Private Letter Ruling
201611030
Released March 11, 2016
Approved
Transcribed from scan
Pension plan receives approval for substitute mortality tables
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Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
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Plain-English summary
A defined benefit pension plan requested permission to use substitute mortality tables for its healthy and disabled male and female populations. The IRS concluded that the submitted rates sufficiently reflected the mortality experience of those populations and approved their use for up to 10 years beginning with the plan year that started October 1, 2015. The tables were based on experience from October 2008 through September 2013, used the Karup-King method, and had a 2011 base year. The approval could end early if credibility, controlled-group coverage, population stability, predictive accuracy, or replacement-table requirements ceased to be satisfied.
Ruling snapshot
- Question: Could the plan use its proposed substitute mortality tables for section 430 funding computations?
- Outcome: Approved for up to 10 years, subject to the stated early-termination rules.
- Key authorities: IRC § 430(h)(3); ERISA § 303(h)(3); Treas. Reg. §§ 1.430(h)(3)-1 and 1.430(h)(3)-2
Full text (IRS public release)
Significant Index No. 0430.00-00
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION
DEC 17 2015
Re:
Dear :
This letter is to inform you that your request to use substitute mortality tables for making
computations under section 430 of the Internal Revenue Code (the “Code”) for the Plan
has been granted with respect to the populations specified in this letter, effective for a
period of up to 10 years beginning with the plan year commencing October 1, 2015.
Your request has been granted in accordance with section 430(h)(3) of the Code and
section 303(h)(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”).
In granting this approval, we have considered only the development of the substitute
mortality rates and whether they sufficiently reflect the mortality experience of the
applicable plan populations. Accordingly, we are not expressing any opinion as to the
accuracy or acceptability of any calculations or other material submitted with your
request.
Permission is hereby granted to use the healthy and disabled male and female substitute
mortality rates shown in the tables below:
Healthy Lives Disabled Lives
Age Males Females Males Females
1 0.000510 0.000457 0.000510 0.000457
2 0.000344 0.000298 0.000344 0.000298
3 0.000286 0.000223 0.000286 0.000223
4 0.000223 0.000167 0.000223 0.000167
5 0.000204 0.000151 0.000204 0.000151
6 0.000195 0.000141 0.000195 0.000141
7 0.000187 0.000132 0.000187 0.000132
8 0.000173 0.000118 0.000173 0.000118
9 0.000167 0.000112 0.000167 0.000112
10 0.000170 0.000113 0.000170 0.000113
11 0.000175 0.000115 0.000175 0.000115
12 0.000183 0.000119 0.000183 0.000119
13 0.000192 0.000124 0.000192 0.000124
14 0.000206 0.000133 0.000206 0.000133
15 0.000218 0.000142 0.000218 0.000142
16 0.000230 0.000150 0.000230 0.000150
17 0.000244 0.000158 0.000244 0.000158
18 0.000256 0.000161 0.000256 0.000161
19 0.000268 0.000161 0.000268 0.000161
20 0.000279 0.000160 0.000279 0.000160
21 0.000292 0.000159 0.000292 0.000159
22 0.000303 0.000161 0.000303 0.000161
23 0.000316 0.000165 0.000316 0.000165
24 0.000326 0.000170 0.000326 0.000170
25 0.000337 0.000177 0.000337 0.000177
26 0.000354 0.000187 0.000354 0.000187
27 0.000362 0.000195 0.000362 0.000195
28 0.000374 0.000206 0.000372 0.000206
29 0.000401 0.000217 0.000390 0.000217
30 0.000451 0.000236 0.000420 0.000236
31 0.000528 0.000281 0.000472 0.000281
32 0.000630 0.000320 0.000532 0.000320
33 0.000754 0.000356 0.000597 0.000357
34 0.000891 0.000388 0.000664 0.000389
35 0.001035 0.000417 0.000732 0.000421
36 0.001175 0.000445 0.000796 0.000450
37 0.001302 0.000474 0.000856 0.000480
38 0.001409 0.000507 0.000919 0.000525
39 0.001490 0.000549 0.001056 0.000637
40 0.001543 0.000602 0.001327 0.000862
41 0.001567 0.000671 0.001774 0.001220
42 0.001569 0.000760 0.002421 0.001716
43 0.001561 0.000870 0.003277 0.002338
44 0.001560 0.001005 0.004336 0.003063
45 0.001592 0.001167 0.005582 0.003861
46 0.001692 0.001355 0.006989 0.004695
47 0.001901 0.001570 0.008524 0.005525
48 0.002275 0.001809 0.010150 0.006314
49 0.002796 0.002068 0.011824 0.007028
50 0.003387 0.002342 0.013505 0.007641
51 0.003971 0.002623 0.015153 0.008139
52 0.004470 0.002902 0.016730 0.008519
53 0.004838 0.003165 0.018205 0.008797
54 0.005126 0.003403 0.019553 0.009009
55 0.005405 0.003655 0.020761 0.009215
56 0.005745 0.003964 0.021825 0.009500
57 0.006217 0.004371 0.022759 0.009982
58 0.006805 0.004864 0.023572 0.010801
59 0.007463 0.005417 0.024180 0.011871
60 0.008213 0.006046 0.024815 0.013129
61 0.009080 0.006768 0.025705 0.014511
62 0.010087 0.007601 0.027082 0.015954
63 0.011236 0.008527 0.028987 0.017527
64 0.012511 0.009533 0.031267 0.019273
65 0.013909 0.010648 0.033858 0.021087
66 0.015428 0.011899 0.036701 0.022864
67 0.017066 0.013314 0.039734 0.024500
68 0.018727 0.014872 0.042852 0.025749
69 0.020414 0.016554 0.046096 0.026681
70 0.022267 0.018392 0.049624 0.027664
71 0.024430 0.020417 0.053592 0.029069
