417(e)(3)(B)
applicable mortality table are not
addressed in these regulations. Revenue
Ruling 2007–67, 2007–2 CB 1047,
describes the modifications that are
currently applied to determine the
section 417(e)(3)(B) applicable mortality
table.
Final regulations under section
430(h)(3) were published in the Federal
Register on October 5, 2017, in TD 9826,
82 FR 46388 (the 2017 regulations).
Section 1.430(h)(3)–1 prescribes base
mortality tables and a set of mortality
improvement rates, which may be
reflected through the use of either
generational mortality tables or static
mortality tables. The generational
mortality tables are a series of mortality
tables, one for each year of birth, each
of which fully reflects projected trends
in mortality rates. The static mortality
tables (which are updated annually 3)
use a single mortality table for all years
of birth to approximate the present
value that would be determined using
the generational mortality tables.
The mortality tables included in the
2017 regulations are based on the
mortality tables included in the RP–
2014 Mortality Tables Report 4 (referred
to in this preamble as the RP–2014
mortality tables), which was released by
the Retirement Plan Experience
Committee (RPEC) of the Society of
Actuaries (SOA) in October 2014 (as
revised in November 2014), and a set of
mortality improvement rates as released
by RPEC in the Mortality Improvement
Scale MP–2016 Report.5 In 2016, RPEC
initiated a study of private-sector
retirement plans in the U.S. in order to
provide an update to the RP–2014
mortality tables, and in 2019, RPEC
issued the Pri-2012 Private Retirement
Plans Mortality Tables Report (Pri-2012
Report).6 In October 2021, RPEC
published the Mortality Improvement
Scale MP–2021 Report (MP–2021
Report), which includes the latest
mortality improvement scale issued by
RPEC.7
The standards prescribed for
developing the mortality tables under
section 430(h)(3)(A) are the same as the
standards that are prescribed for
developing mortality tables for
multiemployer plans under section
431(c)(6)(D)(iv)(II) (which are used to
determine current liability in order to
determine the minimum full funding
limitation under section 431(c)(6)(B)).
These standards also apply for CSEC
plans described in section 414(y) for
purposes of developing mortality tables
that are used for purposes of section
433(h)(3)(B)(i) (to determine current
liability in order to determine the
minimum full funding limitation under
section 433(c)(2)(C) and the funded
current liability percentage under
section 433(i)).
Proposed regulations to update the
mortality tables issued under section
430(h)(3) and make certain other
changes regarding those tables were
published in the Federal Register on
April 28, 2022 (87 FR 25161) (the
proposed regulations). Five comments
on the proposed regulations were
received. No commenters requested to
speak at the scheduled public hearing;
2 Mortality tables that were permitted to be used
for disabled participants under section
412(l)(7)(C)(iii)(I) as in effect before 2008 were
provided in Rev. Rul. 96–7, 96–3 IRB 12. Notice
2008–29, 2008–1 CB 637, adopted those tables for
use under section 430(h)(3)(D).
3 Static mortality tables were published in Notice
2017–60, 2017–43 IRB 365, Notice 2018–02, 2018–
2 IRB 281, Notice 2019–26, 2019–15 IRB 943,
Notice 2019–67, 2019–52 IRB 1510, Notice 2020–
85, 2020–51 IRB 1645, and Notice 2022–22, 2022–
20 IRB 1057.
4 This report is available at https://www.soa.org/
globalassets/assets/files/research/exp-study/
research-2014-rp-report.pdf.
5 This report is available at https://www.soa.org/
globalassets/assets/Files/Research/Exp-Study/
mortality-improvement-scale-mp-2016.pdf.
6 This report is available at https://www.soa.org/
globalassets/assets/files/resources/experiencestudies/2019/pri-2012-mortality-tables-report.pdf.
7 This report is available at https://www.soa.org/
globalassets/assets/files/resources/experiencestudies/2021/2021-mp-scale-report.pdf.
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accordingly, the public hearing was
canceled.
On October 27, 2022, RPEC released
a report titled the ‘‘RPEC 2022 Mortality
Improvement Update.’’ 8 Unlike RPEC’s
previously issued reports regarding
mortality improvement, this report does
not include a new mortality
improvement scale. RPEC noted that, as
of the date of that report, the most
recent year for which full-year mortality
data was available was 2020, which was
severely affected by the COVID–19
pandemic. RPEC concluded that it
would not be appropriate to incorporate,
without adjustment, the substantially
higher rates of mortality experience
from 2020 into the models RPEC had
previously used to project future
mortality.9 Therefore, RPEC chose not to
release a new mortality improvement
scale in 2022. Instead, RPEC
recommended the use of an assumed
increase in mortality rates to reflect the
impact of the COVID–19 pandemic,
which would be phased out after an
appropriate period. RPEC did not
recommend a specific level for this
assumed increase but provided data
about mortality rates for 2020 through
the first half of 2022 and provided
examples of assumed increases that
could be used (including the assumed
increase used in the 2022 Annual
Report of the Board of Trustees of the
Federal Old-Age and Survivors
Insurance and Federal Disability
Insurance Trust Funds).
Section 335 of the SECURE 2.0 Act of
2022 (SECURE 2.0 Act), which was
enacted on December 29, 2022 as
Division T of the Consolidated
Appropriations Act, 2023, Public Law
117–328 (136 Stat. 4459), instructs the
Secretary or the Secretary’s delegate to
amend the regulations under section
430(h)(3)(A) no later than June 30, 2024.
Under this provision, for valuation dates
occurring during or after 2024, the
mortality improvement rates specified
in those regulations must not assume for
years beyond the valuation date
mortality improvements at any age that
are greater than 0.78 percent. Section
335 of the SECURE 2.0 Act also
instructs the Secretary (or delegate) to
modify the 0.78 percent limitation to
reflect material changes in the overall
rate of improvement projected by the
Social Security Administration.
8 This report is available at https://www.soa.org/
resources/research-reports/2022/rpec-mortalityimprovement/.
9 RPEC noted that, if it had used its standard
graduation model and had included 2020 data in
accordance with its usual practice, this would have
had the effect of elevating mortality improvement
rates for periods prior to the pandemic.
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After consideration of public
comments received on the proposed
regulations (and taking into account
section 335 of the SECURE 2.0 Act), the
proposed regulations are adopted by
this Treasury decision, with certain
changes. These changes include: (1) a
delay in the applicability date; (2)
modifications in the mortality
improvement rates to reflect the
expected ongoing impact of COVID–19
on mortality rates and to reflect the 0.78
percent annual cap on mortality
improvement rates as required by
section 335 of the SECURE 2.0 Act; and
(3) a minor change related to the
treatment of individuals who are not
identified as male or female.
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Summary of Comments and
Explanation of Revisions
These regulations set forth the
updated methodology for determining
the generally applicable mortality tables
that are used to calculate present value
under section 430 of the Code. Pursuant
to section 417(e)(3)(B), a modified
version of these tables is used for
purposes of determining the amount of
a single-sum distribution (or another
accelerated form of distribution). In
addition, these tables are used to
determine current liability for
multiemployer plans under section
431(c)(6) and CSEC plans under section
433(h).
The updated methodology for
determining the generally applicable
mortality tables under section
430(h)(3)(A) is issued pursuant to the
requirement under section 430(h)(3)(B)
to revise the mortality tables used under
section 430 to reflect the actual
mortality experience of pension plan
participants and projected trends in that
experience as well as the requirement
under section 335 of the SECURE 2.0
Act that mortality improvement rates
provided under the regulations for years
after the year that includes the
applicable valuation date may not
exceed 0.78 percent per year. As under
the 2017 regulations and the proposed
regulations, the methodology for
determining generally applicable
mortality tables involves the separate
determination of base mortality tables
and the projection of mortality
improvement.
A. Base Mortality Tables
These regulations adopt the base
mortality tables set forth in the
proposed regulations for use under
section 430(h)(3)(A) of the Code, which
are derived from the tables set forth in
the Pri-2012 Report. No commenter
suggested any alternative source for base
mortality tables.
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Like the base mortality tables
provided in the 2017 regulations, the
base mortality tables set forth in these
regulations are gender-distinct and
provide separate non-annuitant and
annuitant mortality rates. The base
mortality tables have a base year of 2012
(the central year of the experience study
used to develop the mortality tables in
the Pri-2012 Report). These base tables
generally have the same mortality rates
as the employee and non-disabled
annuitant mortality rates (amounts
weighted) that were released by RPEC in
connection with the Pri-2012 Report.
However, these base tables also include
non-annuitant mortality rates for ages
below 18 and above 80 and annuitant
mortality rates for ages below age 50.
This generally is the same approach that
was used to develop the base mortality
tables in the 2017 regulations. The
preamble to the proposed regulations
describes the methodology that was
used to develop non-annuitant mortality
rates for ages below age 18 and above
age 80 and annuitant mortality rates for
ages below age 50. See 87 FR 25161,
25163.
B. Mortality Improvement
These regulations adopt the
methodology set forth in the proposed
regulations regarding the adjustment of
the base mortality tables to reflect
expected trends in mortality
improvement but use different mortality
improvement rates. The proposed
regulations applied the Scale MP–2021
Rates (the mortality improvement scale
in the MP–2021 Report) for valuation
dates in the 2023 calendar year. This
mortality improvement scale was
developed using the same underlying
methodology used to develop earlier
mortality improvement scales but
reflects historical population data
through 2019 and the change to the
RPEC-selected assumptions for the longterm rate of mortality improvement that
was first incorporated in the Mortality
Improvement Scale MP–2020 Report.10
One commenter expressed concern
that the expected long-term
improvements in longevity reflected in
the MP–2021 Report may be overly
optimistic and suggested that
regulations apply a cap on the long-term
mortality improvement rates used.
Another commenter recommended that
future mortality rates be increased to
reflect the long-term impact of COVID–
19.
10 This report is available at https://www.soa.org/
globalassets/assets/files/resources/experiencestudies/2020/mortality-improvement-scale-mp2020.pdf.
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After considering all the comments
and the RPEC 2022 Mortality
Improvement Update, the Department of
the Treasury (Treasury Department) and
the IRS have decided to adopt a
modified version of the MP–2021
Mortality Improvement Scale for
valuation dates occurring on or after
January 1, 2024. The mortality
improvement scale applicable for
valuation dates occurring on or after
January 1, 2024, which is referred to as
the 2024 Adjusted Scale MP–2021
Rates, is based on the Scale MP–2021
Rates. However, the 2024 Adjusted
Scale MP–2021 Rates reflect a
modification to the Scale MP–2021
Rates that eliminates any mortality
improvement during 2020, 2021, 2022,
and 2023 (while retaining any projected
mortality deterioration for those years
under the MP–2021 Mortality
Improvement Scale).11 In addition, in
response to the statutory instruction in
section 335 of the SECURE 2.0 Act, the
2024 Adjusted Scale MP–2021
incorporates a cap on mortality
improvement rates of 0.78 percent per
year for years after 2024.12 This cap on
mortality improvement rates is
statutorily required by a clear statutory
instruction, and public comment on the
cap rate is unnecessary.
The Treasury Department and the IRS
intend to consider new data regarding
mortality trends of the general
population as it becomes available
(including future reports and mortality
improvement scales issued by RPEC, as
well as projections of mortality
improvement issued by the Social
Security Administration) and to specify
new mortality improvement rates that
reflect updated data when future
modifications become appropriate.
Those new mortality improvement rates
will incorporate the cap on mortality
improvement rates described in section
335 of the SECURE 2.0 Act (including
a change to the level of the 0.78 percent
cap on annual mortality improvement
rates as a result of any material changes
in the overall rate of improvement
11 Because the mortality rates provided in these
regulations apply beginning in 2024 (that is, after
the height of the COVID–19 pandemic), the
significantly higher rates of mortality experience
during 2020 through 2023 are not determinative of
mortality rates for later years. However, the
Treasury Department and the IRS expect that
mortality in the future will be marginally higher
than what was projected based on mortality
experience prior to the COVID–19 pandemic. This
expectation has been reflected through the
elimination of any mortality improvement
assumption for the years 2020 through 2023.
12 Because the 0.78 percent cap applies to rates
for years after the year that includes the applicable
valuation date, the first impact of that cap will be
on the mortality rates that are projected to apply in
2025.
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projected by the Social Security
Administration).
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C. Use of Static Tables for Small Plans
The 2017 regulations provide for the
use of separate generational nonannuitant and annuitant mortality tables
and separate static non-annuitant and
annuitant mortality tables. However, the
proposed regulations provided for the
elimination of the use of static mortality
tables other than for small plans. This
change was proposed because the
Treasury Department and the IRS
believe that there was no longer a need
to allow the use of static mortality tables
for larger plans (as most actuarial firms
have the capability to use generational
mortality tables) and to minimize antiselection by plan sponsors who
determine that the use of static mortality
tables results in lower minimum
funding requirements. No commenters
objected to this change, and these
regulations adopt that change.
D. Individuals Not Identified as Male or
Female
One commenter requested that final
regulations clarify how the mortality
tables under section 430(h)(3)(A) are
applied in the case of a participant or
beneficiary who identifies as nonbinary.
To address this issue, and to clarify how
these tables should be applied for the
portion of a plan’s population for whom
gender data is not available, the
regulations provide that the plan’s
actuary must use a reasonable approach
in applying the section 430(h)(3)(A)
mortality tables with respect to the
portion of a plan’s population whose
gender is not identified as male or
female (for example, a plan participant
who identifies as nonbinary or for
whom gender is not known). The
regulations include two examples of
reasonable approaches that may be used
for this purpose. These two approaches
are merely two reasonable methods for
determining liabilities with respect to
individuals for whom male or female
gender is not identified, and other
reasonable approaches may be
appropriate.13
Under the first approach, the liability
for an individual is determined as the
weighted average of the liability
calculated as if the individual were
male and the liability calculated as if
the individual were female, using an
appropriate weighting that takes into
13 For example, it might be reasonable to apply an
approach based on an equal weighting of male
mortality rates and female mortality rates if the
gender ratio of the portion of the plan population
for whom male or female gender is identified is
sufficiently close to 50 percent male and 50 percent
female.
