IRS Issues Final Rule on Plan-Specific Substitute Mortality Tables for Determining Present Value of Single-Employer DB Pension Plans

The Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) published a final rule that updates the requirements plan sponsors of single-employer defined benefit plans must meet to obtain IRS approval to use mortality tables specific to the plan in calculating present value for minimum funding purposes (as a substitute for the generally applicable mortality tables).

In addition, the IRS released Revenue Procedure 2024-32, explaining the procedure for plan sponsors to request IRS approval to use the plan-specific substitute mortality tables in accordance with § 430(h)(3)(C) and § 1.430(h)(3)-2 of the Treasury Regulations. It also specifies the date when the previously-approved substitute mortality table must be terminated in conjunction with the replacement of the generally applicable mortality tables specified in § 430(h)(3)(A) and § 1.430(h)(3)-1.

Additional information:

• Sponsors of single-employer pensions need to meet certain minimum funding requirements, calculating the value of all included benefits.
• These regulations affect participants in, beneficiaries of, employers maintaining, and administrators of certain retirement plans.
• A request for approval to use substitute mortality tables for that plan year can be submitted until October 31, 2024, provided that the plan sponsor agrees to a 90-day extension of the standard 180-day review period.

The final rule is effective July 31, 2024, and applies to plan years beginning on or after January 1, 2025.

Revenue Procedure 2024-32 is effective for all requests for approval to use plan-specific substitute mortality tables in accordance with § 430(h)(3)(C) for which the requested effective plan year begins on or after January 1, 2025.