On January 13, 2017, the Groom Law Group released its issue brief, Proposed New IRS Mortality Table May Impact Plan Funding and Benefit Payouts. The brief summarizes the proposed new regulations on the mortality tables to be used by most defined benefit retirement plans that were issued by the Treasury Department and Internal Revenue Service (IRS) on December 29, 2016.
Although the most significant effects of the proposed regulation would be on the calculation of the minimum funding requirements and lump sum optional forms of benefits under ERISA, public sector plans may also be affected. Specifically, the mortality table prescribed by the IRS may affect the calculation of the maximum benefit limitations under Internal Revenue Code § 415.
The proposed regulation updates the mandated mortality basis to the RP-2014 mortality table and a static mortality projection scale MP-2016. For public sector plans, the new mortality table may affect the § 415 maximum benefit limitation calculations; however, the impact will vary based on individual circumstances.
The proposed regulation would be effective for plan years beginning on or after January 1, 2018. The comment period is open until March 29, 2017 and a public hearing is scheduled on April 13, 2017. The mortality tables for 2019 and beyond are expected to be published in future Internal Revenue Bulletins.
The Groom Law Group’s brief is available here.
The proposed regulations are available here.