29456 Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 

Rulemaking Distribution System, which 

describes the application procedure. 

The Proposal 

The FAA is proposing an amendment 

to Title 14 Code of Federal Regulations 

(14 CFR) part 71 to modify Class D 

airspace at Castle Airport, Atwater, CA. 

Local communities and aviation 

concerns met with the FAA on April 26, 

2007, at Atwater, CA, to present 

alternative airspace designs for the 

existing Class D airspace at Atwater, CA, 

Castle Airport. The various airspace 

alternatives presented were designed to 

accommodate IFR and Visual Flight 

Rules (VFR) operations in and out of 

Merced Airport located 6 miles to the 

south. The FAA, local communities, and 

aviation concerns agreed on an 

alternative that would reduce the ceiling 

of the Class D airspace, modify the 

southern border, and add an extension 

on the north side of the Class D for the 

safety of aircraft executing SIAP’s and 

other IFR operations at Castle Airport. 

Class D airspace will be effective during 

specified dates and times established in 

advance by a Notice to Airmen. The 

effective date and time will, thereafter, 

be published in the Airport/Facility 

Directory. 

Class D airspace designations for 

airspace areas extending upward from 

the surface of the earth are published in 

Paragraph 5000 of FAA Order 7400.9P, 

dated September 1, 2006, and effective 

September 15, 2006, which is 

incorporated by reference in 14 CFR 

71.1. The Class D airspace designation 

listed in this document would be 

published subsequently in the Order. 

The FAA has determined that this 

proposed regulation only involves an 

established body of technical 

regulations for which frequent and 

routine amendments are necessary to 

keep them operationally current. 

Therefore, this proposed regulation; (1) 

Is not a ‘‘significant regulatory action’’

under Executive Order 12866; (2) is not 

a ‘‘significant rule’’ under DOT 

Regulatory Policies and Procedures (44 

FR 11034; February 26, 1979); and (3) 

does not warrant preparation of a 

regulatory evaluation as the anticipated 

impact is so minimal. Since this is a 

routine matter that will only affect air 

traffic procedures and air navigation, it 

is certified that this proposed rule, 

when promulgated, will not have a 

significant economic impact on a 

substantial number of small entities 

under the criteria of the Regulatory 

Flexibility Act. 

List of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (air). 

The Proposed Amendment 

In consideration of the foregoing, the 

Federal Aviation Administration 

proposes to amend 14 CFR part 71 as 

follows: 

PART 71—DESIGNATION OF CLASS A, 

B, C, D, AND E AIRSPACE AREAS; AIR 

TRAFFIC SERVICE ROUTES; AND 

REPORTING POINTS 

1. The authority citation for 14 CFR 

part 71 continues to read as follows: 

Authority: 49 U.S.C. 106(g); 40103, 40113, 

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–

1963 Comp., 389. 

§ 71.1 [Amended] 

2. The incorporation by reference in 

14 CFR 71.1 of Federal Aviation 

Administration Order 7400.9P, Airspace 

Designations and Reporting Points, 

dated September 1, 2006, and effective 

September 15, 2006, is amended as 

follows: 

Paragraph 5000 Class D Airspace. 

* * * * * 

AWP CA D Castle Airport, Atwater, CA

[Revised] 

Castle Airport, Atwater, CA 

(Lat. 37°22′50′′ N, long. 120°34′05′′ W.) 

That airspace extending upward from the 

surface to but not including 2,000 feet MSL 

beginning at lat. 37°20′22′′ N., long. 

120°38′49′′ W. and extending clockwise 

around the 4.5 nautical mile radius of the 

Castle Airport to lat. 37°20′02′′ N., long. 

120°29′39′′, thence to the point of beginning 

and within 1.9 miles each side of the El Nido 

VORTAC 320° radial from the 4.5 nautical 

mile radius to 17.6 miles from the El Nido 

VORTAC. This Class D airspace area is 

effective during the specific dates and times 

established in advance by a Notice to 

Airmen. The effective dates and time will 

thereafter be continuously published in the 

Airport/Facility Directory. 

* * * * * 

Issued in Seattle, Washington, on May 11, 

2007. 

Clark Desing, 

Manager, System Support Group Western 

Service Center. 

[FR Doc. E7–10257 Filed 5–25–07; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[REG–143601–06] 

RIN 1545–BG30 

Mortality Tables for Determining 

Present Value 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations providing 

mortality tables to be used in 

determining present value or making 

any computation for purposes of 

applying certain pension funding 

requirements. These regulations affect 

sponsors, administrators, participants, 

and beneficiaries of certain retirement 

plans. 

DATES: Written or electronic comments 

and requests for a public hearing must 

be received by August 27, 2007. 

ADDRESSES: Send submissions to: 

CC:PA:LPD:PR (REG–143601–06), room 

5203, Internal Revenue Service, PO Box 

7604, Ben Franklin Station, Washington, 

DC 20044. Submissions may be handdelivered Monday through Friday 

between the hours of 8 a.m. and 4 p.m. 

to CC:PA:LPD:PR (REG–143601–06), 

Courier’s Desk, Internal Revenue 

Service, 1111 Constitution Avenue, 

NW., Washington, DC, or sent 

electronically, via the Federal 

eRulemaking Portal at http:// 

www.regulations.gov (IRS–REG–

143601–06). 

FOR FURTHER INFORMATION CONTACT: 

Concerning the regulations, Bruce 

Perlin, Lauson C. Green, or Linda S.F. 

Marshall at (202) 622–6090; concerning 

submissions and requests for a public 

hearing, Kelly Banks at (202) 622–7180 

(not toll-free numbers). 

