Compliance September 4, 2003

IRS Seeks Public Comment on Pension Liability Mortality Tables

September 4, 2003 (PLANSPONSOR.com) - The Internal Revenue Service (IRS) and the Treasury Department are requesting public comment on the mortality tables used to determine current defined benefit pension plan liability.
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>The IRS requested public comment on the tables – outlined under tax code Section 412(I)(7) and ERISA Section 302(d)(7) – in Notice 2003-62 per instructions in tax code Section 807(d)(5)(A).   Under that section, the Treasury Department is required to review the tables at least once every five years and provide updates on the actual experience of pension plans and subsequent trend projections based on the review.

>Specifically, the IRS and Treasury Department request the submission of studies regarding trends in mortality experience, whether or not the studies are limited to pension plans. However, for those studies that are not limited to pension plans, additional comments are requested on how these trends might be modified to reflect the trends covered by pension plans.   Provided as an example of the types of mortality tables the IRS and Treasury Department are looking for are:

  • generational – tables that are updated each year through the use of prescribed projection factors
  • modified generational –   generational tables that are applicable for grouped calendar years of birth.
  • sequentially static –   tables applicable for all calendar years of birth that are updated periodically through the use of prescribed projection factors at prescribed times.

>Additionally, comments are requested on the possibility of separate mortality tables that take into account other factors, and if these additionally classification systems should be mandatory or optional.   Some example of additional factors provided by the IRS include:

  • gender
  • tobacco use
  • job classification
  • annuity size
  • income

>In regard to these comments, the IRS also requests comments on:

  • how it would be determined which category an individual fits into
  • the extent to which an individual, once categorized, remains in that same category.
  • the classification of individuals for whom adequate information is unavailable.
  • whether distinctions are applicable to beneficiaries.
  • the extent to which distinctions may overlap or work at cross purposes.

>The IRS previously sought comment in 1995 and 2000.    No changes were made following those previous public comment solicitations.   

>Comments may be submitted to CC:PA:RU (Notice 2003-62), room 5203, Internal Revenue Service, Attention: SE:T:EP:RA:T:A1, POB 7604 Ben Franklin Station, Washington, DC 20044. Comments may be hand delivered between the hours of 8 a.m. and 5 p.m. Monday to Friday to: CC:PA:RU (Notice 2003-62), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, D.C. Alternatively, comments may be submitted via the Internet at Notice.Comments@irscounsel.treas.gov. All comments will be available for public inspection and copying.

A copy of IRS Notice 2003-62 can be found at  http://www.irs.gov/pub/irs-drop/n-03-62.pdf .

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