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account the distribution of gender in the
plan’s population for individuals for
whom gender is identified. For example,
if the gender distribution in a plan’s
population for whom the gender is
identified is 2⁄3 male and 1⁄3 female, the
liability calculated for the individual
would be equal to 2⁄3 of the liability
calculated as if the individual were
male and 1⁄3 of the liability calculated as
if the individual were female.
The second approach might be used
in connection with actuarial software
that is not able to apply a weight to
individuals in the plan census. Under
the second approach, either male or
female status is assigned randomly to an
individual for whom male or female
gender is not identified in a manner that
is expected to result in an appropriate
proportion of males and females for the
plan population that takes into account
the distribution of gender for
individuals in the plan’s population for
whom gender is identified. For example,
if the gender distribution in a plan
population for whom the gender is
identified is 2⁄3 male and 1⁄3 female, a
gender may be assigned to an individual
for whom gender is not identified based
on the individual’s birthdate, with
someone born in the first 8 months of
the year assigned male gender and
someone born in the last 4 months of
the year assigned female gender.
Applicability Date
These regulations apply for valuation
dates occurring on or after January 1,
2024.
Effect of Regulations on Previously
Approved Substitute Mortality Tables
The 2017 regulations also included
rules regarding the use of plan-specific
substitute mortality tables under section
430(h)(3)(C), which are set forth in
§ 1.430(h)(3)–2. Section 1.430(h)(3)–
2(c)(6)(ii) provides for the early
termination of the use of substitute
mortality tables in certain
circumstances, including in conjunction
with a replacement of the mortality
tables specified in § 1.430(h)(3)–1.
Under § 1.430(h)(3)–2(c)(6)(ii)(E), the
early termination in conjunction with a
replacement of the generally applicable
mortality tables will apply as of a date
specified in guidance published in the
Internal Revenue Bulletin. As stated in
the preamble to the proposed
regulations, the Treasury Department
and the IRS generally will not require
that the use of previously approved
substitute mortality tables be terminated
solely as a result of replacement of the
generally applicable mortality tables.
Proposed regulations modifying the
rules for approving plan-specific
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substitute mortality tables are being
published in the proposed rules section
of this issue of the Federal Register.
Those regulations are proposed to apply
to plan years beginning on or after
January 1, 2025. Until amendments to
the plan-specific substitute mortality
regulations are finalized—and an
updated revenue procedure that reflects
the final regulations is issued—the
Treasury Department and the IRS will
not require that any previously
approved plan-specific substitute
mortality tables be terminated pursuant
to § 1.430(h)(3)–2(c)(6)(ii)(E).
Incorporation by Reference
Section 1.430(h)(3)–1(b)(1)(iii) of
these regulations provides that the
mortality improvement rates used to
construct generational tables to be used
for valuation dates occurring on or after
January 1, 2024, are the 2024 Adjusted
Scale MP–2021 Rates as described in the
third paragraph of section B of the
Summary of Comments and Explanation
of Revisions in this preamble. The
Office of the Federal Register (OFR) has
regulations concerning incorporation by
reference. 1 CFR part 51. These
regulations require that agencies must
discuss in the preamble to a rule or
proposed rule the way in which
materials that the agency incorporates
by reference are reasonably available to
interested persons, and how interested
parties can obtain the materials. 1 CFR
51.5(b). The 2024 Adjusted Scale MP–
2021 Rates may be found at
www.irs.gov/retirement-plans/pensionplan-mortality-tables.
Statement of Availability of IRS
Documents
IRS Revenue Rulings, Revenue
Procedures, and Notices cited in this
document are published in the Internal
Revenue Bulletin (or Cumulative
Bulletin) and are available from the
Superintendent of Documents, U.S.
Government Printing Office,
Washington, DC 20402, or by visiting
the IRS website at www.irs.gov.
Special Analyses
Pursuant to the Memorandum of
Agreement, Review of Treasury
Regulations under Executive Order
12866 (June 9, 2023), tax regulatory
actions issued by the IRS are not subject
to the requirements of section 6 of
Executive Order 12866, as amended.
Therefore, a regulatory impact
assessment is not required.
Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby
certified that the regulations will not
have a significant economic impact on
a substantial number of small entities.
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Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Rules and Regulations
ddrumheller on DSK120RN23PROD with RULES1
The only provision that increases
regulatory burden is § 1.430(h)(3)–1(b),
which generally requires the use of
generational mortality tables. However,
under § 1.430(h)(3)–1(c), small entities
are not required to use generational
mortality tables. Therefore, these
regulations will not have a significant
economic impact on a substantial
number of small entities.
Section 202 of the Unfunded
Mandates Reform Act of 1995 requires
that agencies assess anticipated costs
and benefits and take certain other
actions before issuing a final rule that
includes any Federal mandate that may
result in expenditures in any one year
by a State, local, or tribal government,
in the aggregate, or by the private sector,
of $100 million in 1995 dollars, updated
annually for inflation. These regulations
do not include any Federal mandate that
may result in expenditures by State,
local, or tribal governments, or by the
private sector in excess of that
threshold.
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial,
direct compliance costs on State and
local governments, and is not required
by statute, or preempts State law, unless
the agency meets the consultation and
funding requirements of section 6 of the
Executive order. These regulations do
not have federalism implications,
impose substantial direct compliance
costs on State and local governments, or
preempt State law within the meaning
of the Executive order.
Pursuant to section 7805(f) of the
Code, the proposed regulations that
preceded these regulations were
submitted to the Chief Counsel for
Advocacy of the Small Business
Administration for comment on their
impact on small business.
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs
designated this rule as not a major rule,
as defined by 5 U.S.C. 804(2).
Drafting Information
The principal authors of these
regulations are Arslan Malik and Linda
S.F. Marshall of the Office of Associate
Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the Treasury Department and the IRS
participated in the development of these
regulations.
List of Subjects in 26 CFR Part 1
Income taxes, Incorporation by
reference, Reporting and recordkeeping
requirements.
VerDate Sep<11>2014
17:07 Oct 19, 2023
Jkt 262001
Amendments to the Regulations
Accordingly, 26 CFR part 1 is
amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read, in part, as
follows:
■
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.430(h)(3)–1 is
revised to read as follows:
■
§ 1.430(h)(3)–1 Mortality tables used to
determine present value.
(a) Overview—(1) Standard mortality
tables. This section sets forth rules for
the mortality tables to be used in
determining present value or making
any computation under section 430.
These mortality tables include—
(i) Generational mortality tables
described in paragraph (b) of this
section; and
(ii) Static mortality tables for small
plans described in paragraph (c) of this
section.
(2) Alternative tables—(i) Planspecific mortality tables. In lieu of using
the mortality tables provided under this
section, plan-specific substitute
mortality tables are permitted to be used
for purposes of section 430 pursuant to
section 430(h)(3)(C), provided that the
requirements of § 1.430(h)(3)–2 are
satisfied.
(ii) Disabled individuals. In lieu of
using the mortality tables provided
under this section, mortality tables for
disabled individuals are permitted to be
used pursuant to section 430(h)(3)(D).
These tables are provided in guidance
published in the Internal Revenue
Bulletin. See § 601.601(d) of this
chapter.
(3) Individuals not identified as either
male or female. The mortality tables in
this section are applied for an
individual based on the individual’s
gender. With respect to the portion of a
plan’s population for which male or
female gender is not identified (for
example, because an individual
identifies as nonbinary or because the
gender information for an individual is
not available), the plan’s actuary must
use a reasonable approach for
determining liability. Some reasonable
approaches for these individuals
include—
(i) Determining the liability for an
individual for whom male or female
gender is not identified as the weighted
average of the liability calculated as if
the individual were male and the
liability calculated as if the individual
were female, with an appropriate
weighting that takes into account the
PO 00000
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72361
distribution of gender for individuals in
the plan’s population for whom gender
is identified; and
(ii) Assigning either male or female
status randomly to an individual for
whom male or female gender is not
identified in a manner that is expected
to result in an appropriate proportion of
males and females for the plan’s
population that takes into account the
distribution of gender for individuals in
the plan’s population for whom gender
is identified.
(b) Generational mortality tables—(1)
In general—(i) Construction of
generational mortality tables. The
generational mortality tables that are
permitted to be used under section
430(h)(3)(A) and paragraph (a)(1)(i) of
this section are constructed from the
base mortality tables described in
paragraph (b)(1)(ii) of this section and
the mortality improvement rates
described in paragraph (b)(1)(iii) of this
section, as adjusted in accordance with
paragraph (b)(1)(v) of this section.
(ii) Base mortality tables. The base
mortality tables are set forth in
paragraph (d) of this section.
(iii) Mortality improvement rates—(A)
Mortality improvement rates for
valuation dates occurring on or after
January 1, 2024. Except as otherwise
provided in this paragraph (b)(1)(iii), the
mortality improvement rates for
valuation dates occurring on or after
January 1, 2024, are the 2024 Adjusted
Scale MP–2021 Rates as incorporated by
reference pursuant to paragraph
(b)(1)(iv)(A) of this section.
(B) [Reserved.]
(iv) Incorporation by reference. The
material listed in this paragraph
(b)(1)(iv) is incorporated by reference
into this section with the approval of
the Director of the Federal Register
under 5 U.S.C. 552(a) and 1 CFR part 51.
This material is available for inspection
at the IRS and at the National Archives
and Records Administration (NARA).
Contact IRS at: IRS Office of Chief
Counsel, Qualified Plans Branch 1,
CC:EEE:EB:QP1, 1111 Constitution
Avenue NW, Washington, DC 20224;
(202) 317–6700; www.irs.gov/retirementplans/pension-plan-mortality-tables.
For information on the availability of
this material at NARA, visit
www.archives.gov/federal-register/cfr/
ibr-locations or email fr.inspection@
nara.gov. The material may be obtained
from IRS: www.irs.gov/retirement-plans/
pension-plan-mortality-tables.
(A) 2024 Adjusted Scale MP–2021
Rates, dated August 11, 2023.
(B) [Reserved]
(2) Application of mortality
improvement rates—(i) In general.
Under the generational mortality tables
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72362
Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Rules and Regulations
described in this paragraph (b), the
probability of an individual’s death at a
particular age in the future is
determined as the individual’s base
mortality rate that applies at that age
(that is, the applicable mortality rate
from the tables set forth in paragraph (d)
of this section for that age, gender, and
status as an annuitant or a nonannuitant) multiplied by the cumulative
mortality improvement factor for the
individual’s gender and for that age for
the period from the base year for those
mortality tables through the calendar
year in which the individual is
projected to reach the particular age.
Paragraph (b)(3) of this section provides
an example that shows how the base
mortality tables in paragraph (d) of this
section and the mortality improvement
rates for valuation dates occurring
during 2024 are combined to determine
projected mortality rates.
(ii) Cumulative mortality
improvement factor. The cumulative
mortality improvement factor for an age
and gender for a period is the product
of the annual mortality improvement
factors for that age and gender for each
year within that period.
(iii) Annual mortality improvement
factor. The annual mortality
improvement factor for an age and
gender for a year is 1 minus the
mortality improvement rate that applies
for that age and gender for that year. If
that annual mortality improvement rate
is greater than 1 (corresponding to a
negative mortality improvement rate),
then the projected mortality rate for that
age and gender for that year is greater
than the projected mortality rate for the
same age and gender for the preceding
year.
(3) Example of calculation—(i)
Calculation of mortality rate. The
mortality rate for 2024 that is applied to
a male annuitant who is age 68 in 2024
is equal to the product of the mortality
rate under paragraph (d) of this section
for a male annuitant who was age 68 in
2012 (0.01418) and the cumulative
mortality improvement factor calculated
from the 2024 Adjusted Scale MP–2021
Rates for an age 68 male from 2012 to
2024. The cumulative mortality
improvement factor for age 68 males for
the period from 2012 to 2024 is 0.9827,
and the mortality rate for 2024 for male
annuitants who are age 68 in that year
is 0.01393, as shown in the following
table.
TABLE 1 TO PARAGRAPH (b)(3)(i)
Rate of mortality
improvement
from prior year to
current year
Calendar
year
ddrumheller on DSK120RN23PROD with RULES1
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
(ii) Probability of survival for an
individual. After the projected mortality
rates are derived for each age for each
year, the rates are used to calculate the
present value of a benefit stream that
depends on the probability of survival
year-by-year. For example, for purposes
of calculating the present value (for a
2024 valuation date) of future payments
in a benefit stream payable for a male
annuitant who is age 68 in 2024, the
probability of survival for the annuitant
is based on the mortality rate for a male
annuitant who is age 68 in 2024
(0.01393), and the projected mortality
rate for a male annuitant who will be
age 69 in 2025 (0.01507), age 70 in 2026
(0.01635), and so on.
(4) Use of the tables—(i) Separate
tables for annuitants and nonannuitants. Separate mortality tables are
provided for use with respect to
annuitants and non-annuitants. The
non-annuitant mortality tables are
applied to determine the probability of
VerDate Sep<11>2014
17:07 Oct 19, 2023
Jkt 262001
Annual mortality
improvement
factor
(1 ¥ mortality
improvement rate)
n/a
0.0071
0.0047
0.0029
0.0017
0.0009
0.0001
(0.0001)
0.0001
0.0000
0.0000
0.0000
0.0000
n/a
0.9929
0.9953
0.9971
0.9983
0.9991
0.9999
1.0001
0.9999
1.0000
1.0000
1.0000
1.0000
survival for a non-annuitant for the
period before the non-annuitant is
projected to commence receiving
benefits. The annuitant mortality tables
are applied to determine the present
value of benefits for each annuitant. In
addition, the annuitant mortality tables
are applied for each non-annuitant with
respect to each assumed commencement
of benefits for the period beginning with
that assumed commencement. For
purposes of this section, an annuitant
means a plan participant who has
commenced receiving benefits and a
non-annuitant means a plan participant
who has not yet commenced receiving
benefits (for example, an active
employee or a terminated vested
participant). A participant whose
benefit has partially commenced is
treated as an annuitant with respect to
the portion of the benefit that has
commenced and treated as a nonannuitant with respect to the balance of
the benefit. In addition, with respect to
PO 00000
Frm 00016
Fmt 4700
Sfmt 4700
Cumulative
mortality
improvement
factor
n/a
0.9929
0.9882
0.9854
0.9837
0.9828
0.9827
0.9828
0.9827
0.9827
0.9827
0.9827
0.9827
Mortality
rate
0.01418
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
........................