SUPPLEMENTARY INFORMATION: 

Background 

Section 412 provides minimum 

funding requirements for defined 

benefit pension plans. The Pension 

Protection Act of 2006 (PPA), Public 

Law 109–280 (120 Stat. 780), makes 

extensive changes to those minimum 

funding requirements that generally 

apply for plan years beginning on or 

after January 1, 2008. Section 430, 

which was added by PPA, specifies the 

minimum funding requirements that 

apply to defined benefit plans that are 

not multiemployer plans pursuant to 


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1Section 302 of the Employee Retirement Income 

Security Act of 1974, as amended (ERISA) sets forth 

funding rules that are parallel to those in section 

412 of the Internal Revenue Code (Code), and 

section 303 of ERISA sets forth additional funding 

rules for defined benefit plans (other than 

multiemployer plans) that are parallel to those in 

section 430 of the Code. Under section 101 of 

Reorganization Plan No. 4 of 1978 (43 FR 47713) 

and section 302 of ERISA, the Secretary of the 

Treasury has interpretive jurisdiction over the 

subject matter addressed in these proposed 

regulations for purposes of ERISA, as well as the 

Code. Thus, these proposed Treasury regulations 

issued under section 430 of the Code apply as well 

for purposes of section 303 of ERISA. 

2The UP–94 Study, prepared by the UP–94 Task 

Force of the Society of Actuaries, was published in 

the Transactions of the Society of Actuaries, Vol. 

XLVII (1995), p. 819. The RP–2000 Mortality Table 

Report was released in July, 2000. Society of 

Actuaries, RP–2000 Mortality Tables Report, at 

http://www.soa.org/ccm/content/researchpublications/experience-studies-tools/the-rp-2000- 

mortality-tables/. 

section 412.1 Section 430(a) defines the 

minimum required contribution for a 

defined benefit plan that is not a 

multiemployer plan by reference to the 

plan’s funding target for the plan year. 

Under section 430(d)(1), a plan’s 

funding target for a plan year generally 

is the present value of all benefits 

accrued or earned under the plan as of 

the beginning of the plan year. 

Section 430(h)(3) provides rules 

regarding the mortality tables to be used 

under section 430. Under section 

430(h)(3)(A), except as provided in 

section 430(h)(3)(C) or (D), the Secretary 

is to prescribe by regulation mortality 

tables to be used in determining any 

present value or making any 

computation under section 430. Those 

tables are to be based on the actual 

experience of pension plans and 

projected trends in such experience. In 

prescribing those tables, the Secretary is 

required to take into account results of 

available independent studies of 

mortality of individuals covered by 

pension plans. This standard for issuing 

the mortality table under section 

430(h)(3)(A) is the same as the standard 

for issuing updated mortality tables 

pursuant to the review under section 

412(l)(7)(C)(ii)(III) of the mortality table 

used in determining a plan’s current 

liability pursuant to section 

412(l)(7)(C)(ii)(I) for plan years before 

the effective date of the PPA changes. 

Section 430(h)(3)(C) provides rules for 

a plan sponsor’s use of substitute 

mortality tables. Upon the request of a 

plan sponsor and approval by the 

Secretary, mortality tables that meet the 

requirements for substitute mortality 

tables are used in determining present 

value or making any computation under 

section 430 during the period of 

consecutive plan years (not to exceed 

10) specified in the request. Substitute 

mortality tables cease to be in effect as 

of the earliest of the date on which there 

is a significant change in the 

participants in the plan by reason of a 

plan spinoff or merger or otherwise, or 

the date on which the plan actuary 

determines that those tables do not meet 

the requirements for substitute mortality 

tables. The plan sponsor’s request to use 

substitute mortality tables is to be made 

at least 7 months before the first day of 

the first plan year for which substitute 

mortality tables are to apply. A request 

to use substitute mortality tables is 

deemed approved unless the Secretary 

denies approval for the use of those 

mortality tables within 180 days of the 

request (subject to extension of this 

period by mutual agreement). 

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. 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. 

Section 430(h)(3)(D) provides for the 

use of separate mortality tables with 

respect to certain individuals who are 

entitled to benefits on account of 

disability. These separate mortality 

tables are permitted to be used with 

respect to disabled individuals in lieu of 

the generally applicable mortality tables 

provided pursuant to section 

430(h)(3)(A) or the substitute mortality 

tables under section 430(h)(3)(C). The 

Secretary is to establish separate tables 

for individuals with disabilities 

occurring in plan years beginning before 

January 1, 1995, and in later plan years, 

with the mortality tables for individuals 

with disabilities occurring in those later 

plan years applying only to individuals 

who are disabled within the meaning of 

Title II of the Social Security Act. 

Section 431, which was added by 

PPA, specifies the minimum funding 

requirements that apply to 

multiemployer plans. Under section 

431(c)(6)(B), a plan’s full funding 

limitation cannot be less than the excess 

(if any) of 90 percent of the current 

liability of the plan (including the 

expected increase in current liability 

due to benefits accruing during the plan 

year) over the value of the plan’s assets. 

Section 431(c)(6)(D)(iv)(II) provides that 

the Secretary may by regulation 

prescribe mortality tables to be used in 

determining a plan’s current liability for 

purposes of section 431(c)(6). The 

standards for these mortality tables are 

the same as the standards for mortality 

tables to be prescribed under section 

430(h)(3)(A). Section 431(c)(6)(D)(iv)(I) 

provides that, until mortality tables are 

prescribed under section 

431(c)(6)(D)(iv)(II), the mortality table 

used in determining a plan’s current 

liability for purposes of section 431(c)(6) 

is the table prescribed by the Secretary 

that is based on the prevailing 

commissioners’ standard table 

(described in section 807(d)(5)(A)) used 

to determine reserves for group annuity 

contracts issued on January 1, 1993. 