72 0.027042 0.022659 0.058157 0.031264
73 0.030013 0.025065 0.063284 0.034266
74 0.033250 0.027615 0.068869 0.037829
75 0.036887 0.030389 0.074965 0.041928
76 0.041060 0.033464 0.081623 0.046540
77 0.045905 0.036919 0.088896 0.051641
78 0.051364 0.040583 0.096970 0.057521
79 0.057346 0.044405 0.105810 0.064198
80 0.063938 0.048639 0.115137 0.071234
81 0.071227 0.053545 0.124674 0.078194
82 0.079300 0.059377 0.134142 0.084640
83 0.087917 0.066128 0.143090 0.089815
84 0.097020 0.073627 0.151703 0.094009
85 0.106968 0.081886 0.160659 0.098361
86 0.118121 0.090917 0.170634 0.104007
87 0.130839 0.100735 0.182306 0.112085
88 0.145201 0.111094 0.191836 0.122905
89 0.160967 0.121987 0.198774 0.135708
90 0.178019 0.133778 0.208875 0.150031
91 0.196234 0.146836 0.227899 0.165409
92 0.215372 0.160695 0.252467 0.180671
93 0.235023 0.174527 0.273809 0.195185
94 0.254779 0.188326 0.292433 0.209056
95 0.274271 0.202082 0.308780 0.222376
96 0.293162 0.215779 0.323225 0.235225
97 0.311151 0.229396 0.336082 0.247669
98 0.327971 0.242902 0.347598 0.259762
99 0.343391 0.256266 0.357958 0.271543
100 0.357213 0.269446 0.367280 0.283041
101 0.369278 0.282398 0.375620 0.294270
102 0.379456 0.295069 0.382968 0.305229
103 0.387657 0.307402 0.389251 0.315908
104 0.393824 0.319333 0.394329 0.326282
105 0.397934 0.330793 0.398001 0.336312
106 0.400000 0.341706 0.400000 0.345947
107 0.400000 0.351992 0.400000 0.355124
108 0.400000 0.361564 0.400000 0.363764
109 0.400000 0.370328 0.400000 0.371778
110 0.400000 0.378185 0.400000 0.379061
111 0.400000 0.385031 0.400000 0.385499
112 0.400000 0.390755 0.400000 0.390960
113 0.400000 0.395241 0.400000 0.395304
114 0.400000 0.398365 0.400000 0.398373
115 0.400000 0.400000 0.400000 0.400000
116 0.400000 0.400000 0.400000 0.400000
117 0.400000 0.400000 0.400000 0.400000
118 0.400000 0.400000 0.400000 0.400000
119 0.400000 0.400000 0.400000 0.400000
120 1.000000 1.000000 1.000000 1.000000
The above tables will be used for all healthy and disabled male and female participants,
respectively, in the Plan.
The above rates were developed based on an experience study period from
October 1, 2008, through September 30, 2013, and were calculated using the Karup-
King method. The base year for the resulting tables is 2011. The Internal Revenue
Service has reviewed the substitute mortality rates and supporting information, and has
determined that based on the information submitted, the rates sufficiently reflect the
mortality experience of the applicable populations within the Plan.
Your attention is called to section 430(h)(3)(C)(ii) of the Code, section 303(h)(3)(C)(ii) of
ERISA, and section 1.430(h)(3)-2(d)(4) of the regulations, which describe the
circumstances in which the use of the substitute mortality table will terminate before the
end of the 10-year period described above. In general, the substitute mortality tables
can no longer be used as of the earliest of:
(1) The plan year in which the plan fails to satisfy the requirements of paragraph
1.430(h)(3)-2(c)(1) of the regulations, requiring that the groups for which
substitute mortality tables are used must have credible mortality experience,
(2) The plan year in which the plan fails to satisfy the requirements of paragraph
1.430(h)(3)-2(d)(1) of the regulations, regarding the requirement that other plans
and populations in the controlled group must use substitute mortality tables
unless it can be demonstrated that they do not have credible mortality
experience,
(3) The second plan year following the plan year in which there is a significant
change in individuals covered by the plan as described in paragraph
1.430(h)(3)-2(d)(4)(ii) of the regulations (generally applicable when there is a
change of 20% or more in the number of individuals in the population for which
the substitute mortality table is used),
(4) The plan year following the plan year in which a substitute mortality table used
for a plan population is no longer accurately predictive of future mortality of that
population, as determined by the Commissioner or as certified by the Plan’s
actuary to the satisfaction of the Commissioner, and
(5) The date specified in guidance published in the Internal Revenue Bulletin
pursuant to a replacement of mortality tables specified under section
430(h)(3)(A) and 1.430(h)(3)-1, other than annual updates to the static mortality
tables issued pursuant to 1.430(h)(3)-1(a)(3) of the regulations.
This ruling is directed only to the taxpayer that requested it. Section 6110(k)(3) of the
Code provides that it may not be used or cited by others as precedent.
When filing Form 5500 for the plan years for which the substitute mortality tables are
used, please note the information that is required to be attached to Schedule SB
(Actuarial Information) in accordance with the instructions to that form.
We have sent a copy of this letter to your Authorized Representative pursuant to a
power of attorney on file in this office and to the Manager, EP Classification in
Baltimore, Maryland and to the Manager, EP Compliance Unit in Chicago, Illinois.
If you require further assistance in this matter, please contact
(ID# ) at ( ) - .
Sincerely,
David M. Ziegler, Manager
Employee Plans Actuarial Group 2
Cc:
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