0.01393
a beneficiary of a participant, the
annuitant mortality tables apply for the
period beginning with each assumed
commencement of benefits for the
participant. If the participant has died
(or to the extent the participant is
assumed to die before commencing
benefits), the annuitant mortality tables
apply with respect to the beneficiary for
the period beginning with each assumed
commencement of benefits for the
beneficiary.
(ii) Examples of calculation using
separate non-annuitant and annuitant
tables. With respect to a 45-year-old
active participant who is projected to
commence receiving an annuity at age
55, the funding target is determined
using the non-annuitant mortality tables
for the period before the participant
attains age 55 and using the annuitant
mortality tables for the period ages 55
and above. Similarly, for a 45-year-old
terminated vested participant who is
projected to commence an annuity at
E:\FR\FM\20OCR1.SGM
20OCR1
Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Rules and Regulations
age 65, the funding target is determined
using the non-annuitant mortality tables
for the period before the participant
attains age 65 and using the annuitant
mortality tables for ages 65 and above.
(c) Static mortality tables—(1)
Availability of alternative tables for
small plans—(i) In general. As an
alternative to the generational mortality
tables defined in paragraph (b) of this
section, static mortality tables may be
used for a small plan. The static
mortality tables described in this
paragraph (c) are constructed from the
separate non-annuitant and annuitant
static mortality tables described in
paragraph (c)(2)(i) of this section,
combined using the procedure
described in paragraph (c)(2)(ii) of this
section.
(ii) Definition of small plan. For
purposes of this paragraph (c), a small
plan is defined as a plan with 500 or
fewer total participants (including both
active and inactive participants and
beneficiaries of deceased participants)
on the valuation date.
(iii) Use of static mortality tables. The
static mortality tables that are used for
a valuation date are the static mortality
tables for the calendar year that includes
the valuation date.
(iv) Publication of mortality tables.
The static mortality tables for the 2024
calendar year are set forth in paragraph
(e) of this section.
Note 1 to paragraph (c)(1)(iv): The static
mortality tables for valuation dates occurring
in later calendar years will be published in
the Internal Revenue Bulletin. See
§ 601.601(d) of this chapter.
(2) Development of static mortality
tables—(i) Non-annuitant and annuitant
mortality tables. The non-annuitant and
annuitant static mortality tables are
determined using the base mortality
tables described in paragraph (b)(1)(ii)
of this section. The rates in those base
mortality tables are adjusted using the
mortality improvement rates described
in paragraph (b)(1)(iii) of this section, in
accordance with the rules set forth in
paragraph (c)(3) of this section.
(ii) Combined static mortality tables.
The static mortality tables described in
this paragraph (c) are constructed from
the separate non-annuitant and
annuitant static mortality tables
pursuant to paragraph (c)(2)(i) of this
section, blended using the weighting
factors in paragraph (d) of this section.
The weighting factors are applied to
develop these combined static tables
using the following equation: Combined
mortality rate = [non-annuitant rate * (1
¥ weighting factor)] + [annuitant rate *
weighting factor].
(3) Projection of mortality
improvements—(i) General rule. Except
as provided in paragraph (c)(3)(iii) of
this section, the static mortality tables
for a calendar year are determined by
multiplying the applicable mortality
rate for each age from the base mortality
tables by both—
(A) The cumulative mortality
improvement factor (determined under
paragraph (b)(2)(ii) of this section) for
the period from 2012 through that
calendar year; and
(B) The cumulative mortality
improvement factor (determined under
paragraph (b)(2)(ii) of this section) for
the period beginning in that calendar
year and continuing beyond that
calendar year for the number of years in
the projection period described in
paragraph (c)(3)(ii) of this section.
(ii) Projection period for static
mortality tables—(A) In general. The
projection period is 8 years for males
and 9 years for females, as adjusted
based on age as provided in paragraph
(c)(3)(ii)(B) of this section.
(B) Age adjustment. For ages below
80, the projection period is increased by
1 year for each year below age 80. For
ages above 80, the projection period is
72363
reduced (but not below zero) by 1⁄3 year
for each year above 80.
(iii) Fractional projection periods. If
for an age the number of years in the
projection period determined under
paragraph (c)(3)(ii) of this section is not
a whole number, then the mortality rate
for that age is determined by using
linear interpolation between—
(A) The mortality rate for that age that
would be determined under paragraph
(c)(3)(i) of this section if the number of
years in the projection period were the
next lower whole number; and
(B) The mortality rate for that age that
would be determined under paragraph
(c)(3)(i) of this section if the number of
years in the projection period were the
next higher whole number.
(iv) Example. For example, at age 85
the projection period for a male is 61⁄3
years (8 years minus 1⁄3 year for each of
the 5 years above age 80). For a
valuation date in 2024, the mortality
rate in the static mortality table for an
85-year-old male is based on a
projection of mortality improvement for
61⁄3 years beyond 2024. Under
paragraph (c)(3)(iii) of this section, the
mortality rate for an 85-year-old male
annuitant in the static mortality table for
2024 is 2⁄3 times the projected mortality
rate for a male annuitant that age in
2030 plus 1⁄3 times the projected
mortality rate for a male annuitant that
age in 2031. Accordingly, the mortality
rate for an 85-year-old male annuitant in
the static mortality table for 2024 is
0.08126 (2⁄3 times the projected
mortality rate for an 85-year-old male
annuitant in 2030 (0.08146) plus 1⁄3
times the projected mortality rate for an
85-year-old male annuitant in 2031
(0.08086)).
(d) Base mortality tables. The
following are the base mortality tables.
The base year for these tables is 2012.
TABLE 2 TO PARAGRAPH (d)
Males
Females
Weighting
factor
for small
plan
Age
ddrumheller on DSK120RN23PROD with RULES1
Non-annuitant
0 ...............................................................
1 ...............................................................
2 ...............................................................
3 ...............................................................
4 ...............................................................
5 ...............................................................
6 ...............................................................
7 ...............................................................
8 ...............................................................
9 ...............................................................
10 .............................................................
11 .............................................................
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Jkt 262001
0.00650
0.00045
0.00030
0.00022
0.00019
0.00016
0.00014
0.00013
0.00011
0.00009
0.00008
0.00009
PO 00000
Frm 00017
Annuitant
0.00650
0.00045
0.00030
0.00022
0.00019
0.00016
0.00014
0.00013
0.00011
0.00009
0.00008
0.00009
Fmt 4700
Sfmt 4700
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
Non-annuitant
0.00544
0.00038
0.00023
0.00018
0.00013
0.00012
0.00011
0.00010
0.00009
0.00009
0.00009
0.00009
E:\FR\FM\20OCR1.SGM
20OCR1
Annuitant
0.00544
0.00038
0.00023
0.00018
0.00013
0.00012
0.00011
0.00010
0.00009
0.00009
0.00009
0.00009
Weighting
factor
for small
plans
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
72364
Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Rules and Regulations
TABLE 2 TO PARAGRAPH (d)—Continued
Males
Females
Weighting
factor
for small
plan
Age
ddrumheller on DSK120RN23PROD with RULES1
Non-annuitant
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
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.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
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.............................................................
.............................................................
.............................................................
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.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
.............................................................
VerDate Sep<11>2014
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Jkt 262001
0.00013
0.00017
0.00022
0.00028
0.00034
0.00040
0.00046
0.00053
0.00056
0.00056
0.00056
0.00055
0.00055
0.00054
0.00054
0.00054
0.00054
0.00054
0.00055
0.00055
0.00056
0.00058
0.00059
0.00061
0.00063
0.00065
0.00068
0.00071
0.00074
0.00077
0.00081
0.00086
0.00091
0.00097
0.00105
0.00113
0.00123
0.00134
0.00147
0.00161
0.00177
0.00194
0.00213
0.00234
0.00257
0.00281
0.00308
0.00338
0.00369
0.00403
0.00441
0.00481
0.00525
0.00573
0.00636
0.00706
0.00784
0.00870
0.00967
0.01073
0.01192
0.01323
0.01469
0.01632
0.01812
0.02012
0.02234
0.02480
PO 00000
Frm 00018
Annuitant
0.00013
0.00017
0.00022
0.00028
0.00034
0.00040
0.00046
0.00053
0.00056
0.00056
0.00056
0.00055
0.00055
0.00054
0.00054
0.00054
0.00054
0.00054
0.00055
0.00055
0.00056
0.00058
0.00059
0.00061
0.00063
0.00065
0.00068
0.00071
0.00074
0.00082
0.00099
0.00124
0.00158
0.00200
0.00251
0.00310
0.00378
0.00454
0.00539
0.00544
0.00565
0.00588
0.00616
0.00647
0.00686
0.00728
0.00770
0.00811
0.00848
0.00882
0.00918
0.00960
0.01014
0.01087
0.01178
0.01288
0.01418
0.01564
0.01729
0.01914
0.02121
0.02354
0.02613
0.02905
0.03233
0.03604
0.04026
0.04504
Fmt 4700
Sfmt 4700
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0008
0.0016
0.0024
0.0032
0.0040
0.0047
0.0055
0.0063
0.0071
0.0079
0.0140
0.0209
0.0302
0.0430
0.0898
0.1676
0.2153
0.2635
0.3144
0.3821
0.4579
0.5935
0.7153
0.7764
0.8454
0.9002
0.9275
0.9431
0.9547
0.9642
0.9732
0.9791
0.9823
0.9847
0.9868
0.9889
0.9906
0.9920
0.9935
Non-annuitant
0.00010
0.00012
0.00013
0.00013
0.00014
0.00015
0.00015
0.00015
0.00015
0.00015
0.00016
0.00018
0.00019
0.00019
0.00019
0.00020
0.00020
0.00020
0.00021
0.00022
0.00023
0.00025
0.00026
0.00028
0.00031
0.00034
0.00036
0.00040
0.00043
0.00047
0.00051
0.00055
0.00060
0.00065
0.00071
0.00077
0.00083
0.00090
0.00098
0.00107
0.00116
0.00126
0.00137
0.00148
0.00161
0.00175
0.00190
0.00206
0.00224
0.00243
0.00264
0.00287
0.00312
0.00339
0.00380
0.00427
0.00480
0.00540
0.00606
0.00681
0.00765
0.00860
0.00966
0.01085
0.01219
0.01370
0.01539
0.01729
E:\FR\FM\20OCR1.SGM
20OCR1
Annuitant
0.00010
0.00012
0.00013
0.00013
0.00014
0.00015
0.00015
0.00015
0.00015
0.00015
0.00016
0.00018
0.00019
0.00019
0.00019
0.00020
0.00020
0.00020
0.00021
0.00022
0.00023
0.00025
0.00026
0.00028
0.00031
0.00034
0.00036
0.00040
0.00043
0.00049
0.00061
0.00078
0.00101
0.00130
0.00165
0.00206
0.00252
0.00304
0.00362
0.00426
0.00495
0.00500
0.00512
0.00517
0.00522
0.00528
0.00561
0.00601
0.00643
0.00690
0.00743
0.00796
0.00859
0.00928
0.01003
0.01089
0.01192
0.01309
0.01444
0.01597
0.01770
0.01967
0.02192
0.02445
0.02727
0.03042
0.03391
0.03775
Weighting
factor
for small
plans
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0000
0.0010
0.0020
0.0030
0.0040
0.0051
0.0061
0.0071
0.0081
0.0091
0.0101
0.0185
0.0262
0.0349
0.0449
0.0853
0.1535
0.1923
0.2291
0.2680
0.3192
0.3731
0.4705
0.5668
0.6230
0.7172
0.8006
0.8414
0.8658
0.8857
0.9046
0.9240
0.9365
0.9437
0.9512
0.9568
0.9637
0.9682
0.9727
0.9765
72365
Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Rules and Regulations
TABLE 2 TO PARAGRAPH (d)—Continued
Males
Females
Weighting
factor
for small
plan
Age
Non-annuitant
80 .............................................................
81 .............................................................
82 .............................................................
83 .............................................................
84 .............................................................
85 .............................................................
86 .............................................................
87 .............................................................
88 .............................................................
89 .............................................................
90 .............................................................
91 .............................................................
92 .............................................................
93 .............................................................
94 .............................................................
95 .............................................................
96 .............................................................
97 .............................................................
98 .............................................................
99 .............................................................
100 ...........................................................
101 ...........................................................
102 ...........................................................
103 ...........................................................
104 ...........................................................
105 ...........................................................
106 ...........................................................
107 ...........................................................
108 ...........................................................
109 ...........................................................
110 ...........................................................
111 ...........................................................
112 ...........................................................
113 ...........................................................
114 ...........................................................
115 ...........................................................
116 ...........................................................
117 ...........................................................
118 ...........................................................
119 ...........................................................
120 ...........................................................
0.02754
0.02989
0.03460
0.04166
0.05108
0.06285
0.07698
0.09346
0.11229
0.13348
0.15703
0.17401
0.19151
0.20936
0.22742
0.24569
0.26415
0.28281
0.30169
0.32077
0.33996
0.35910
0.37794
0.39633
0.41415
0.43131
0.44771
0.46329
0.47800
0.49181
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
1.00000
(e) Static tables for 2024. The
following static mortality tables are used
pursuant to paragraph (a)(1)(ii) of this
section for determining present value or
making any computation under section
430 with respect to valuation dates
occurring during 2024.
TABLE 3 TO PARAGRAPH (e)
ddrumheller on DSK120RN23PROD with RULES1
Age
0
1
2
3
4
5
6
7
8
9
Male
................................