Notice 2003–62 (2003–2 CB 576) was 

issued as part of the periodic review 

pursuant to section 412(l)(7)(C)(ii)(III) of 

the mortality tables used in determining 

current liability pursuant to section 

412(l)(7)(C)(ii)(I). At the time Notice 

2003–62 was issued, the IRS and the 

Treasury Department were aware of two 

reviews of mortality experience for 

pension plan participants undertaken by 

the Retirement Plans Experience 

Committee of the Society of Actuaries 

(the UP–94 Study and the RP–2000 

Mortality Tables Report),2 and 

commentators were invited to submit 

any other independent studies of 

pension plan mortality experience. 

Notice 2003–62 also requested the 

submission of studies regarding 

projected trends in mortality 

experience. With respect to projecting 

mortality improvements, the IRS and 

the Treasury Department requested 

comments regarding the advantages and 

disadvantages of reflecting these trends 

on an ongoing basis through the use of 

generational, modified generational, or 

sequentially static mortality tables. See 

§ 601.601(d)(2)(ii)(b) of this chapter. 

On December 2, 2005, the IRS issued 

proposed regulations under section 

412(l)(7) (REG–124988–05, 70 FR 

72260–01) setting forth mortality tables 

to be used for nondisabled pension plan 

participants (the 2005 proposed 

regulations). Those proposed 

regulations would have required plans 

of 500 or more participants (including 

both active and inactive participants) to 

use separate mortality tables for 

nonannuitant and annuitant periods. 

Those separate tables were derived from 

the RP–2000 mortality tables, with 

different projection periods for 

annuitants and nonannuitants based on 

an estimate of the duration of the 

respective liabilities. Small plans, 

defined as those with fewer than 500 

participants, would have been permitted 

to use a combined table that applied the 


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29458 Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 

same mortality rates to both annuitants 

and nonannuitants under the 2005 

proposed regulations. Those proposed 

regulations provided for updated tables 

to be issued annually using the current 

year as the new base year and using a 

specified set of projection factors to 

reflect expected improvements in 

mortality. 

The 2005 proposed regulations were 

finalized in the Federal Register on 

February 2, 2007 (TD 9310, 72 FR 4955). 

Those final regulations permit all plans 

to use a blended table for 2007 rather 

than require that large plans use 

separate annuitant and nonannuitant 

tables (as would have been required 

under the 2005 proposed regulations). 

The IRS and the Treasury Department 

believe that using separate annuitant 

and nonannuitant tables results in a 

more accurate measure of a plan’s 

current liability. However, in view of 

the sweeping PPA changes and the 

resulting need to overhaul actuarial 

valuation systems, it was determined 

that all plans (and not just small plans) 

should be permitted to use the 

combined mortality tables for the 2007 

plan year. 

Explanation of Provisions 

Generally Applicable Mortality Tables 

These proposed regulations set forth 

the methodology the IRS and the 

Treasury Department would use to 

establish mortality tables as provided 

under section 430(h)(3)(A) to be used for 

participants and beneficiaries to 

determine present value or make any 

computation under section 430. These 

mortality tables would apply as well for 

purposes of determining the current 

liability of a multiemployer plan 

pursuant to section 431(c)(6)(D)(iv)(II). 

In addition, pursuant to § 1.412(l)(7)–

1(a), these proposed regulations would 

apply for purposes of determining the 

current liability of a plan for which 

application of the PPA changes to 

section 412 is delayed (see sections 104 

through 106 of PPA). Under the 

proposed regulations, mortality tables to 

be used with respect to disabled 

individuals would be provided in 

guidance published in the Internal 

Revenue Bulletin (IRB). 

The new mortality tables under 

section 430(h)(3)(A) would be based on 

the tables contained in the RP–2000 

Mortality Tables Report. In response to 

Notice 2003–62, commentators 

generally recommended that the RP–

2000 mortality tables be the basis for the 

mortality tables used under section 

412(l)(7)(C)(ii). The IRS and the 

Treasury Department reviewed the RP–

2000 mortality tables and the 

accompanying report published by the 

Society of Actuaries, and determined to 

use the RP–2000 mortality tables as the 

basis for final regulations under section 

412(l)(7)(C)(ii) because the RP–2000 

mortality tables form the best available 

basis for predicting mortality of pension 

plan participants and beneficiaries 

(other than disabled individuals) based 

on pension plan experience, including 

expected trends. Because section 430 

applies this same standard, the 

mortality tables set forth in these 

proposed regulations under section 430 

are also based on the RP–2000 mortality 

tables. Like the mortality tables 

provided in the final section 412(l) 

regulations, the mortality tables set forth 

in these proposed regulations are 

gender-distinct because of significant 

differences between expected male 

mortality and expected female 

mortality. See § 601.601(d)(2)(ii)(b) of 

this chapter. 

The mortality tables set forth in these 

proposed regulations would provide 

separate mortality rates for annuitants 

and nonannuitants. This distinction has 

been made because the RP–2000 

Mortality Tables Report indicates that 

these two groups have significantly 

different mortality experience. This is 

particularly true at typical ages for early 

retirees, where the number of healthinduced early retirements results in a 

population that has higher mortality 

rates than the population of currently 

employed individuals. While the use of 

separate mortality rates for these groups 

of individuals will likely entail changes 

in programming of actuarial software, 

the IRS and the Treasury Department 

believe that the improvement in 

accuracy resulting from the use of 

separate mortality tables for annuitants 

and nonannuitants more than offsets the 

added complexity. 

