OUR THOUGHTS ON:

Updates and Changes to Mortality Tables by the IRS and Society of Actuaries

Audit|ERISA

By Lara Fuller

The IRS has approved and issued Notice 2016-50, Updated Static Mortality Tables for Defined Benefit Pension Plans for 2017.  However, they have once again postponed the implementation of using the updated Society of Actuary’s (SOA’s) latest mortality tables issued in 2014 (and updated annually) as the basis for these updates.  The Treasury Department and the IRS have proposed new regulations regarding the mortality tables to be used on, or after, January 1, 2018 for determining the minimum funding requirements and determination of lump sum values.  For plans that do pay lump sum benefits, this will also affect the determination of the plan’s benefit obligation under ASC 960.  These updated tables would take into account the latest SOA’s tables.  The delay in these regulations will allow sponsors adequate time to adjust business plans.  This comes as a relief to many plan sponsors.

In addition to the proposed IRS changes to mortality tables for funding purposes, the SOA have also released their updated 2016 mortality improvement scales.  These updated scales reflect a somewhat smaller improvement in longevity.  Projections are continuing to show an improvement in life expectancy, but at a slower rate than originally anticipated.

For more information, please contact Schneider Downs or visit the Our Thoughts On... blog for similar articles.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

comments