................................
................................
................................
................................
................................
................................
................................
................................
................................
VerDate Sep<11>2014
Female
0.00356
0.00025
0.00017
0.00012
0.00011
0.00009
0.00008
0.00008
0.00006
0.00005
17:07 Oct 19, 2023
0.00306
0.00022
0.00013
0.00010
0.00008
0.00007
0.00007
0.00006
0.00005
0.00005
Jkt 262001
Annuitant
0.05046
0.05657
0.06343
0.07114
0.07977
0.08946
0.10032
0.11248
0.12600
0.14088
0.15703
0.17401
0.19151
0.20936
0.22742
0.24569
0.26415
0.28281
0.30169
0.32077
0.33996
0.35910
0.37794
0.39633
0.41415
0.43131
0.44771
0.46329
0.47800
0.49181
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
1.00000
Non-annuitant
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
0.01943
0.02134
0.02516
0.03089
0.03853
0.04808
0.05955
0.07293
0.08822
0.10542
0.12453
0.13818
0.15250
0.16737
0.18274
0.19863
0.21509
0.23214
0.24983
0.26814
0.28698
0.30619
0.32549
0.34472
0.36375
0.38243
0.40065
0.41828
0.43522
0.45139
0.46673
0.48120
0.49477
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
1.00000
TABLE 3 TO PARAGRAPH (e)—
Continued
Age
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
PO 00000
Male
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
Frm 00019
Fmt 4700
0.00005
0.00005
0.00008
0.00010
0.00013
0.00017
0.00021
0.00025
0.00029
0.00034
0.00036
0.00037
0.00037
0.00038
0.00039
0.00040
0.00041
0.00043
Sfmt 4700
0.04198
0.04663
0.05178
0.05754
0.06401
0.07132
0.07954
0.08879
0.09936
0.11124
0.12453
0.13818
0.15250
0.16737
0.18274
0.19863
0.21509
0.23214
0.24983
0.26814
0.28698
0.30619
0.32549
0.34472
0.36375
0.38243
0.40065
0.41828
0.43522
0.45139
0.46673
0.48120
0.49477
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
0.50000
1.00000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
1.0000
TABLE 3 TO PARAGRAPH (e)—
Continued
Female
0.00006
0.00006
0.00006
0.00008
0.00008
0.00008
0.00009
0.00010
0.00010
0.00010
0.00010
0.00010
0.00011
0.00013
0.00014
0.00014
0.00015
0.00016
Weighting
factor
for small
plans
Annuitant
Age
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
..............................
E:\FR\FM\20OCR1.SGM
20OCR1
Male
0.00044
0.00046
0.00049
0.00050
0.00053
0.00056
0.00059
0.00062
0.00065
0.00067
0.00070
0.00072
0.00074
0.00075
0.00077
0.00079
0.00081
0.00084
Female
0.00016
0.00017
0.00018
0.00019
0.00021
0.00023
0.00024
0.00026
0.00029
0.00031
0.00032
0.00035
0.00037
0.00039
0.00041
0.00043
0.00045
0.00048
72366
Federal Register / Vol. 88, No. 202 / Friday, October 20, 2023 / Rules and Regulations
TABLE 3 TO PARAGRAPH (e)—
Continued
ddrumheller on DSK120RN23PROD with RULES1
Age
Male
46 ..............................
47 ..............................
48 ..............................
49 ..............................
50 ..............................
51 ..............................
52 ..............................
53 ..............................
54 ..............................
55 ..............................
56 ..............................
57 ..............................
58 ..............................
59 ..............................
60 ..............................
61 ..............................
62 ..............................
63 ..............................
64 ..............................
65 ..............................
66 ..............................
67 ..............................
68 ..............................
69 ..............................
70 ..............................
71 ..............................
72 ..............................
73 ..............................
74 ..............................
75 ..............................
76 ..............................
77 ..............................
78 ..............................
79 ..............................
80 ..............................
81 ..............................
82 ..............................
83 ..............................
84 ..............................
85 ..............................
86 ..............................
87 ..............................
88 ..............................
89 ..............................
90 ..............................
91 ..............................
92 ..............................
93 ..............................
94 ..............................
95 ..............................
96 ..............................
97 ..............................
98 ..............................
99 ..............................
100 ............................
101 ............................
102 ............................
103 ............................
104 ............................
105 ............................
106 ............................
107 ............................
108 ............................
109 ............................
110 ............................
111 ............................
112 ............................
113 ............................
114 ............................
115 ............................
116 ............................
VerDate Sep<11>2014
Female
0.00088
0.00092
0.00098
0.00104
0.00113
0.00124
0.00137
0.00153
0.00173
0.00206
0.00253
0.00296
0.00344
0.00397
0.00458
0.00523
0.00615
0.00703
0.00774
0.00861
0.00957
0.01054
0.01163
0.01283
0.01419
0.01575
0.01750
0.01949
0.02175
0.02433
0.02729
0.03069
0.03460
0.03912
0.04442
0.05008
0.05649
0.06372
0.07192
0.08126
0.09180
0.10364
0.11688
0.13148
0.14733
0.16404
0.18111
0.19847
0.21588
0.23319
0.25152
0.27010
0.28899
0.30836
0.32788
0.34742
0.36672
0.38574
0.40436
0.42191
0.43897
0.45520
0.47064
0.48536
0.49448
0.49552
0.49656
0.49756
0.49870
0.49975
0.49990
17:07 Oct 19, 2023
TABLE 3 TO PARAGRAPH (e)—
Continued
0.00051
0.00055
0.00059
0.00064
0.00070
0.00080
0.00090
0.00101
0.00115
0.00138
0.00170
0.00195
0.00225
0.00258
0.00299
0.00343
0.00409
0.00478
0.00537
0.00619
0.00707
0.00786
0.00871
0.00968
0.01082
0.01217
0.01368
0.01540
0.01742
0.01975
0.02240
0.02540
0.02878
0.03254
0.03715
0.04158
0.04650
0.05202
0.05823
0.06527
0.07337
0.08255
0.09305
0.10480
0.11790
0.13141
0.14547
0.16007
0.17495
0.19020
0.20655
0.22354
0.24127
0.25965
0.27862
0.29799
0.31750
0.33705
0.35650
0.37576
0.39452
0.41279
0.43024
0.44694
0.46282
0.47794
0.49215
0.49820
0.49900
0.49980
0.49990
Jkt 262001
Age
117
118
119
120
Male
............................
............................
............................
............................
I
0.49995
0.50000
0.50000
1.00000
Female
0.50000
0.50000
0.50000
1.00000
(f) Applicability date. This section
applies for valuation dates occurring on
or after January 1, 2024.
Par. 3. Section 1.430(h)(3)–2 is
amended by:
■ a. In paragraph (c)(3)(ii) deleting the
text ‘‘§ 1.430(h)(3)–1(a)(2)(i)(E)’’ and
adding in its place ‘‘§ 1.430(h)(3)–
1(b)(2)(ii)’’;
■ b. Revising paragraph (c)(6)(ii)(E); and
■ c. In paragraph (d)(4)(iii)(A):
■ i. Deleting the text ‘‘§ 1.430(h)(3)–
1(a)(2)(i)(E)’’ and adding in its place
‘‘§ 1.430(h)(3)–1(b)(2)(ii)’’;
■ ii. Deleting ‘‘2006’’ and adding in its
place ‘‘2012’’; and
■ iii. Deleting the text ‘‘§ 1.430(h)(3)–
1(a)(2)(i)(C)’’ and adding in its place
‘‘§ 1.430(h)(3)–1(b)(1)(iii).’’
The revision reads as follows:
■
§ 1.430(h)(3)–2 Plan-specific substitute
mortality tables used to determine present
value.
*
*
*
*
*
(c) * * *
(6) * * *
(ii) * * *
(E) The date specified in guidance
published in the Internal Revenue
Bulletin (see § 601.601(d) of this
chapter) in conjunction with a
replacement of mortality tables
specified under section 430(h)(3)(A) and
§ 1.430(h)(3)–1 (other than changes to
the mortality improvement rates under
§ 1.430(h)(3)–1(b)(1)(iii) or annual
updates to the static mortality tables
issued as noted in § 1.430(h)(3)–
1(c)(1)(iv)).
*
*
*
*
*
■ Par. 4. Section 1.431(c)(6)–1 is revised
to read as follows:
used pursuant to § 1.430(h)(3)–1(b) or
the static mortality tables used pursuant
to § 1.430(h)(3)–1(c) are permitted to be
used without regard to whether the plan
is a small plan. However, substitute
mortality tables under §§ 1.430(h)(3)–
1(a)(2)(i) and 1.430(h)(3)–2 are not
permitted to be used for purposes of this
paragraph (a).
(b) Applicability date. This section
applies for valuation dates occurring on
or after January 1, 2024.
Par. 5. Section 1.433(h)(3)–1 is
revised to read as follows:
■
§ 1.433(h)(3)–1 Mortality tables used to
determine current liability.
(a) Mortality tables used to determine
current liability. In accordance with
section 433(h)(3)(B), the mortality
assumptions that apply to a singleemployer defined benefit plan for the
plan year pursuant to section
430(h)(3)(A) and (D) and §§ 1.430(h)(3)–
1(a)(1) and (a)(2)(ii) are used to
determine a cooperative and small
employer charity (CSEC) plan’s current
liability under section 433(h). For
purposes of this paragraph (a), either the
generational mortality tables used
pursuant to § 1.430(h)(3)–1(b) or the
static mortality tables used pursuant to
§ 1.430(h)(3)–1(c) are permitted to be
used without regard to whether the plan
is a small plan as defined in
§ 1.430(h)(3)–1(c)(1)(ii). However,
substitute mortality tables under
§§ 1.430(h)(3)–1(a)(2)(i) and 1.430(h)(3)–
2 are not permitted to be used for
purposes of this paragraph (a).
(b) Applicability date. This section
applies for valuation dates occurring on
or after January 1, 2024.
Douglas W. O’Donnell,
Deputy Commissioner for Services and
Enforcement.
Approved: October 4, 2023.
Lily L. Batchelder,
Assistant Secretary of the Treasury (Tax
Policy).
[FR Doc. 2023–23267 Filed 10–19–23; 8:45 am]
BILLING CODE 4830–01–P
§ 1.431(c)(6)–1 Mortality tables used to
determine current liability.
(a) Mortality tables used to determine
current liability. In accordance with
section 431(c)(6)(D), the mortality
assumptions that apply to a singleemployer defined benefit plan for the
plan year pursuant to section
430(h)(3)(A) and (D) and §§ 1.430(h)(3)–
1(a)(1) and (a)(2)(ii) are used to
determine a multiemployer plan’s
current liability for purposes of
applying the rules of section 431(c)(6).
For purposes of this paragraph (a),
either the generational mortality tables
PO 00000
Frm 00020
Fmt 4700
Sfmt 4700
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 300
[TD 9982]
RIN 1545–BQ26
User Fees Relating to Enrolled
Actuaries
Internal Revenue Service (IRS),
Treasury.
AGENCY:
E:\FR\FM\20OCR1.SGM
20OCR1
]]>Agencies
[Federal Register Volume 88, Number 202 (Friday, October 20, 2023)]
[Rules and Regulations]
[Pages 72357-72366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-23267]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[TD 9983]
RIN 1545-BQ14
Mortality Tables for Determining Present Value Under Defined
Benefit Pension Plans
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulations.
-----------------------------------------------------------------------
SUMMARY: This document sets forth final regulations prescribing
mortality tables to be used for most defined benefit pension plans. The
tables specify the probability of survival year-by-year for an
individual based on age, gender, and other factors. The tables are used
(together with other actuarial assumptions) to calculate the present
value of a stream of expected future benefit payments for purposes of
determining the minimum funding requirements for the plan. These
mortality tables are also relevant for determining the minimum required
amount of a lump-sum distribution from such a plan. These regulations
affect participants in, beneficiaries of, employers maintaining, and
administrators of certain defined benefit pension plans.
DATES:
Effective date: These regulations are effective October 20, 2023.
Applicability date: These regulations apply to valuation dates
occurring on or after January 1, 2024.
Incorporation by reference: The incorporation by reference of
certain publications listed in the rule is approved by the Director of
the Federal Register as of October 20, 2023.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Arslan
Malik or Linda Marshall at (202) 317-6700; concerning the construction
of the base mortality tables and the static mortality tables for 2024,
Christopher Denning at (202) 317-5755 (not toll free).
SUPPLEMENTARY INFORMATION:
Background
Section 412 of the Internal Revenue Code (Code) prescribes minimum
funding requirements for defined benefit pension plans, and section 430
specifies the minimum funding requirements that apply generally to
defined benefit plans that are not multiemployer plans.\1\ Section
430(a) defines the minimum required contribution for a plan by
reference to the plan's funding target for the plan year. Under section
430(d)(1), 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.
---------------------------------------------------------------------------
\1\ Section 302 of the Employee Retirement Income Security Act
of 1974, Public Law 93-406, 88 Stat. 829 (1974), as amended (ERISA),
sets forth funding rules that are parallel to those in section 412
of the Code, and section 303 of ERISA sets forth additional funding
rules for defined benefit plans (other than multiemployer plans)
that are parallel to those in section 430 of the Code. Pursuant to
section 101 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App., as
amended, the Secretary of the Treasury has interpretive jurisdiction
over the subject matter addressed in these regulations for purposes
of ERISA, as well as the Code. Thus, these Treasury regulations
issued under section 430 of the Code also apply for purposes of
section 303 of ERISA. Similarly, Treasury regulations under sections
431 and 433 apply for purposes of sections 304 and 306 of ERISA.