Under these proposed regulations, the 

annuitant mortality tables would be 

applied to determine the present value 

of benefits for annuitants. The annuitant 

mortality tables are also used for 

nonannuitants (active employees and 

terminated vested participants) for the 

periods beginning when the 

nonannuitants are projected to 

commence receiving benefits, while the 

nonannuitant mortality tables are 

applied for the periods before 

nonannuitants are projected to 

commence receiving benefits. For any 

period in which an annuitant is 

projected to be receiving benefits, the 

mortality table applicable to any 

beneficiary of that annuitant is the 

annuitant mortality table. 

The RP–2000 Mortality Tables Report 

sets forth mortality tables that reflect 

expected mortality as of 2000, along 

with projection factors that are used to 

reflect the impact of expected 

improvements in mortality. Similarly, 

the mortality tables set forth in the 

proposed regulations are based on 

expected mortality as of 2000 and reflect 

the impact of expected improvements in 

mortality. Commentators to prior 

guidance generally stated that the 

projection of mortality improvement is 

desirable because it reflects expected 

mortality more accurately than using 

mortality tables that do not reflect such 

projection. The IRS and the Treasury 

Department agree with these comments, 

and believe that failing to project 

mortality improvement in determining 

the funding target would tend to result 

in underfunding. The proposed 

regulations permit plan sponsors to 

apply the projection of mortality 

improvement in either of two ways: 

Through use of static tables that are 

updated annually to reflect expected 

improvements in mortality, or through 

use of generational tables. 

The proposed regulations set forth 

base tables for annuitants and 

nonannuitants, as well as a set of 

projection factors. The base tables set 

forth in the proposed regulations 

generally provide the same rates as the 

RP–2000 mortality tables, except that 

they have been extended so that the 

annuitant and nonannuitant tables have 

mortality rates available at each age. The 

RP–2000 Mortality Tables Report did 

not develop annuitant rates before age 

50 or nonannuitant rates after age 70. 

The extended nonannuitant tables in 

these proposed regulations were created 

by (1) using nonannuitant rates through 

age 70, (2) using annuitant rates for ages 

over 80, and (3) blending the rates to 

produce a smooth transition between 

the two tables, using increasing 

fractions. The total difference between 

the rates at ages 70 and 80 is divided by 

55; the rate at age 71 is set equal to the 

rate at age 70 plus 1/55 of the total 

difference, the age 72 rate is equal to the 

rate at age 71 plus 2/55 of the total 

difference, etc. 

A similar approach was used to 

develop the base tables for annuitants. 

For male annuitants, annuitant rates 

from the RP–2000 Mortality Tables 

Report were used for ages 50 and over, 

nonannuitant rates from the RP–2000 

Mortality Tables Report were used 

through age 40, and rates between ages 

41 and 49 were smoothed to create a 

smooth transition using the same 

methodology as was used for the 

nonannuitant tables. For female 

annuitants, annuitant rates from the RP–

2000 Mortality Tables Report were used 

for ages 50 and over. However, to avoid 

anomalous results, female nonannuitant 


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rates were used through age 46 (rather 

than age 40) and, accordingly, rates 

were smoothed between ages 47 and 49. 

The smoothing methodology for the 

female annuitant tables was the same as 

that used for the male tables but, 

because a shorter transition period was 

used, the difference between the age 46 

and the age 50 mortality rates was 

smoothed using a denominator of 10 

instead of 55. 

For a plan sponsor that chooses to use 

the generational mortality tables, the 

mortality rate for each particular age 

would be projected for each individual 

participant to reflect projected 

improvement for the period of time 

until the participant reaches the 

particular age using the applicable base 

table along with the projection factors 

provided under the proposed 

regulations. These projection factors are 

from Mortality Projection Scale AA, 

which was recommended for use in the 

UP–94 Study and in the RP–2000 

Mortality Tables Report. For example, to 

obtain the age 54 mortality rate for a 

male annuitant born in 1974 using the 

generational mortality tables, the age 54 

male annuitant table rate is projected 28 

years using the age 54 male Projection 

Scale AA rate set forth in the proposed 

regulations. The projection period is 28 

years because a participant born in 1974 

would attain age 54 in 2028, 28 years 

after the base year of the tables set forth 

in the proposed regulations. In this 

instance, because the male age 54 

annuitant rate is .005797 under the base 

table, and the male age 54 Projection 

Scale AA rate set forth in paragraph (d) 

of § 1.430(h)(3)–1 is .020, the age 54 

male annuitant rate for participants born 

in 1974 is .003293 (.005797 * (1-.020)28). 

The static mortality tables that would 

be permitted to be used under the 

proposed regulations are constructed 

from the base table used for purposes of 

the generational mortality tables. The 

static mortality tables are projected from 

the base table for the year 2000 through 

the year of valuation with further 

projection to reflect the approximate 

expected duration of liabilities. The 

static mortality tables for annuitants 

under the proposed regulations reflect 

projection through the year of valuation 

with a further projection period of 7 

years, and the static mortality tables for 

nonannuitants under the proposed 

regulations reflect projection through 

the year of valuation with a further 

projection period of 15 years. These 

projection periods were selected as the 

expected average duration of liabilities 

and are consistent with projection 

periods suggested by commentators. To 

be consistent with the original 

construction of the RP–2000 mortality 

tables, both the static annuitant and 

nonannuitant tables use the rates from 

the projected annuitant table for ages 80 

and over and from the projected 

nonannuitant table for ages 40 and 

younger (ages 44 and younger for 

females). For a smooth transition 

between the different projection periods 

for annuitants versus nonannuitants, the 

rates for ages 71 through 79 and for ages 

41 through 49 (ages 45 through 49 for 

females) were smoothed using the same 

technique as that used in constructing 

the base tables. 

