On October 20, 2023, the IRS published final regulations under Section 430(h) of the Code regarding the mortality tables to be used by most qualified defined benefit plans for valuation dates on or after January 1, 2024. Key changes from the prior regulations are summarized below.
- Base Mortality Tables – Change in the base mortality tables from the RP-2014 tables (see RP-2014 Mortality Tables Report, RP-2014_Link) to the Pri-2012 tables (see Pri-2012 Private Retirement Plans Mortality Tables Report, Pri-2012_Link). The base mortality rates are generally the same as the gender-distinct (amounts weighted) employee (annuitant tables) and non-disabled annuitant (non-annuitant tables) rates provided in the Pri-2012 Private Retirement Plans Mortality Tables Report, with minor adjustments for extending ages beyond the published tables.
- Mortality Improvement – Change in the mortality improvement table to an IRS-created table, the “2024 Adjusted Scale MP-2021 Rates” (see IRS website for published rates, 2024-Adj_MP-2021_Link). The mortality improvement rates are developed from the MP-2021 mortality improvement scale used for valuations in 2023 with adjustments made for COVID experience during 2020 – 2023 and legally required restrictions on long-term improvement.
- Static Mortality Tables – Change to eliminate the use of static mortality tables for other than small plans (500 or fewer participants/beneficiaries as of the valuation date).
- Individuals Not Identified as Either Male or Female – Adoption of rules to be used for participants who do not identify as either male or female.
The annual static mortality tables from the regulation will also be used for purposes of determining minimum present value under IRC Section 417(e)(3) (i.e., lump sums) for distributions starting in 2024.
The IRS separately released proposed regulations that would update the requirements that a plan sponsor of a single-employer defined benefit plan must meet to obtain IRS approval to use plan-specific mortality tables.
Feel free to reach out to your Foster & Foster consultant with any questions you may have.