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Section 430(h)(3) provides rules regarding the mortality tables to
be used under section 430. Under section 430(h)(3)(A), except as
provided in section 430(h)(3)(C) or (D), the Secretary is to prescribe
by regulation mortality tables to be used in determining any present
value or making any computation under section 430. Those mortality
tables are to be based on the actual mortality experience of pension
plan participants and projected trends in that experience. In
prescribing those mortality tables, the Secretary is required to take
into account results of available independent studies of mortality of
individuals covered by pension plans. Under section 430(h)(3)(B), the
Secretary is required to revise any mortality table in effect under
section 430(h)(3)(A) at least every 10 years to reflect actual
mortality experience of pension plan participants and projected trends
in that experience. Under section 430(h)(3)(C), a plan sponsor may
request the Secretary's approval to use plan-specific substitute
mortality tables that meet requirements specified in the statute rather
than the generally applicable mortality tables. If approved, the
substitute mortality tables are used to determine present values and
make computations under section 430 during the period of consecutive
plan years (not to exceed 10) specified in the request.
Section 430(h)(3)(D) provides for the use of separate mortality
tables with respect to certain individuals who are entitled to benefits
on account of disability. These separate mortality tables are permitted
to be used with respect to disabled individuals in lieu of the
generally applicable mortality tables
[[Page 72358]]
provided pursuant to section 430(h)(3)(A). The Secretary is to
establish separate tables for individuals with disabilities occurring
in plan years beginning before January 1, 1995, and for individuals
with disabilities occurring in later plan years, with the mortality
tables for individuals with disabilities occurring in those later plan
years applying only to individuals who are disabled within the meaning
of Title II of the Social Security Act.\2\
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\2\ Mortality tables that were permitted to be used for disabled
participants under section 412(l)(7)(C)(iii)(I) as in effect before
2008 were provided in Rev. Rul. 96-7, 96-3 IRB 12. Notice 2008-29,
2008-1 CB 637, adopted those tables for use under section
430(h)(3)(D).
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Section 417(e)(3) generally provides that the present value of
certain benefits under a qualified pension plan (including single-sum
distributions) must not be less than the present value of the accrued
benefit using applicable interest rates and the applicable mortality
table. Section 417(e)(3)(B) defines the term ``applicable mortality
table'' as the mortality table specified for the plan year for minimum
funding purposes under section 430(h)(3)(A) (without regard to the
rules for substitute mortality tables under section 430(h)(3)(C) or
mortality tables for disabled individuals under section 430(h)(3)(D)),
modified as appropriate by the Secretary. The modifications made by the
Secretary to the section 430(h)(3)(A) mortality table to determine the
section 417(e)(3)(B) applicable mortality table are not addressed in
these regulations. Revenue Ruling 2007-67, 2007-2 CB 1047, describes
the modifications that are currently applied to determine the section
417(e)(3)(B) applicable mortality table.
Final regulations under section 430(h)(3) were published in the
Federal Register on October 5, 2017, in TD 9826, 82 FR 46388 (the 2017
regulations). Section 1.430(h)(3)-1 prescribes base mortality tables
and a set of mortality improvement rates, which may be reflected
through the use of either generational mortality tables or static
mortality tables. The generational mortality tables are a series of
mortality tables, one for each year of birth, each of which fully
reflects projected trends in mortality rates. The static mortality
tables (which are updated annually \3\) use a single mortality table
for all years of birth to approximate the present value that would be
determined using the generational mortality tables.
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\3\ Static mortality tables were published in Notice 2017-60,
2017-43 IRB 365, Notice 2018-02, 2018-2 IRB 281, Notice 2019-26,
2019-15 IRB 943, Notice 2019-67, 2019-52 IRB 1510, Notice 2020-85,
2020-51 IRB 1645, and Notice 2022-22, 2022-20 IRB 1057.
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The mortality tables included in the 2017 regulations are based on
the mortality tables included in the RP-2014 Mortality Tables Report
\4\ (referred to in this preamble as the RP-2014 mortality tables),
which was released by the Retirement Plan Experience Committee (RPEC)
of the Society of Actuaries (SOA) in October 2014 (as revised in
November 2014), and a set of mortality improvement rates as released by
RPEC in the Mortality Improvement Scale MP-2016 Report.\5\ In 2016,
RPEC initiated a study of private-sector retirement plans in the U.S.
in order to provide an update to the RP-2014 mortality tables, and in
2019, RPEC issued the Pri-2012 Private Retirement Plans Mortality
Tables Report (Pri-2012 Report).\6\ In October 2021, RPEC published the
Mortality Improvement Scale MP-2021 Report (MP-2021 Report), which
includes the latest mortality improvement scale issued by RPEC.\7\
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\4\ This report is available at https://www.soa.org/globalassets/assets/files/research/exp-study/research-2014-rp-report.pdf.
\5\ This report is available at https://www.soa.org/globalassets/assets/Files/Research/Exp-Study/mortality-improvement-scale-mp-2016.pdf.
\6\ This report is available at https://www.soa.org/globalassets/assets/files/resources/experience-studies/2019/pri-2012-mortality-tables-report.pdf.
\7\ This report is available at https://www.soa.org/globalassets/assets/files/resources/experience-studies/2021/2021-mp-scale-report.pdf.
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The standards prescribed for developing the mortality tables under
section 430(h)(3)(A) are the same as the standards that are prescribed
for developing mortality tables for multiemployer plans under section
431(c)(6)(D)(iv)(II) (which are used to determine current liability in
order to determine the minimum full funding limitation under section
431(c)(6)(B)). These standards also apply for CSEC plans described in
section 414(y) for purposes of developing mortality tables that are
used for purposes of section 433(h)(3)(B)(i) (to determine current
liability in order to determine the minimum full funding limitation
under section 433(c)(2)(C) and the funded current liability percentage
under section 433(i)).
Proposed regulations to update the mortality tables issued under
section 430(h)(3) and make certain other changes regarding those tables
were published in the Federal Register on April 28, 2022 (87 FR 25161)
(the proposed regulations). Five comments on the proposed regulations
were received. No commenters requested to speak at the scheduled public
hearing; accordingly, the public hearing was canceled.
On October 27, 2022, RPEC released a report titled the ``RPEC 2022
Mortality Improvement Update.'' \8\ Unlike RPEC's previously issued
reports regarding mortality improvement, this report does not include a
new mortality improvement scale. RPEC noted that, as of the date of
that report, the most recent year for which full-year mortality data
was available was 2020, which was severely affected by the COVID-19
pandemic. RPEC concluded that it would not be appropriate to
incorporate, without adjustment, the substantially higher rates of
mortality experience from 2020 into the models RPEC had previously used
to project future mortality.\9\ Therefore, RPEC chose not to release a
new mortality improvement scale in 2022. Instead, RPEC recommended the
use of an assumed increase in mortality rates to reflect the impact of
the COVID-19 pandemic, which would be phased out after an appropriate
period. RPEC did not recommend a specific level for this assumed
increase but provided data about mortality rates for 2020 through the
first half of 2022 and provided examples of assumed increases that
could be used (including the assumed increase used in the 2022 Annual
Report of the Board of Trustees of the Federal Old-Age and Survivors
Insurance and Federal Disability Insurance Trust Funds).
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\8\ This report is available at https://www.soa.org/resources/research-reports/2022/rpec-mortality-improvement/.
\9\ RPEC noted that, if it had used its standard graduation
model and had included 2020 data in accordance with its usual
practice, this would have had the effect of elevating mortality
improvement rates for periods prior to the pandemic.
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Section 335 of the SECURE 2.0 Act of 2022 (SECURE 2.0 Act), which
was enacted on December 29, 2022 as Division T of the Consolidated
Appropriations Act, 2023, Public Law 117-328 (136 Stat. 4459),
instructs the Secretary or the Secretary's delegate to amend the
regulations under section 430(h)(3)(A) no later than June 30, 2024.
Under this provision, for valuation dates occurring during or after
2024, the mortality improvement rates specified in those regulations
must not assume for years beyond the valuation date mortality
improvements at any age that are greater than 0.78 percent. Section 335
of the SECURE 2.0 Act also instructs the Secretary (or delegate) to
modify the 0.78 percent limitation to reflect material changes in the
overall rate of improvement projected by the Social Security
Administration.
[[Page 72359]]
After consideration of public comments received on the proposed
regulations (and taking into account section 335 of the SECURE 2.0
Act), the proposed regulations are adopted by this Treasury decision,
with certain changes. These changes include: (1) a delay in the
applicability date; (2) modifications in the mortality improvement
rates to reflect the expected ongoing impact of COVID-19 on mortality
rates and to reflect the 0.78 percent annual cap on mortality
improvement rates as required by section 335 of the SECURE 2.0 Act; and
(3) a minor change related to the treatment of individuals who are not
identified as male or female.
Summary of Comments and Explanation of Revisions
These regulations set forth the updated methodology for determining
the generally applicable mortality tables that are used to calculate
present value under section 430 of the Code. Pursuant to section
417(e)(3)(B), a modified version of these tables is used for purposes
of determining the amount of a single-sum distribution (or another
accelerated form of distribution). In addition, these tables are used
to determine current liability for multiemployer plans under section
431(c)(6) and CSEC plans under section 433(h).
The updated methodology for determining the generally applicable
mortality tables under section 430(h)(3)(A) is issued pursuant to the
requirement under section 430(h)(3)(B) to revise the mortality tables
used under section 430 to reflect the actual mortality experience of
pension plan participants and projected trends in that experience as
well as the requirement under section 335 of the SECURE 2.0 Act that
mortality improvement rates provided under the regulations for years
after the year that includes the applicable valuation date may not
exceed 0.78 percent per year. As under the 2017 regulations and the
proposed regulations, the methodology for determining generally
applicable mortality tables involves the separate determination of base
mortality tables and the projection of mortality improvement.
A. Base Mortality Tables
These regulations adopt the base mortality tables set forth in the
proposed regulations for use under section 430(h)(3)(A) of the Code,
which are derived from the tables set forth in the Pri-2012 Report. No
commenter suggested any alternative source for base mortality tables.
Like the base mortality tables provided in the 2017 regulations,
the base mortality tables set forth in these regulations are gender-
distinct and provide separate non-annuitant and annuitant mortality
rates. The base mortality tables have a base year of 2012 (the central
year of the experience study used to develop the mortality tables in
the Pri-2012 Report). These base tables generally have the same
mortality rates as the employee and non-disabled annuitant mortality
rates (amounts weighted) that were released by RPEC in connection with
the Pri-2012 Report. However, these base tables also include non-
annuitant mortality rates for ages below 18 and above 80 and annuitant
mortality rates for ages below age 50. This generally is the same
approach that was used to develop the base mortality tables in the 2017
regulations. The preamble to the proposed regulations describes the
methodology that was used to develop non-annuitant mortality rates for
ages below age 18 and above age 80 and annuitant mortality rates for
ages below age 50. See 87 FR 25161, 25163.
B. Mortality Improvement
These regulations adopt the methodology set forth in the proposed
regulations regarding the adjustment of the base mortality tables to
reflect expected trends in mortality improvement but use different
mortality improvement rates. The proposed regulations applied the Scale
MP-2021 Rates (the mortality improvement scale in the MP-2021 Report)
for valuation dates in the 2023 calendar year. This mortality
improvement scale was developed using the same underlying methodology
used to develop earlier mortality improvement scales but reflects
historical population data through 2019 and the change to the RPEC-
selected assumptions for the long-term rate of mortality improvement
that was first incorporated in the Mortality Improvement Scale MP-2020
Report.\10\
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\10\ This report is available at https://www.soa.org/globalassets/assets/files/resources/experience-studies/2020/mortality-improvement-scale-mp-2020.pdf.
---------------------------------------------------------------------------
One commenter expressed concern that the expected long-term
improvements in longevity reflected in the MP-2021 Report may be overly
optimistic and suggested that regulations apply a cap on the long-term
mortality improvement rates used. Another commenter recommended that
future mortality rates be increased to reflect the long-term impact of
COVID-19.
After considering all the comments and the RPEC 2022 Mortality
Improvement Update, the Department of the Treasury (Treasury
Department) and the IRS have decided to adopt a modified version of the
MP-2021 Mortality Improvement Scale for valuation dates occurring on or
after January 1, 2024. The mortality improvement scale applicable for
valuation dates occurring on or after January 1, 2024, which is
referred to as the 2024 Adjusted Scale MP-2021 Rates, is based on the
Scale MP-2021 Rates. However, the 2024 Adjusted Scale MP-2021 Rates
reflect a modification to the Scale MP-2021 Rates that eliminates any
mortality improvement during 2020, 2021, 2022, and 2023 (while
retaining any projected mortality deterioration for those years under
the MP-2021 Mortality Improvement Scale).\11\ In addition, in response
to the statutory instruction in section 335 of the SECURE 2.0 Act, the
2024 Adjusted Scale MP-2021 incorporates a cap on mortality improvement
rates of 0.78 percent per year for years after 2024.\12\ This cap on
mortality improvement rates is statutorily required by a clear
statutory instruction, and public comment on the cap rate is
unnecessary.
---------------------------------------------------------------------------
\11\ Because the mortality rates provided in these regulations
apply beginning in 2024 (that is, after the height of the COVID-19
pandemic), the significantly higher rates of mortality experience
during 2020 through 2023 are not determinative of mortality rates
for later years. However, the Treasury Department and the IRS expect
that mortality in the future will be marginally higher than what was
projected based on mortality experience prior to the COVID-19
pandemic. This expectation has been reflected through the
elimination of any mortality improvement assumption for the years
2020 through 2023.
\12\ Because the 0.78 percent cap applies to rates for years
after the year that includes the applicable valuation date, the
first impact of that cap will be on the mortality rates that are
projected to apply in 2025.
---------------------------------------------------------------------------
The Treasury Department and the IRS intend to consider new data
regarding mortality trends of the general population as it becomes
available (including future reports and mortality improvement scales
issued by RPEC, as well as projections of mortality improvement issued
by the Social Security Administration) and to specify new mortality
improvement rates that reflect updated data when future modifications
become appropriate. Those new mortality improvement rates will
incorporate the cap on mortality improvement rates described in section
335 of the SECURE 2.0 Act (including a change to the level of the 0.78
percent cap on annual mortality improvement rates as a result of any
material changes in the overall rate of improvement
[[Page 72360]]
projected by the Social Security Administration).