The static mortality tables that would 

apply with respect to valuation dates 

occurring during 2008 are set forth in 

the proposed regulations. The mortality 

tables to be used for valuation dates in 

subsequent years would be published in 

the IRB. Comments are requested 

regarding whether it would be desirable 

to publish a series of tables for each of 

a number of years (such as five years) 

along with final regulations, with tables 

for subsequent years to be published in 

the IRB. 

As an example of the use of the static 

tables for the 2008 calendar plan year, 

with respect to a 45-year-old active 

participant who is projected to 

commence receiving an annuity at age 

55, the funding target would be 

determined using the applicable 

nonannuitant mortality table for the 

period before the participant attains age 

55 (so that the probability of an active 

male participant living from age 45 to 

the age of 55 using the mortality table 

that would apply in 2008 is 98.61%) 

and the applicable annuitant mortality 

table after the participant attains age 55. 

Similarly, if a 45-year-old terminated 

vested participant is projected to 

commence an annuity at age 65, the 

funding target would be determined 

using the applicable nonannuitant 

mortality table for the period before the 

participant attains age 65 and the 

applicable annuitant mortality table for 

ages 65 and above. 

These proposed regulations would 

provide an option for smaller plans 

(plans where the total of active and 

inactive participants is less than 500) 

that choose to use static mortality tables 

to use a single blended static table for 

all participants—in lieu of the separate 

tables for annuitants and 

nonannuitants—in order to simplify the 

actuarial valuation for these plans. This 

blended table would be constructed 

from the separate nonannuitant and 

annuitant tables using the 

nonannuitant/annuitant weighting 

factors published in the RP–2000 

Mortality Tables Report. However, 

because the RP–2000 Mortality Tables 

Report does not provide weighting 

factors before age 51 or after age 69, the 

IRS and the Treasury Department would 

extend the table of weighting factors 

(using straight-line interpolation) for 

ages 41 through 50 (ages 45–50 for 

females) and for ages 70 through 79 in 

order to develop the blended table. 

Substitute Mortality Tables 

These proposed regulations would set 

forth the framework for the 

development and use of substitute 

mortality tables in connection with 

present value determinations and other 

computations under section 

430(h)(3)(C). The provision generally 

provides for the use of substitute 

mortality tables by a plan that is subject 

to section 430, in lieu of the mortality 

tables provided under section 

430(h)(3)(A) and § 1.430(h)(3)–1, upon 

written request of the plan sponsor and 

approval of the Commissioner. 

Substitute mortality tables must 

reflect the actual mortality experience of 

the pension plan maintained by the plan 

sponsor for which the tables are to be 

used and that mortality experience must 

be credible. Separate mortality tables 

must be established for each gender 

under the plan, and a substitute 

mortality table is permitted to be 

established for a gender only if the plan 

has credible mortality experience with 

respect to that gender. If the mortality 

experience for one gender is credible 

but the mortality experience for the 

other gender is not credible, the 

substitute mortality tables are used for 

the gender that has credible mortality 

experience, and the mortality tables 

under § 1.430(h)(3)–1 are used for the 

gender that does not have credible 

mortality experience. If separate 

mortality tables under section 

430(h)(3)(D) are used for certain 

disabled individuals under a plan, then 

those individuals are disregarded for all 

purposes with respect to substitute 

mortality tables under section 

430(h)(3)(C). Thus, if the mortality 

tables under section 430(h)(3)(D) are 

used for certain disabled individuals 

under a plan, mortality experience with 

respect to those individuals must be 

excluded in determining mortality rates 

for substitute mortality tables with 

respect to a plan. 

Under the proposed regulations, a 

substitute mortality table is based on 

credible mortality experience for a 

gender within a plan if and only if the 

mortality experience is based on at least 

1,000 deaths within that gender over the 

period covered by the experience study. 

The experience study must be based on 

mortality experience data over a 2, 3, or 

4-consecutive year period, the last day 

of which must be less than 3 years 


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29460 Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 

before the first day of the first plan year 

for which the substitute mortality tables 

are to apply. The 1,000 deaths threshold 

is set at a level so that there is a high 

degree of confidence that the plan’s past 

mortality experience will be predictive 

of its future mortality, and is consistent 

with relevant actuarial literature (see, 

for example, Thomas N. Herzog, 

Introduction to Credibility Theory 

(1999); Stuart A. Klugman, et al., Loss 

Models: From Data to Decisions (2004)). 

Development of a substitute mortality 

table under the proposed regulations 

requires creation of a base table and 

identification of a base year, which are 

then used to determine a substitute 

mortality table. The base table would be 

developed from a study of the mortality 

experience of the plan using amountsweighted data. The proposed 

regulations set forth rules regarding 

development of amounts-weighted 

mortality rates for an age and the 

determination of the base year. The 

proposed regulations provide that 

amounts-weighted mortality rates may 

be derived from amounts-weighted 

mortality rates for age groups. Guidance 

issued by the Commissioner may 

specify grouping rules (for example, 5- 

year age groups, except for extreme 

ages) and methods for developing 

amounts-weighted mortality rates for 

individual ages from amounts-weighted 

mortality rates initially determined for 

each age group. In addition, the 

proposed regulations would provide 

that base tables may be constructed 

either directly through graduation of 

amounts-weighted mortality rates or 

indirectly by applying a level 

percentage to tables prescribed by 

section 430(h)(3)(A), provided that the 

resulting tables sufficiently reflect the 

plan’s mortality experience. The 

Commissioner may permit the 

construction of base tables through 

application of a level percentage to 

other recognized mortality tables, 

applying similar standards to ensure 

that the resulting tables are sufficiently 

reflective of the plan’s mortality 

experience. 

