Three plans received combined mortality tables including disabled participants

Plain-English summary

A controlled group requested substitute mortality tables for three defined benefit pension plans. The IRS approved combined male and combined female tables covering annuitants and nonannuitants, including disabled participants, for ten plan years. The IRS reviewed only whether the rates were correctly developed under the § 430 regulations and Rev. Proc. 2017-55. Continued use remained subject to the regulation's early-termination rules for mortality credibility, controlled-group coverage, significant population changes, predictive accuracy, and replacement table guidance.

Ruling snapshot

• Question: Could three plans use combined substitute mortality tables for male and female participants, including disabled participants?
• Outcome: Approved for ten plan years, subject to the regulation's 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; Rev. Proc. 2017-55

Full text (IRS public release)

Scanned document; transcription proofread from IRS OCR. Obvious scan misreads were corrected. Redacted values are marked [redacted], and the redacted mortality-rate columns are described in a transcriber note. Wording is otherwise verbatim.

Significant Index No. 0430.00-00

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

NOV 15 2018

201906020

T:EP:RA:A2

Re: Substitute Mortality Table Request

Taxpayer = [redacted] (EIN: [redacted])
Plan 1 = [redacted]
(EIN: [redacted]; Plan No. [redacted])
Plan 2 = [redacted]
(EIN: [redacted]; Plan No. [redacted])
Plan 3 = [redacted]
(EIN: [redacted]; Plan No. [redacted])

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 Plans 1
through 3 has been granted with respect to the populations specified in this letter,
effective for a period of 10 plan years beginning with the plan year commencing January
1, [redacted]. 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.

Specifically, this approval applies to the following populations:

• Plans 1, 2 and 3 combined — Male participants (annuitants and nonannuitants),
including disabled participants

• Plans 1, 2 and 3 combined — Female participants (annuitants and nonannuitants),
including disabled participants

In granting this approval, we have only considered whether the substitute mortality rates
were developed correctly in accordance with section 1.430(h)(3)-2 of the Treasury
Regulations (“Regulations”) and Revenue Procedure 2017-55. Accordingly, we are not



2 201906020


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 substitute mortality rates shown in the table
below for Plans 1 through 3:

Substitute Mortality Tables
Approved for use beginning with the plan year commencing January 1, [redacted]
Base year [redacted]

Age
Male Annuitants and Nonannuitants
Female Annuitants and Nonannuitants
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

3 201906020

Age
Male Annuitants and Nonannuitants
Female Annuitants and Nonannuitants
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

4 201906020

Age
Male Annuitants and Nonannuitants
Female Annuitants and Nonannuitants
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

5 201906020

Age
Male Annuitants and Nonannuitants
Female Annuitants and Nonannuitants
114
115
116
117
118
119
120

[The individual male and female mortality rates were redacted in the IRS release. -- transcriber]

The above rates were developed based on an experience study period from January 1,
[redacted], through December 31, [redacted], with a base year of [redacted]. The rates were calculated
by adjusting the applicable standard mortality tables in section 1.430(h)(3)-1(d) of the
Regulations indicated in the table below, using the mortality ratio and credibility
weighting factor determined by aggregating male and female experience, as shown in
the table below.

Male and Female Annuitants and Nonannuitants

Mortality ratio: [redacted]
Credibility Weighting Factor: [redacted]

The Internal Revenue Service has reviewed the substitute mortality rates and
supporting information, and has determined that based on the information submitted,
the rates were correctly developed in accordance with section 1.430(h)(3)-2 of the
Regulations and Revenue Procedure 2017-55.

The above rates must be applied on a generational basis, as provided in section
1.430(h)(3)-2(c)(3) of the Regulations.

Your attention is called to section 430(h)(3)(C)(ii) of the Code and section 1.430(h)(3)-
2(d)(6) 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) For a plan using a substitute mortality table for only one gender, the first plan
year for which there is full or partial credible mortality information with respect to
the other gender that had lacked credible mortality information (unless an
approved substitute mortality table is used for that gender),



6 201906020

(2) The first plan year in which the plan fails to satisfy the requirements of
paragraph 1.430(h)(3)-2(c)(1) of the Regulations, regarding the requirement that
other plans and populations in the controlled group must also use substitute
mortality tables unless it can be demonstrated that they do not have credible
mortality information (taking into account the transition period for newly affiliated
companies in section 1.430(h)(3)-2(f)(3) of the Regulations),

(3) The second plan year following the plan year for which there is a significant
change in individuals covered by the plan as described in section
1.430(h)(3)-2(c)(6)(iii) of the Regulations,

(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, or

(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) of the Code and section 1.430(h)(3)-1 of the Regulations, other
than annual updates to the static mortality tables issued pursuant to section
1.430(h)(3)-1(a)(3) of the regulations or changes to the mortality improvement
rates pursuant to section 1.430(h)(3)-1(a)(2)(i)(C) 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 the Manager, EP Classification in Columbus, Ohio
and to the Manager, EP Compliance Unit in Chicago, Illinois.



7 201906020

If you have any questions concerning this matter, please contact [redacted]
at [redacted]

Sincerely,

David M. Ziegler, Manager
Employee Plans Actuarial Group 2

cc: