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 March 27, 2023

Current Benefit Plan and Audit Related News and Updates

Tuesday, March, 26, 2019 / Published in Employee Benefit Plans, Forms and Procedures, News and Press Releases

IRS UPDATES MORTALITY IMPROVEMENT RATES & STATIC MORTALITY TABLES FOR 2020

In Notice 2019-26, the IRS has provided updated mortality improvement rates and static mortality tables to be used for defined benefit pension plans under § 430(h)(3)(A) of the Internal Revenue Code (Code) and section 303(h)(3)(A) of the Employee Retirement Income Security Act of 1974 (ERISA). These updated mortality improvement rates and static tables, which are being issued pursuant to the regulations under § 430(h)(3)(A), apply for purposes of calculating the funding target and other items for valuation dates occurring during the 2020 calendar year. The IRS notice also includes a modified unisex version of the mortality tables for use in determining minimum present value under § 417(e)(3) of the Code and section 205(g)(3) of ERISA for distributions with annuity starting dates that occur during stability periods beginning in the 2020 calendar year.
The mortality improvement rates for valuation dates occurring during 2020 are the mortality improvement rates in the Mortality Improvement Scale MP-2018 Report (issued by the Retirement Plans Experience Committee (RPEC) of the Society of Actuaries and available at https://www.soa.org/Files/resources/experience-studies/2018/mortality-improvement-scale-mp-2018.pdf). The IRS in Notice 2018-12, provided mortality improvement rates and static mortality table that apply for valuation dates occurring during 2019.
The IRS also asks for comments on two matters:
  • Whether or not an alternative model for developing mortality improvement rates from historical U.S. population mortality rates as described in Section 4 of the Mortality Improvement Scale MP-2018 Report RPEC should be used to determine the mortality improvement rates that apply under § 430(h)(3)(A) for future years? And
  • Whether future updates to the mortality improvement rates under §1.430(h)(3)-1 should be delayed until the cumulative changes to expected mortality rate reach a particular magnitude?

Plan sponsors should read Notice 2019-26 and work with their actuaries to understand the impact that Notice 2019-26 will have on their plan including and funding requirements.

Tagged under: Defined Benefit Plans, IRS, Pension Plans

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Torrillo & Associates, LLC specializes in employee benefit plan audits, 401k audits, 403b audits, pension plan audits, and retirement plan audits. We are licensed in 7 states including New York, New Jersey, and Pennsylvania.  With firm mobility, we are also able to practice in an additional 27 states.

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Glen Mills, PA 19342

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