C. Use of Static Tables for Small Plans
The 2017 regulations provide for the use of separate generational
non-annuitant and annuitant mortality tables and separate static non-
annuitant and annuitant mortality tables. However, the proposed
regulations provided for the elimination of the use of static mortality
tables other than for small plans. This change was proposed because the
Treasury Department and the IRS believe that there was no longer a need
to allow the use of static mortality tables for larger plans (as most
actuarial firms have the capability to use generational mortality
tables) and to minimize anti-selection by plan sponsors who determine
that the use of static mortality tables results in lower minimum
funding requirements. No commenters objected to this change, and these
regulations adopt that change.
D. Individuals Not Identified as Male or Female
One commenter requested that final regulations clarify how the
mortality tables under section 430(h)(3)(A) are applied in the case of
a participant or beneficiary who identifies as nonbinary. To address
this issue, and to clarify how these tables should be applied for the
portion of a plan's population for whom gender data is not available,
the regulations provide that the plan's actuary must use a reasonable
approach in applying the section 430(h)(3)(A) mortality tables with
respect to the portion of a plan's population whose gender is not
identified as male or female (for example, a plan participant who
identifies as nonbinary or for whom gender is not known). The
regulations include two examples of reasonable approaches that may be
used for this purpose. These two approaches are merely two reasonable
methods for determining liabilities with respect to individuals for
whom male or female gender is not identified, and other reasonable
approaches may be appropriate.\13\
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\13\ For example, it might be reasonable to apply an approach
based on an equal weighting of male mortality rates and female
mortality rates if the gender ratio of the portion of the plan
population for whom male or female gender is identified is
sufficiently close to 50 percent male and 50 percent female.
---------------------------------------------------------------------------
Under the first approach, the liability for an individual is
determined as the weighted average of the liability calculated as if
the individual were male and the liability calculated as if the
individual were female, using an appropriate weighting that takes into
account the distribution of gender in the plan's population for
individuals for whom gender is identified. For example, if the gender
distribution in a plan's population for whom the gender is identified
is \2/3\ male and \1/3\ female, the liability calculated for the
individual would be equal to \2/3\ of the liability calculated as if
the individual were male and \1/3\ of the liability calculated as if
the individual were female.
The second approach might be used in connection with actuarial
software that is not able to apply a weight to individuals in the plan
census. Under the second approach, either male or female status is
assigned randomly to an individual for whom male or female gender is
not identified in a manner that is expected to result in an appropriate
proportion of males and females for the plan population that takes into
account the distribution of gender for individuals in the plan's
population for whom gender is identified. For example, if the gender
distribution in a plan population for whom the gender is identified is
\2/3\ male and \1/3\ female, a gender may be assigned to an individual
for whom gender is not identified based on the individual's birthdate,
with someone born in the first 8 months of the year assigned male
gender and someone born in the last 4 months of the year assigned
female gender.
Applicability Date
These regulations apply for valuation dates occurring on or after
January 1, 2024.
Effect of Regulations on Previously Approved Substitute Mortality
Tables
The 2017 regulations also included rules regarding the use of plan-
specific substitute mortality tables under section 430(h)(3)(C), which
are set forth in Sec. 1.430(h)(3)-2. Section 1.430(h)(3)-2(c)(6)(ii)
provides for the early termination of the use of substitute mortality
tables in certain circumstances, including in conjunction with a
replacement of the mortality tables specified in Sec. 1.430(h)(3)-1.
Under Sec. 1.430(h)(3)-2(c)(6)(ii)(E), the early termination in
conjunction with a replacement of the generally applicable mortality
tables will apply as of a date specified in guidance published in the
Internal Revenue Bulletin. As stated in the preamble to the proposed
regulations, the Treasury Department and the IRS generally will not
require that the use of previously approved substitute mortality tables
be terminated solely as a result of replacement of the generally
applicable mortality tables.
Proposed regulations modifying the rules for approving plan-
specific substitute mortality tables are being published in the
proposed rules section of this issue of the Federal Register. Those
regulations are proposed to apply to plan years beginning on or after
January 1, 2025. Until amendments to the plan-specific substitute
mortality regulations are finalized--and an updated revenue procedure
that reflects the final regulations is issued--the Treasury Department
and the IRS will not require that any previously approved plan-specific
substitute mortality tables be terminated pursuant to Sec.
1.430(h)(3)-2(c)(6)(ii)(E).
Incorporation by Reference
Section 1.430(h)(3)-1(b)(1)(iii) of these regulations provides that
the mortality improvement rates used to construct generational tables
to be used for valuation dates occurring on or after January 1, 2024,
are the 2024 Adjusted Scale MP-2021 Rates as described in the third
paragraph of section B of the Summary of Comments and Explanation of
Revisions in this preamble. The Office of the Federal Register (OFR)
has regulations concerning incorporation by reference. 1 CFR part 51.
These regulations require that agencies must discuss in the preamble to
a rule or proposed rule the way in which materials that the agency
incorporates by reference are reasonably available to interested
persons, and how interested parties can obtain the materials. 1 CFR
51.5(b). The 2024 Adjusted Scale MP-2021 Rates may be found at
www.irs.gov/retirement-plans/pension-plan-mortality-tables.
Statement of Availability of IRS Documents
IRS Revenue Rulings, Revenue Procedures, and Notices cited in this
document are published in the Internal Revenue Bulletin (or Cumulative
Bulletin) and are available from the Superintendent of Documents, U.S.
Government Printing Office, Washington, DC 20402, or by visiting the
IRS website at www.irs.gov.
Special Analyses
Pursuant to the Memorandum of Agreement, Review of Treasury
Regulations under Executive Order 12866 (June 9, 2023), tax regulatory
actions issued by the IRS are not subject to the requirements of
section 6 of Executive Order 12866, as amended. Therefore, a regulatory
impact assessment is not required.
Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it
is hereby certified that the regulations will not have a significant
economic impact on a substantial number of small entities.
[[Page 72361]]
The only provision that increases regulatory burden is Sec.
1.430(h)(3)-1(b), which generally requires the use of generational
mortality tables. However, under Sec. 1.430(h)(3)-1(c), small entities
are not required to use generational mortality tables. Therefore, these
regulations will not have a significant economic impact on a
substantial number of small entities.
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that agencies assess anticipated costs and benefits and take certain
other actions before issuing a final rule that includes any Federal
mandate that may result in expenditures in any one year by a State,
local, or tribal government, in the aggregate, or by the private
sector, of $100 million in 1995 dollars, updated annually for
inflation. These regulations do not include any Federal mandate that
may result in expenditures by State, local, or tribal governments, or
by the private sector in excess of that threshold.
Executive Order 13132 (Federalism) prohibits an agency from
publishing any rule that has federalism implications if the rule either
imposes substantial, direct compliance costs on State and local
governments, and is not required by statute, or preempts State law,
unless the agency meets the consultation and funding requirements of
section 6 of the Executive order. These regulations do not have
federalism implications, impose substantial direct compliance costs on
State and local governments, or preempt State law within the meaning of
the Executive order.
Pursuant to section 7805(f) of the Code, the proposed regulations
that preceded these regulations were submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on their
impact on small business.
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a major rule, as defined by 5 U.S.C. 804(2).
Drafting Information
The principal authors of these regulations are Arslan Malik and
Linda S.F. Marshall of the Office of Associate Chief Counsel (Employee
Benefits, Exempt Organizations, and Employment Taxes). However, other
personnel from the Treasury Department and the IRS participated in the
development of these regulations.
List of Subjects in 26 CFR Part 1
Income taxes, Incorporation by reference, Reporting and
recordkeeping requirements.
Amendments to the Regulations
Accordingly, 26 CFR part 1 is amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read, in
part, as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 1.430(h)(3)-1 is revised to read as follows:
Sec. 1.430(h)(3)-1 Mortality tables used to determine present value.
(a) Overview--(1) Standard mortality tables. This section sets
forth rules for the mortality tables to be used in determining present
value or making any computation under section 430. These mortality
tables include--
(i) Generational mortality tables described in paragraph (b) of
this section; and
(ii) Static mortality tables for small plans described in paragraph
(c) of this section.
(2) Alternative tables--(i) Plan-specific mortality tables. In lieu
of using the mortality tables provided under this section, plan-
specific substitute mortality tables are permitted to be used for
purposes of section 430 pursuant to section 430(h)(3)(C), provided that
the requirements of Sec. 1.430(h)(3)-2 are satisfied.
(ii) Disabled individuals. In lieu of using the mortality tables
provided under this section, mortality tables for disabled individuals
are permitted to be used pursuant to section 430(h)(3)(D). These tables
are provided in guidance published in the Internal Revenue Bulletin.
See Sec. 601.601(d) of this chapter.
(3) Individuals not identified as either male or female. The
mortality tables in this section are applied for an individual based on
the individual's gender. With respect to the portion of a plan's
population for which male or female gender is not identified (for
example, because an individual identifies as nonbinary or because the
gender information for an individual is not available), the plan's
actuary must use a reasonable approach for determining liability. Some
reasonable approaches for these individuals include--
(i) Determining the liability for an individual for whom male or
female gender is not identified as the weighted average of the
liability calculated as if the individual were male and the liability
calculated as if the individual were female, with an appropriate
weighting that takes into account the distribution of gender for
individuals in the plan's population for whom gender is identified; and
(ii) Assigning either male or female status randomly to an
individual for whom male or female gender is not identified in a manner
that is expected to result in an appropriate proportion of males and
females for the plan's population that takes into account the
distribution of gender for individuals in the plan's population for
whom gender is identified.
(b) Generational mortality tables--(1) In general--(i) Construction
of generational mortality tables. The generational mortality tables
that are permitted to be used under section 430(h)(3)(A) and paragraph
(a)(1)(i) of this section are constructed from the base mortality
tables described in paragraph (b)(1)(ii) of this section and the
mortality improvement rates described in paragraph (b)(1)(iii) of this
section, as adjusted in accordance with paragraph (b)(1)(v) of this
section.
(ii) Base mortality tables. The base mortality tables are set forth
in paragraph (d) of this section.
(iii) Mortality improvement rates--(A) Mortality improvement rates
for valuation dates occurring on or after January 1, 2024. Except as
otherwise provided in this paragraph (b)(1)(iii), the mortality
improvement rates for valuation dates occurring on or after January 1,
2024, are the 2024 Adjusted Scale MP-2021 Rates as incorporated by
reference pursuant to paragraph (b)(1)(iv)(A) of this section.
(B) [Reserved.]
(iv) Incorporation by reference. The material listed in this
paragraph (b)(1)(iv) is incorporated by reference into this section
with the approval of the Director of the Federal Register under 5
U.S.C. 552(a) and 1 CFR part 51. This material is available for
inspection at the IRS and at the National Archives and Records
Administration (NARA). Contact IRS at: IRS Office of Chief Counsel,
Qualified Plans Branch 1, CC:EEE:EB:QP1, 1111 Constitution Avenue NW,
Washington, DC 20224; (202) 317-6700; www.irs.gov/retirement-plans/pension-plan-mortality-tables. For information on the availability of
this material at NARA, visit www.archives.gov/federal-register/cfr/ibr-locations or email [email protected]. The material may be obtained
from IRS: www.irs.gov/retirement-plans/pension-plan-mortality-tables.
(A) 2024 Adjusted Scale MP-2021 Rates, dated August 11, 2023.
(B) [Reserved]
(2) Application of mortality improvement rates--(i) In general.
Under the generational mortality tables
[[Page 72362]]
described in this paragraph (b), the probability of an individual's
death at a particular age in the future is determined as the
individual's base mortality rate that applies at that age (that is, the
applicable mortality rate from the tables set forth in paragraph (d) of
this section for that age, gender, and status as an annuitant or a non-
annuitant) multiplied by the cumulative mortality improvement factor
for the individual's gender and for that age for the period from the
base year for those mortality tables through the calendar year in which
the individual is projected to reach the particular age. Paragraph
(b)(3) of this section provides an example that shows how the base
mortality tables in paragraph (d) of this section and the mortality
improvement rates for valuation dates occurring during 2024 are
combined to determine projected mortality rates.
(ii) Cumulative mortality improvement factor. The cumulative
mortality improvement factor for an age and gender for a period is the
product of the annual mortality improvement factors for that age and
gender for each year within that period.
(iii) Annual mortality improvement factor. The annual mortality
improvement factor for an age and gender for a year is 1 minus the
mortality improvement rate that applies for that age and gender for
that year. If that annual mortality improvement rate is greater than 1
(corresponding to a negative mortality improvement rate), then the
projected mortality rate for that age and gender for that year is
greater than the projected mortality rate for the same age and gender
for the preceding year.
(3) Example of calculation--(i) Calculation of mortality rate. The
mortality rate for 2024 that is applied to a male annuitant who is age
68 in 2024 is equal to the product of the mortality rate under
paragraph (d) of this section for a male annuitant who was age 68 in
2012 (0.01418) and the cumulative mortality improvement factor
calculated from the 2024 Adjusted Scale MP-2021 Rates for an age 68
male from 2012 to 2024. The cumulative mortality improvement factor for
age 68 males for the period from 2012 to 2024 is 0.9827, and the
mortality rate for 2024 for male annuitants who are age 68 in that year
is 0.01393, as shown in the following table.
Table 1 to Paragraph (b)(3)(i)
----------------------------------------------------------------------------------------------------------------
Rate of mortality Annual mortality
improvement from improvement factor Cumulative
Calendar year prior year to (1 - mortality mortality Mortality rate
current year improvement rate) improvement factor
----------------------------------------------------------------------------------------------------------------
2012................................ n/a n/a n/a 0.01418
2013................................ 0.0071 0.9929 0.9929 ..............
2014................................ 0.0047 0.9953 0.9882 ..............
2015................................ 0.0029 0.9971 0.9854 ..............
2016................................ 0.0017 0.9983 0.9837 ..............
