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CCH (cch.taxgroup.com) reports:

  The IRS has issued final regulations providing guidance regarding the mortality tables to be used in determining present value or making any computation for purposes of applying certain pension funding requirements. The regulations provide generally applicable mortality tables, and rules for adopting substitute tables. The regulations governing the generally applicable mortality tables for single employer defined benefit pension plans, and the regulations providing for the use of those mortality tables for multiemployer defined benefit pension plans, apply to plan years beginning on or after January 1, 2008. The regulations regarding the approval and use of substitute mortality tables for single employer defined benefit pension plans apply to plan years beginning on or after January 1, 2009.

Background

  The Pension Protection Act of 2006 (PPA) (P.L. 109-280), revised the minimum funding requirements for defined benefit pension plans for plan years beginning on or after January 1, 2008. The PPA added Code Sec. 430, which specifies the minimum funding requirements that apply to defined benefit plans that are not multiemployer plans, and Code Sec. 431, which specifies minimum funding requirements for multiemployer plans. Code Sec. 430(h)(3) requires the IRS to provide mortality tables by regulation for these, and it provides rules for a plan's use of substitute mortality tables.

Generally Applicable Mortality Tables

  The final regulations set forth the IRS's methodology in establishing mortality tables to be used for participants and beneficiaries to determine present value or make any computation regarding the minimum funding standards for single-employer defined benefit plans under the changes made by the PPA. These mortality tables also apply for purposes of determining the current liability of a multiemployer plan and for determining the current liability of a plan for which the application of the PPA changes is delayed. Under the final regulations, mortality tables for disabled individuals is to be provided in separate guidance published by the IRS (Notice 2008-29, I.R.B. 2008-12, 637, is the latest pronouncement).

  The mortality tables are based on the RP-2000 Mortality Tables Report. The tables are gender-distinct since women live longer. The regulations use separate annuitant and nonannuitant tables because early retirees tend to be less healthy and do not live as long. The regulations reflect the effect of expected improvements in mortality.

Substitute Tables

  The final regulations provide for the use of substitute mortality tables upon written request of the plan sponsor and approval by the IRS. Substitute mortality tables must reflect the actual mortality experience of the pension plan for which the tables are to be used, and that mortality experience must be credible. Separate mortality tables must be established for each gender, and a substitute mortality table is allowed to be established for a gender only if the plan has credible mortality experience with respect to that gender.

  Credible mortality experience for a gender must be based on at least 1,000 deaths within that gender in the period covered by the experience study. One change in the final regulations from the proposed regulations is an increase in the maximum permissible time for an experience study from four years to five to help plans that have trouble coming up with 1,000 deaths. The IRS indicates that it may increase the maximum period in the future by published guidance.

T.D. 9419, 2008FED ¶47,055

Other References:

 
Code Sec. 430

  CCH Reference - 2008FED ¶20,154

  CCH Reference - 2008FED ¶20,155

 
Code Sec. 431

  CCH Reference - 2008FED ¶20,174

  Tax Research Consultant

  CCH Reference - TRC RETIRE: 30,556