IRS Release Guidelines on Substitute Mortality Table Requests

May 31, 2007 ( - The Internal Revenue Service released Thursday the procedure employers must take if they want to use substitute mortality tables to compute their benefit obligations.

The IRS issued  the procedure defined benefit plan sponsors – excluding multi-employer plans – should follow to request and obtain approval for the use of plan-specific substitute mortality tables in accordance with § 430(h)(3)(C) of the Internal Revenue Code (Code) and section 303(h)(3)(C) of the Employee Retirement Income Security Act of 1974.

Requests for using substitute mortality tables will not be considered unless they meet three requirements. The procedure released by the IRS includes a checklist.     

Requests for the use of substitute mortality tables must be submitted to:

Internal Revenue Service

Attention: EP Letter Rulings

P.O. Box

McPherson Station

Washington , D.C. 20038

The agency released last week proposed rules and mortality tables, including substitute mortality tables, for determining present value and pension funding computations (See  Substitute Mortality Table Proposal Unveiled ). The guidance included the rules for employers wanting to use substitute mortality tables.

According to the guidance, mortality tables meet the requirements for substitute mortality tables if:

  • the pension plan has a sufficient number of plan participants, and
  • the plan has been maintained for a sufficient period of time in order to have credible mortality experience, and
  • such tables reflect the actual experience of the plan and projected trends in general mortality experience of participants in pension plans.

The request to use substitute mortality tables is deemed approved unless the Secretary of Labor denies approval for the use of those mortality tables within 180 days of the request (subject to extension of this period by mutual agreement).  

Except as provided by the Secretary, a plan sponsor cannot use substitute mortality tables for any plan unless substitute mortality tables are established and used for each other plan maintained by the plan sponsor and the plan sponsor’s controlled group.