2017................................ 0.0009 0.9991 0.9828 ..............
2018................................ 0.0001 0.9999 0.9827 ..............
2019................................ (0.0001) 1.0001 0.9828 ..............
2020................................ 0.0001 0.9999 0.9827 ..............
2021................................ 0.0000 1.0000 0.9827 ..............
2022................................ 0.0000 1.0000 0.9827 ..............
2023................................ 0.0000 1.0000 0.9827 ..............
2024................................ 0.0000 1.0000 0.9827 0.01393
----------------------------------------------------------------------------------------------------------------
(ii) Probability of survival for an individual. After the projected
mortality rates are derived for each age for each year, the rates are
used to calculate the present value of a benefit stream that depends on
the probability of survival year-by-year. For example, for purposes of
calculating the present value (for a 2024 valuation date) of future
payments in a benefit stream payable for a male annuitant who is age 68
in 2024, the probability of survival for the annuitant is based on the
mortality rate for a male annuitant who is age 68 in 2024 (0.01393),
and the projected mortality rate for a male annuitant who will be age
69 in 2025 (0.01507), age 70 in 2026 (0.01635), and so on.
(4) Use of the tables--(i) Separate tables for annuitants and non-
annuitants. Separate mortality tables are provided for use with respect
to annuitants and non-annuitants. The non-annuitant mortality tables
are applied to determine the probability of survival for a non-
annuitant for the period before the non-annuitant is projected to
commence receiving benefits. The annuitant mortality tables are applied
to determine the present value of benefits for each annuitant. In
addition, the annuitant mortality tables are applied for each non-
annuitant with respect to each assumed commencement of benefits for the
period beginning with that assumed commencement. For purposes of this
section, an annuitant means a plan participant who has commenced
receiving benefits and a non-annuitant means a plan participant who has
not yet commenced receiving benefits (for example, an active employee
or a terminated vested participant). A participant whose benefit has
partially commenced is treated as an annuitant with respect to the
portion of the benefit that has commenced and treated as a non-
annuitant with respect to the balance of the benefit. In addition, with
respect to a beneficiary of a participant, the annuitant mortality
tables apply for the period beginning with each assumed commencement of
benefits for the participant. If the participant has died (or to the
extent the participant is assumed to die before commencing benefits),
the annuitant mortality tables apply with respect to the beneficiary
for the period beginning with each assumed commencement of benefits for
the beneficiary.
(ii) Examples of calculation using separate non-annuitant and
annuitant tables. With respect to a 45-year-old active participant who
is projected to commence receiving an annuity at age 55, the funding
target is determined using the non-annuitant mortality tables for the
period before the participant attains age 55 and using the annuitant
mortality tables for the period ages 55 and above. Similarly, for a 45-
year-old terminated vested participant who is projected to commence an
annuity at
[[Page 72363]]
age 65, the funding target is determined using the non-annuitant
mortality tables for the period before the participant attains age 65
and using the annuitant mortality tables for ages 65 and above.
(c) Static mortality tables--(1) Availability of alternative tables
for small plans--(i) In general. As an alternative to the generational
mortality tables defined in paragraph (b) of this section, static
mortality tables may be used for a small plan. The static mortality
tables described in this paragraph (c) are constructed from the
separate non-annuitant and annuitant static mortality tables described
in paragraph (c)(2)(i) of this section, combined using the procedure
described in paragraph (c)(2)(ii) of this section.
(ii) Definition of small plan. For purposes of this paragraph (c),
a small plan is defined as a plan with 500 or fewer total participants
(including both active and inactive participants and beneficiaries of
deceased participants) on the valuation date.
(iii) Use of static mortality tables. The static mortality tables
that are used for a valuation date are the static mortality tables for
the calendar year that includes the valuation date.
(iv) Publication of mortality tables. The static mortality tables
for the 2024 calendar year are set forth in paragraph (e) of this
section.
Note 1 to paragraph (c)(1)(iv): The static mortality tables for
valuation dates occurring in later calendar years will be published
in the Internal Revenue Bulletin. See Sec. 601.601(d) of this
chapter.
(2) Development of static mortality tables--(i) Non-annuitant and
annuitant mortality tables. The non-annuitant and annuitant static
mortality tables are determined using the base mortality tables
described in paragraph (b)(1)(ii) of this section. The rates in those
base mortality tables are adjusted using the mortality improvement
rates described in paragraph (b)(1)(iii) of this section, in accordance
with the rules set forth in paragraph (c)(3) of this section.
(ii) Combined static mortality tables. The static mortality tables
described in this paragraph (c) are constructed from the separate non-
annuitant and annuitant static mortality tables pursuant to paragraph
(c)(2)(i) of this section, blended using the weighting factors in
paragraph (d) of this section. The weighting factors are applied to
develop these combined static tables using the following equation:
Combined mortality rate = [non-annuitant rate * (1 - weighting factor)]
+ [annuitant rate * weighting factor].
(3) Projection of mortality improvements--(i) General rule. Except
as provided in paragraph (c)(3)(iii) of this section, the static
mortality tables for a calendar year are determined by multiplying the
applicable mortality rate for each age from the base mortality tables
by both--
(A) The cumulative mortality improvement factor (determined under
paragraph (b)(2)(ii) of this section) for the period from 2012 through
that calendar year; and
(B) The cumulative mortality improvement factor (determined under
paragraph (b)(2)(ii) of this section) for the period beginning in that
calendar year and continuing beyond that calendar year for the number
of years in the projection period described in paragraph (c)(3)(ii) of
this section.
(ii) Projection period for static mortality tables--(A) In general.
The projection period is 8 years for males and 9 years for females, as
adjusted based on age as provided in paragraph (c)(3)(ii)(B) of this
section.
(B) Age adjustment. For ages below 80, the projection period is
increased by 1 year for each year below age 80. For ages above 80, the
projection period is reduced (but not below zero) by \1/3\ year for
each year above 80.
(iii) Fractional projection periods. If for an age the number of
years in the projection period determined under paragraph (c)(3)(ii) of
this section is not a whole number, then the mortality rate for that
age is determined by using linear interpolation between--
(A) The mortality rate for that age that would be determined under
paragraph (c)(3)(i) of this section if the number of years in the
projection period were the next lower whole number; and
(B) The mortality rate for that age that would be determined under
paragraph (c)(3)(i) of this section if the number of years in the
projection period were the next higher whole number.
(iv) Example. For example, at age 85 the projection period for a
male is 6\1/3\ years (8 years minus \1/3\ year for each of the 5 years
above age 80). For a valuation date in 2024, the mortality rate in the
static mortality table for an 85-year-old male is based on a projection
of mortality improvement for 6\1/3\ years beyond 2024. Under paragraph
(c)(3)(iii) of this section, the mortality rate for an 85-year-old male
annuitant in the static mortality table for 2024 is \2/3\ times the
projected mortality rate for a male annuitant that age in 2030 plus \1/
3\ times the projected mortality rate for a male annuitant that age in
2031. Accordingly, the mortality rate for an 85-year-old male annuitant
in the static mortality table for 2024 is 0.08126 (\2/3\ times the
projected mortality rate for an 85-year-old male annuitant in 2030
(0.08146) plus \1/3\ times the projected mortality rate for an 85-year-
old male annuitant in 2031 (0.08086)).
(d) Base mortality tables. The following are the base mortality
tables. The base year for these tables is 2012.
Table 2 to Paragraph (d)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Males Females
------------------------------------------------------------------------------------------------
Age Weighting Weighting
Non-annuitant Annuitant factor for Non-annuitant Annuitant factor for
small plan small plans
--------------------------------------------------------------------------------------------------------------------------------------------------------
0...................................................... 0.00650 0.00650 0.0000 0.00544 0.00544 0.0000
1...................................................... 0.00045 0.00045 0.0000 0.00038 0.00038 0.0000
2...................................................... 0.00030 0.00030 0.0000 0.00023 0.00023 0.0000
3...................................................... 0.00022 0.00022 0.0000 0.00018 0.00018 0.0000
4...................................................... 0.00019 0.00019 0.0000 0.00013 0.00013 0.0000
5...................................................... 0.00016 0.00016 0.0000 0.00012 0.00012 0.0000
6...................................................... 0.00014 0.00014 0.0000 0.00011 0.00011 0.0000
7...................................................... 0.00013 0.00013 0.0000 0.00010 0.00010 0.0000
8...................................................... 0.00011 0.00011 0.0000 0.00009 0.00009 0.0000
9...................................................... 0.00009 0.00009 0.0000 0.00009 0.00009 0.0000
10..................................................... 0.00008 0.00008 0.0000 0.00009 0.00009 0.0000
11..................................................... 0.00009 0.00009 0.0000 0.00009 0.00009 0.0000
[[Page 72364]]
12..................................................... 0.00013 0.00013 0.0000 0.00010 0.00010 0.0000
13..................................................... 0.00017 0.00017 0.0000 0.00012 0.00012 0.0000
14..................................................... 0.00022 0.00022 0.0000 0.00013 0.00013 0.0000
15..................................................... 0.00028 0.00028 0.0000 0.00013 0.00013 0.0000
16..................................................... 0.00034 0.00034 0.0000 0.00014 0.00014 0.0000
17..................................................... 0.00040 0.00040 0.0000 0.00015 0.00015 0.0000
18..................................................... 0.00046 0.00046 0.0000 0.00015 0.00015 0.0000
19..................................................... 0.00053 0.00053 0.0000 0.00015 0.00015 0.0000
20..................................................... 0.00056 0.00056 0.0000 0.00015 0.00015 0.0000
21..................................................... 0.00056 0.00056 0.0000 0.00015 0.00015 0.0000
22..................................................... 0.00056 0.00056 0.0000 0.00016 0.00016 0.0000
23..................................................... 0.00055 0.00055 0.0000 0.00018 0.00018 0.0000
24..................................................... 0.00055 0.00055 0.0000 0.00019 0.00019 0.0000
25..................................................... 0.00054 0.00054 0.0000 0.00019 0.00019 0.0000
26..................................................... 0.00054 0.00054 0.0000 0.00019 0.00019 0.0000
27..................................................... 0.00054 0.00054 0.0000 0.00020 0.00020 0.0000
28..................................................... 0.00054 0.00054 0.0000 0.00020 0.00020 0.0000
29..................................................... 0.00054 0.00054 0.0000 0.00020 0.00020 0.0000
30..................................................... 0.00055 0.00055 0.0000 0.00021 0.00021 0.0000
31..................................................... 0.00055 0.00055 0.0000 0.00022 0.00022 0.0000
32..................................................... 0.00056 0.00056 0.0000 0.00023 0.00023 0.0000
33..................................................... 0.00058 0.00058 0.0000 0.00025 0.00025 0.0000
34..................................................... 0.00059 0.00059 0.0000 0.00026 0.00026 0.0000
35..................................................... 0.00061 0.00061 0.0000 0.00028 0.00028 0.0000
36..................................................... 0.00063 0.00063 0.0000 0.00031 0.00031 0.0000
37..................................................... 0.00065 0.00065 0.0000 0.00034 0.00034 0.0000
38..................................................... 0.00068 0.00068 0.0000 0.00036 0.00036 0.0000
39..................................................... 0.00071 0.00071 0.0000 0.00040 0.00040 0.0000
40..................................................... 0.00074 0.00074 0.0000 0.00043 0.00043 0.0000
41..................................................... 0.00077 0.00082 0.0008 0.00047 0.00049 0.0010
42..................................................... 0.00081 0.00099 0.0016 0.00051 0.00061 0.0020
43..................................................... 0.00086 0.00124 0.0024 0.00055 0.00078 0.0030
44..................................................... 0.00091 0.00158 0.0032 0.00060 0.00101 0.0040
45..................................................... 0.00097 0.00200 0.0040 0.00065 0.00130 0.0051
46..................................................... 0.00105 0.00251 0.0047 0.00071 0.00165 0.0061
47..................................................... 0.00113 0.00310 0.0055 0.00077 0.00206 0.0071
48..................................................... 0.00123 0.00378 0.0063 0.00083 0.00252 0.0081
49..................................................... 0.00134 0.00454 0.0071 0.00090 0.00304 0.0091
50..................................................... 0.00147 0.00539 0.0079 0.00098 0.00362 0.0101
51..................................................... 0.00161 0.00544 0.0140 0.00107 0.00426 0.0185
52..................................................... 0.00177 0.00565 0.0209 0.00116 0.00495 0.0262
53..................................................... 0.00194 0.00588 0.0302 0.00126 0.00500 0.0349
54..................................................... 0.00213 0.00616 0.0430 0.00137 0.00512 0.0449
55..................................................... 0.00234 0.00647 0.0898 0.00148 0.00517 0.0853
56..................................................... 0.00257 0.00686 0.1676 0.00161 0.00522 0.1535
57..................................................... 0.00281 0.00728 0.2153 0.00175 0.00528 0.1923
58..................................................... 0.00308 0.00770 0.2635 0.00190 0.00561 0.2291
59..................................................... 0.00338 0.00811 0.3144 0.00206 0.00601 0.2680
60..................................................... 0.00369 0.00848 0.3821 0.00224 0.00643 0.3192
61..................................................... 0.00403 0.00882 0.4579 0.00243 0.00690 0.3731
62..................................................... 0.00441 0.00918 0.5935 0.00264 0.00743 0.4705
63..................................................... 0.00481 0.00960 0.7153 0.00287 0.00796 0.5668
64..................................................... 0.00525 0.01014 0.7764 0.00312 0.00859 0.6230
65..................................................... 0.00573 0.01087 0.8454 0.00339 0.00928 0.7172
66..................................................... 0.00636 0.01178 0.9002 0.00380 0.01003 0.8006
67..................................................... 0.00706 0.01288 0.9275 0.00427 0.01089 0.8414
68..................................................... 0.00784 0.01418 0.9431 0.00480 0.01192 0.8658
69..................................................... 0.00870 0.01564 0.9547 0.00540 0.01309 0.8857
70..................................................... 0.00967 0.01729 0.9642 0.00606 0.01444 0.9046
71..................................................... 0.01073 0.01914 0.9732 0.00681 0.01597 0.9240
72..................................................... 0.01192 0.02121 0.9791 0.00765 0.01770 0.9365
73..................................................... 0.01323 0.02354 0.9823 0.00860 0.01967 0.9437
74..................................................... 0.01469 0.02613 0.9847 0.00966 0.02192 0.9512
75..................................................... 0.01632 0.02905 0.9868 0.01085 0.02445 0.9568