In general, substitute mortality tables 

are permitted to be used for a plan only 

if the use of substitute mortality tables 

is approved for each other pension plan 

subject to the requirements of section 

430 that is maintained by the plan 

sponsor or by a member of the sponsor’s 

controlled group. However, under the 

proposed regulations, the use of 

substitute mortality tables for one plan 

would not be prohibited merely because 

another plan subject to section 430 that 

is maintained by the plan sponsor (or by 

a member of the plan sponsor’s 

controlled group) cannot use substitute 

mortality tables because neither the 

males nor the females under that plan 

have credible mortality experience for a 

plan year. Thus, if a sponsor’s 

controlled group contains two pension 

plans subject to section 430, each of 

which has credible mortality experience 

for at least one gender, either both plans 

must obtain approval from the 

Commissioner to use substitute 

mortality tables or neither plan may use 

substitute mortality tables. By contrast, 

if for one of those plans neither males 

nor females have credible mortality 

experience, then the plan without 

credible mortality experience will not 

interfere with the ability of the plan 

with credible mortality experience to 

use substitute mortality tables. 

Under the proposed regulations, the 

requirement that the plan sponsor 

demonstrate the lack of credible 

mortality experience for both the male 

and female populations in other plans 

maintained by the plan sponsor (and by 

members of the plan sponsor’s 

controlled group) must be satisfied 

annually. For each plan year in which 

a plan uses substitute mortality tables, 

the demonstration that both genders of 

another plan maintained by the plan 

sponsor do not have credible mortality 

experience (that is, there are less than 

1,000 deaths within each gender) must 

be made using a 4-year period for 

mortality experience that ends less than 

3 years before the first day of that plan 

year. 

For example, a plan sponsor that 

requests to use substitute mortality 

tables for a plan for the plan year that 

begins January 1, 2008, would have to 

show, as part of its submission to the 

Commissioner, that both the male and 

female populations in all other defined 

benefit plans of the plan sponsor (and 

in the plan sponsor’s controlled group) 

that are subject to section 430 and that 

do not use substitute mortality tables do 

not have credible mortality experience 

using a 4-year period that ends no 

earlier than January 2, 2005 (that is, 

each gender in those plans did not 

experience 1,000 deaths during that 4- 

year period). If the plan sponsor chooses 

to use the 4-year period from January 1, 

2003, through December 31, 2006, to 

demonstrate the lack of credible 

mortality experience for the other plans, 

then the plan can rely on this same data 

to demonstrate the lack of credible 

mortality experience for 2009 as well 

because the less-than-3-years 

requirement is still met with respect to 

the 2009 plan year. However, the plan 

would not be able to use this same data 

to demonstrate lack of credibility for the 

2010 plan year because the last day of 

the experience study used for the 

demonstration (the January 1, 2003–

December 31, 2006 period) is too distant 

in time (3 or more years) from the first 

day of the plan year (January 1, 2010). 

Although the proposed regulations 

permit a plan sponsor to use an 

experience study to demonstrate a lack 

of credible mortality experience for a 

plan population for multiple years, plan 

sponsors are encouraged to update 

experience studies annually as new 

mortality data become available for the 

plan population. In such a case, if an 

updated test reveals 1,000 or more 

deaths for the more recent 4-year period, 

the plan sponsor nonetheless will be 

able to continue to use substitute 

mortality tables for one plan year by 

demonstrating that the other plans in 

the controlled group do not have 

credible mortality experience based on 

the earlier experience study. This will 

give the plan sponsor sufficient time to 

develop substitute mortality tables for 

the plan population with newly credible 

mortality experience and to obtain the 

Commissioner’s approval to use those 

tables prior to the first year substitute 

mortality tables are to be used for that 

population. 

Under the proposed regulations, a 

plan’s substitute mortality tables must 

be generational mortality tables. 

Substitute mortality tables are 

determined using the base mortality 

tables developed from the experience 

study and the projection factors 

provided in Projection Scale AA, as set 

forth in § 1.430(h)(3)–1(d). Under the 

generational mortality tables, the 

probability of an individual’s death at a 

particular age is determined as the 

individual’s base mortality rate (that is, 

the applicable base mortality rate from 

the base mortality table for the age for 

which the probability of death is being 

determined) multiplied by the mortality 

improvement factor. The mortality 

improvement factor is equal to (1—

projection factor for that age)n, where n 

is equal to the projection period (that is, 

the number of years between the base 

year for the base mortality table and the 

year for which the probability of death 

is being determined). 

The proposed regulations would 

require separate tables to be established 

for males and females under a plan. 

Under the proposed regulations, 

separate substitute mortality tables 

would be permitted (but not required) to 

be established for separate populations 

within a gender, such as annuitants and 

nonannuitants or hourly and salaried 

individuals. The proposed regulations 

would provide that separate substitute 

mortality tables are permitted to be used 

for a separate population within a 

gender under a plan only if all 


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Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 29461 

individuals of that gender in the plan 

are divided into separate populations, 

each separate population has credible 

mortality experience (determined in the 

same manner as determining whether a 

gender has credible mortality 

experience), and the separate substitute 

mortality table for each separate 

population is developed using mortality 

experience data for that population. For 

example, in the case of a plan that has 

credible mortality experience data for 

both its male hourly and male salaried 

populations, separate substitute 

mortality tables could be used for those 

two separate populations. However, if 

the plan does not have credible 

mortality experience for its male 

salaried population, it would not be 

permissible to use substitute mortality 

tables for its male hourly population 

and the standard mortality tables 

described in § 1.430(h)(3)–1 for its male 

salaried population. 

