The IRS announced on Dec. 8, 2022 that it will not be finalizing regulations it proposed on April 27 that prescribed mortality tables to be used by most pension plans. The proposed regulations would have affected participants in, beneficiaries of, employers maintaining, and administrators of certain defined benefit plans.
About the Tables
The tables specify the probability of survival year-by-year for an individual based on age, gender and other factors. Together with other actuarial assumptions, this information is used to calculate the present value of a stream of expected future benefit payments in order to determine the minimum funding requirements for a pension plan.
What this Means
In its April 28, 2022, Employee Plans Newsletter, the IRS had explained that if the proposed regulations were finalized effective for plan years beginning on or after Jan. 1, 2023, then the mortality tables provided in Notice 2022-22 would apply for purposes of calculating minimum required contributions only for a plan with a plan year that begins in 2022 and that has a valuation date in 2023.
Since it is not finalizing the proposed regulations, the mortality tables provided in Notice 2022-22 will apply for purposes of calculating minimum required contributions for a valuation date in 2023 for all plans. The IRS on April 27 had issued Notice 2022-22 to update mortality improvement rates and static mortality tables for DB plans for 2023.
More specifically, Notice 2022-22 specifies updated mortality improvement rates and static mortality tables to be used for DB plans under Internal Revenue Code Section 430(h)(3)(A) and ERISA Section 303(h)(3)(A). These updated mortality improvement rates and static tables apply for calculating funding targets and other items for valuation dates that will occur during the 2023 calendar year.
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