76..................................................... 0.01812 0.03233 0.9889 0.01219 0.02727 0.9637
77..................................................... 0.02012 0.03604 0.9906 0.01370 0.03042 0.9682
78..................................................... 0.02234 0.04026 0.9920 0.01539 0.03391 0.9727
79..................................................... 0.02480 0.04504 0.9935 0.01729 0.03775 0.9765
[[Page 72365]]
80..................................................... 0.02754 0.05046 1.0000 0.01943 0.04198 1.0000
81..................................................... 0.02989 0.05657 1.0000 0.02134 0.04663 1.0000
82..................................................... 0.03460 0.06343 1.0000 0.02516 0.05178 1.0000
83..................................................... 0.04166 0.07114 1.0000 0.03089 0.05754 1.0000
84..................................................... 0.05108 0.07977 1.0000 0.03853 0.06401 1.0000
85..................................................... 0.06285 0.08946 1.0000 0.04808 0.07132 1.0000
86..................................................... 0.07698 0.10032 1.0000 0.05955 0.07954 1.0000
87..................................................... 0.09346 0.11248 1.0000 0.07293 0.08879 1.0000
88..................................................... 0.11229 0.12600 1.0000 0.08822 0.09936 1.0000
89..................................................... 0.13348 0.14088 1.0000 0.10542 0.11124 1.0000
90..................................................... 0.15703 0.15703 1.0000 0.12453 0.12453 1.0000
91..................................................... 0.17401 0.17401 1.0000 0.13818 0.13818 1.0000
92..................................................... 0.19151 0.19151 1.0000 0.15250 0.15250 1.0000
93..................................................... 0.20936 0.20936 1.0000 0.16737 0.16737 1.0000
94..................................................... 0.22742 0.22742 1.0000 0.18274 0.18274 1.0000
95..................................................... 0.24569 0.24569 1.0000 0.19863 0.19863 1.0000
96..................................................... 0.26415 0.26415 1.0000 0.21509 0.21509 1.0000
97..................................................... 0.28281 0.28281 1.0000 0.23214 0.23214 1.0000
98..................................................... 0.30169 0.30169 1.0000 0.24983 0.24983 1.0000
99..................................................... 0.32077 0.32077 1.0000 0.26814 0.26814 1.0000
100.................................................... 0.33996 0.33996 1.0000 0.28698 0.28698 1.0000
101.................................................... 0.35910 0.35910 1.0000 0.30619 0.30619 1.0000
102.................................................... 0.37794 0.37794 1.0000 0.32549 0.32549 1.0000
103.................................................... 0.39633 0.39633 1.0000 0.34472 0.34472 1.0000
104.................................................... 0.41415 0.41415 1.0000 0.36375 0.36375 1.0000
105.................................................... 0.43131 0.43131 1.0000 0.38243 0.38243 1.0000
106.................................................... 0.44771 0.44771 1.0000 0.40065 0.40065 1.0000
107.................................................... 0.46329 0.46329 1.0000 0.41828 0.41828 1.0000
108.................................................... 0.47800 0.47800 1.0000 0.43522 0.43522 1.0000
109.................................................... 0.49181 0.49181 1.0000 0.45139 0.45139 1.0000
110.................................................... 0.50000 0.50000 1.0000 0.46673 0.46673 1.0000
111.................................................... 0.50000 0.50000 1.0000 0.48120 0.48120 1.0000
112.................................................... 0.50000 0.50000 1.0000 0.49477 0.49477 1.0000
113.................................................... 0.50000 0.50000 1.0000 0.50000 0.50000 1.0000
114.................................................... 0.50000 0.50000 1.0000 0.50000 0.50000 1.0000
115.................................................... 0.50000 0.50000 1.0000 0.50000 0.50000 1.0000
116.................................................... 0.50000 0.50000 1.0000 0.50000 0.50000 1.0000
117.................................................... 0.50000 0.50000 1.0000 0.50000 0.50000 1.0000
118.................................................... 0.50000 0.50000 1.0000 0.50000 0.50000 1.0000
119.................................................... 0.50000 0.50000 1.0000 0.50000 0.50000 1.0000
120.................................................... 1.00000 1.00000 1.0000 1.00000 1.00000 1.0000
--------------------------------------------------------------------------------------------------------------------------------------------------------
(e) Static tables for 2024. The following static mortality tables
are used pursuant to paragraph (a)(1)(ii) of this section for
determining present value or making any computation under section 430
with respect to valuation dates occurring during 2024.
Table 3 to Paragraph (e)
------------------------------------------------------------------------
Age Male Female
------------------------------------------------------------------------
0................................................. 0.00356 0.00306
1................................................. 0.00025 0.00022
2................................................. 0.00017 0.00013
3................................................. 0.00012 0.00010
4................................................. 0.00011 0.00008
5................................................. 0.00009 0.00007
6................................................. 0.00008 0.00007
7................................................. 0.00008 0.00006
8................................................. 0.00006 0.00005
9................................................. 0.00005 0.00005
10................................................ 0.00005 0.00006
11................................................ 0.00005 0.00006
12................................................ 0.00008 0.00006
13................................................ 0.00010 0.00008
14................................................ 0.00013 0.00008
15................................................ 0.00017 0.00008
16................................................ 0.00021 0.00009
17................................................ 0.00025 0.00010
18................................................ 0.00029 0.00010
19................................................ 0.00034 0.00010
20................................................ 0.00036 0.00010
21................................................ 0.00037 0.00010
22................................................ 0.00037 0.00011
23................................................ 0.00038 0.00013
24................................................ 0.00039 0.00014
25................................................ 0.00040 0.00014
26................................................ 0.00041 0.00015
27................................................ 0.00043 0.00016
28................................................ 0.00044 0.00016
29................................................ 0.00046 0.00017
30................................................ 0.00049 0.00018
31................................................ 0.00050 0.00019
32................................................ 0.00053 0.00021
33................................................ 0.00056 0.00023
34................................................ 0.00059 0.00024
35................................................ 0.00062 0.00026
36................................................ 0.00065 0.00029
37................................................ 0.00067 0.00031
38................................................ 0.00070 0.00032
39................................................ 0.00072 0.00035
40................................................ 0.00074 0.00037
41................................................ 0.00075 0.00039
42................................................ 0.00077 0.00041
43................................................ 0.00079 0.00043
44................................................ 0.00081 0.00045
45................................................ 0.00084 0.00048
[[Page 72366]]
46................................................ 0.00088 0.00051
47................................................ 0.00092 0.00055
48................................................ 0.00098 0.00059
49................................................ 0.00104 0.00064
50................................................ 0.00113 0.00070
51................................................ 0.00124 0.00080
52................................................ 0.00137 0.00090
53................................................ 0.00153 0.00101
54................................................ 0.00173 0.00115
55................................................ 0.00206 0.00138
56................................................ 0.00253 0.00170
57................................................ 0.00296 0.00195
58................................................ 0.00344 0.00225
59................................................ 0.00397 0.00258
60................................................ 0.00458 0.00299
61................................................ 0.00523 0.00343
62................................................ 0.00615 0.00409
63................................................ 0.00703 0.00478
64................................................ 0.00774 0.00537
65................................................ 0.00861 0.00619
66................................................ 0.00957 0.00707
67................................................ 0.01054 0.00786
68................................................ 0.01163 0.00871
69................................................ 0.01283 0.00968
70................................................ 0.01419 0.01082
71................................................ 0.01575 0.01217
72................................................ 0.01750 0.01368
73................................................ 0.01949 0.01540
74................................................ 0.02175 0.01742
75................................................ 0.02433 0.01975
76................................................ 0.02729 0.02240
77................................................ 0.03069 0.02540
78................................................ 0.03460 0.02878
79................................................ 0.03912 0.03254
80................................................ 0.04442 0.03715
81................................................ 0.05008 0.04158
82................................................ 0.05649 0.04650
83................................................ 0.06372 0.05202
84................................................ 0.07192 0.05823
85................................................ 0.08126 0.06527
86................................................ 0.09180 0.07337
87................................................ 0.10364 0.08255
88................................................ 0.11688 0.09305
89................................................ 0.13148 0.10480
90................................................ 0.14733 0.11790
91................................................ 0.16404 0.13141
92................................................ 0.18111 0.14547
93................................................ 0.19847 0.16007
94................................................ 0.21588 0.17495
95................................................ 0.23319 0.19020
96................................................ 0.25152 0.20655
97................................................ 0.27010 0.22354
98................................................ 0.28899 0.24127
99................................................ 0.30836 0.25965
100............................................... 0.32788 0.27862
101............................................... 0.34742 0.29799
102............................................... 0.36672 0.31750
103............................................... 0.38574 0.33705
104............................................... 0.40436 0.35650
105............................................... 0.42191 0.37576
106............................................... 0.43897 0.39452
107............................................... 0.45520 0.41279
108............................................... 0.47064 0.43024
109............................................... 0.48536 0.44694
110............................................... 0.49448 0.46282
111............................................... 0.49552 0.47794
112............................................... 0.49656 0.49215
113............................................... 0.49756 0.49820
114............................................... 0.49870 0.49900
115............................................... 0.49975 0.49980
116............................................... 0.49990 0.49990
117............................................... 0.49995 0.50000
118............................................... 0.50000 0.50000
119............................................... 0.50000 0.50000
120............................................... 1.00000 1.00000
------------------------------------------------------------------------
(f) Applicability date. This section applies for valuation dates
occurring on or after January 1, 2024.
0
Par. 3. Section 1.430(h)(3)-2 is amended by:
0
a. In paragraph (c)(3)(ii) deleting the text ``Sec. 1.430(h)(3)-
1(a)(2)(i)(E)'' and adding in its place ``Sec. 1.430(h)(3)-
1(b)(2)(ii)'';
0
b. Revising paragraph (c)(6)(ii)(E); and
0
c. In paragraph (d)(4)(iii)(A):
0
i. Deleting the text ``Sec. 1.430(h)(3)-1(a)(2)(i)(E)'' and adding in
its place ``Sec. 1.430(h)(3)-1(b)(2)(ii)'';
0
ii. Deleting ``2006'' and adding in its place ``2012''; and
0
iii. Deleting the text ``Sec. 1.430(h)(3)-1(a)(2)(i)(C)'' and adding
in its place ``Sec. 1.430(h)(3)-1(b)(1)(iii).''
The revision reads as follows:
Sec. 1.430(h)(3)-2 Plan-specific substitute mortality tables used to
determine present value.
* * * * *
(c) * * *
(6) * * *
(ii) * * *
(E) The date specified in guidance published in the Internal
Revenue Bulletin (see Sec. 601.601(d) of this chapter) in conjunction
with a replacement of mortality tables specified under section
430(h)(3)(A) and Sec. 1.430(h)(3)-1 (other than changes to the
mortality improvement rates under Sec. 1.430(h)(3)-1(b)(1)(iii) or
annual updates to the static mortality tables issued as noted in Sec.
1.430(h)(3)-1(c)(1)(iv)).
* * * * *
0
Par. 4. Section 1.431(c)(6)-1 is revised to read as follows:
Sec. 1.431(c)(6)-1 Mortality tables used to determine current
liability.
(a) Mortality tables used to determine current liability. In
accordance with section 431(c)(6)(D), the mortality assumptions that
apply to a single-employer defined benefit plan for the plan year
pursuant to section 430(h)(3)(A) and (D) and Sec. Sec. 1.430(h)(3)-
1(a)(1) and (a)(2)(ii) are used to determine a multiemployer plan's
current liability for purposes of applying the rules of section
431(c)(6). For purposes of this paragraph (a), either the generational
mortality tables used pursuant to Sec. 1.430(h)(3)-1(b) or the static
mortality tables used pursuant to Sec. 1.430(h)(3)-1(c) are permitted
to be used without regard to whether the plan is a small plan. However,
substitute mortality tables under Sec. Sec. 1.430(h)(3)-1(a)(2)(i) and
1.430(h)(3)-2 are not permitted to be used for purposes of this
paragraph (a).
(b) Applicability date. This section applies for valuation dates
occurring on or after January 1, 2024.
0
Par. 5. Section 1.433(h)(3)-1 is revised to read as follows:
Sec. 1.433(h)(3)-1 Mortality tables used to determine current
liability.
(a) Mortality tables used to determine current liability. In
accordance with section 433(h)(3)(B), the mortality assumptions that
apply to a single-employer defined benefit plan for the plan year
pursuant to section 430(h)(3)(A) and (D) and Sec. Sec. 1.430(h)(3)-
1(a)(1) and (a)(2)(ii) are used to determine a cooperative and small
employer charity (CSEC) plan's current liability under section 433(h).
For purposes of this paragraph (a), either the generational mortality
tables used pursuant to Sec. 1.430(h)(3)-1(b) or the static mortality
tables used pursuant to Sec. 1.430(h)(3)-1(c) are permitted to be used
without regard to whether the plan is a small plan as defined in Sec.
1.430(h)(3)-1(c)(1)(ii). However, substitute mortality tables under
Sec. Sec. 1.430(h)(3)-1(a)(2)(i) and 1.430(h)(3)-2 are not permitted
to be used for purposes of this paragraph (a).
(b) Applicability date. This section applies for valuation dates
occurring on or after January 1, 2024.
Douglas W. O'Donnell,
Deputy Commissioner for Services and Enforcement.
Approved: October 4, 2023.
Lily L. Batchelder,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2023-23267 Filed 10-19-23; 8:45 am]
BILLING CODE 4830-01-P