The requirement that each separate 

population have credible mortality 

experience does not apply in the case of 

separate mortality tables that are 

developed for annuitant and 

nonannuitant populations within a 

gender. Thus, the proposed regulations 

would provide that substitute mortality 

tables for separate annuitant and 

nonannuitant populations may be used 

within a gender even if only one of 

those separate populations has credible 

mortality experience. Similarly, if 

separate populations with credible 

mortality experience are established 

within a gender, then any of those 

populations may be further subdivided 

into separate annuitant and 

nonannuitant subpopulations, provided 

that at least one of the two resulting 

subpopulations has credible mortality 

experience. In such a case, the standard 

mortality tables under § 1.430(h)(3)–1 

must be used for a resulting 

subpopulation that does not have 

credible mortality experience. For 

example, in the case of a plan that has 

credible mortality experience for both 

its male hourly and salaried individuals, 

if the male salaried annuitant 

population has credible mortality 

experience, it may use substitute 

mortality tables with respect to that 

population even if the male salaried 

nonannuitant population uses the 

standard mortality tables under 

§ 1.430(h)(3)–1 (because that 

nonannuitant population does not have 

credible mortality experience). For 

purposes of demonstrating that an 

annuitant or nonannuitant population 

within a gender or within a separate 

population does not have credible 

mortality experience, the demonstration 

of lack of credible mortality experience 

is made on the same basis as for 

purposes of demonstrating a lack of 

credible mortality experience for a 

gender. 

The proposed regulations would 

provide a limited time period during 

which a newly acquired plan that does 

not use substitute mortality tables does 

not prevent another plan from using 

substitute mortality tables. Under the 

proposed regulations, the use of 

substitute mortality tables for a plan is 

not prohibited merely because a newly 

acquired plan does not use substitute 

mortality tables, but only through the 

last day of the plan year of the plan 

using substitute mortality tables that 

contains the end of the period described 

in section 410(b)(6)(C). For the 

following plan year, the mortality tables 

prescribed under § 1.430(h)(3)–1 would 

apply with respect to the plan (and all 

other plans within the plan sponsor’s 

controlled group, including the acquired 

plan) unless approval to use substitute 

mortality tables has been obtained with 

respect to the acquired plan, or the 

acquired plan cannot use substitute 

mortality tables because neither the 

males nor the females under the plan 

have credible mortality experience. For 

example, if the employer acquires a plan 

in September 2009 that does not use 

substitute mortality tables and that has 

a plan year that ends June 30, the 

acquisition of that plan will not impair 

the continued use of substitute mortality 

tables by a pre-existing calendar year 

plan of the employer through the end of 

the 2011 calendar year. This is because 

the section 410(b)(6)(C) transition 

period for the newly acquired plan will 

end on June 30, 2011. Under the 

proposed regulations, a plan is treated 

as a newly acquired plan if it is acquired 

or otherwise becomes maintained by the 

plan sponsor (or by a member of the 

plan sponsor’s controlled group) in 

connection with a merger, acquisition, 

or similar transaction described in 

§ 1.410(b)–2(f). The proposed 

regulations would provide that a plan is 

also treated as a newly acquired plan if 

it is established in connection with a 

transfer in accordance with section 

414(l) of assets and liabilities from 

another employer’s plan in connection 

with a merger, acquisition, or similar 

transaction described in § 1.410(b)–2(f). 

In the case of a newly acquired plan, 

the demonstration of whether credible 

mortality experience exists for the plan 

may be made by either including or 

excluding mortality experience data for 

the period prior to the date the plan 

becomes maintained by a member of the 

new plan sponsor’s controlled group. If 

a plan sponsor excludes mortality 

experience data prior to the date the 

plan became maintained within the new 

plan sponsor’s controlled group, the 

exclusion must apply for all populations 

within the plan. For example, it is 

impermissible to include the data for 

hourly individuals for the preacquisition period but exclude the data 

for salaried individuals for that same 

period. 

In order to demonstrate a lack of 

credible mortality experience with 

respect to a gender for a plan year, a 

special rule applies if the plan’s 

mortality experience demonstration for 

a plan year is made by excluding 

mortality experience for the period prior 

to the date the newly acquired plan 

becomes maintained within the new 

plan sponsor’s controlled group. In such 

a case, an employer is permitted to 

demonstrate a plan’s lack of credible 

mortality experience using an 

experience study period of less than 

four years, provided that the experience 

study period begins with the date the 

plan becomes maintained within the 

employer’s controlled group and ends 

not more than one year and one day 

before the first day of the plan year with 

respect to which the lack of credible 

mortality experience demonstration is 

made. 

The proposed regulations would 

provide rules for aggregating plans for 

purposes of using substitute mortality 

tables. Under the proposed regulations, 

in order to use a set of substitute 

mortality tables for two or more plans, 

the applicable rules are applied by 

treating those plans as a single plan. In 

such a case, the substitute mortality 

tables must be used for all such plans 

and must be based on data collected 

with respect to all such plans. Although 

plans generally are not required to be 

aggregated, the proposed regulations 

would require a plan to be aggregated 

with any plan that was previously spun 

off from that plan if one purpose of the 

spinoff was to avoid the use of 

substitute mortality tables for any of the 

plans involved in the spinoff. 

Under the proposed regulations, in 

order to use substitute mortality tables 

with respect to a plan, a plan sponsor 

must submit a written request to the 

Commissioner that demonstrates that 

those substitute mortality tables comply 

with applicable requirements. A request 

to use substitute mortality tables must 

state the first plan year and the term of 

years (not more than 10) that the tables 

are requested to be used. In general, 

substitute mortality tables cannot be 

used for a plan year unless the plan 

sponsor submits the written request to 

use substitute mortality tables at least 7 

months prior to the first day of the first 


rwilkins on PROD1PC63 with PROPOSALS
29462 Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 

3Substitute mortality tables described in Code 

section 430(h)(3)(C) and § 1.430(h)(3)–2 of these 

proposed regulations do not apply for purposes of 

the requirements of secton 417(e). 

plan year for which the substitute 

mortality tables are to apply. However, 

the timing of the written request to use 

substitute mortality tables does not 

prevent a plan from using substitute 

mortality tables for a plan year if the 

written request is submitted no later 

than October 1, 2007. This special rule 

allows plan sponsors sufficient time to 

review the proposed regulations and 

other guidance and prepare requests to 

use substitute mortality tables for use in 

2008. 

Under the proposed regulations, 

experience data cannot be used to 

develop a base table if the number of 

individuals in the population covered 

by the table (for example, the male 

annuitants) as of the last day of the plan 

year before the year the request to use 

substitute mortality tables is made (or a 

reasonable estimate of that number), 

compared to the average number of 

individuals in that population over the 

years covered by the experience study 

on which the substitute mortality tables 

are based, reflects a difference of 20 

percent or more, unless it is 

demonstrated to the satisfaction of the 

Commissioner that the experience data 

is accurately predictive of future 

mortality of that plan population (taking 

into account the effect of the change in 

individuals) after appropriate 

adjustments to the data are made (for 

example, excluding data from 

individuals with respect to a spun-off 

portion of the plan). 

Under the proposed regulations, the 

Commissioner may, in revenue rulings 

and procedures, notices and other 

guidance published in the IRB (see 

§ 601.601(d)(2)(ii)(b) of this chapter), 

provide additional guidance regarding 

the approval and use of substitute 

mortality tables under section 

430(h)(3)(C) and related matters. The 

IRS will shortly issue a revenue 

procedure that will set forth the 

requirements related to requests to use 

substitute mortality tables. 

In general, the Commissioner has a 

180-day period to review a request for 

the use of substitute mortality tables. If 

the Commissioner does not issue a 

denial within this 180-day period, the 

request is deemed to have been 

approved unless the Commissioner and 

the plan sponsor have agreed to extend 

that period. The Commissioner may 

request additional information with 

respect to a submission. Failure to 

provide that information on a timely 

basis is grounds for denial of the plan 

sponsor’s request. In addition, the 

Commissioner will deny a request if the 

request fails to meet the requirements to 

use substitute mortality tables or if the 

Commissioner determines that a 

substitute mortality table does not 

sufficiently reflect the mortality 

experience of the applicable plan 

population. 

The proposed regulations would 

provide rules regarding the duration of 

use of substitute mortality tables. Under 

the proposed regulations, substitute 

mortality tables generally are used with 

respect to a plan for the term of 

consecutive plan years specified in the 

plan sponsor’s written request to use 

such tables and approved by the 

Commissioner, or such shorter period 

prescribed by the Commissioner in the 

approval to use substitute mortality 

tables. If the term of use of a substitute 

mortality table ends for any reason, the 

mortality tables specified in 

§ 1.430(h)(3)–1 will apply with respect 

to the plan unless the plan sponsor has 

obtained approval to use substitute 

mortality tables for a further term. The 

proposed regulations would provide 

that a plan’s substitute mortality tables 

cannot be used as of the earliest of the 

following: the second plan year 

following the plan year in which there 

is a significant change in the population 

covered by the substitute mortality table 

(generally, a change of at least 20% from 

the average number of individuals 

included in the experience study); or 

the plan year following the plan year in 

which a substitute mortality table for a 

plan population is no longer accurately 

predictive of future mortality of that 

population, as determined by the 

Commissioner or as certified by the 

plan’s actuary to the satisfaction of the 

Commissioner. In addition, the 

proposed regulations would provide 

that a plan’s substitute mortality tables 

cannot be used after the date specified 

in guidance published in the IRB (see 

§ 601.601(d)(2)(ii)(b) of this chapter) 

pursuant to a replacement of mortality 

tables specified under section 

430(h)(3)(A) (other than annual updates 

to the static mortality tables). 

Applicability Date 

These regulations are proposed to 

apply to plan years beginning on or after 

January 1, 2008. 

Mortality Tables Used Under Section 

417(e) 

Section 417(e)(3)(B)(i), as amended by 

PPA, provides that the applicable 

mortality table (which is used to 

determine the minimum present value 

of certain distributions as required by 

section 417(e)(3)) is a mortality table, 

modified as appropriate by the Secretary 

of the Treasury, based on the mortality 

table specified for the plan year under 

section 430(h)(3)(A) (without regard to 

the option to use substitute mortality 

tables under section 430(h)(3)(C) or the 

separate mortality tables for disabled 

individuals under section 430(h)(3)(D)). 

This change is effective for plan years 

beginning after December 31, 2007. 

Comments are requested regarding how 

the mortality tables provided under 

proposed § 1.430(h)(3)–1 should be 

modified for use in applying the 

minimum present value rules of section 

417(e)(3).3 Issues to be addressed 

include whether to use annuitant 

mortality rates or combined mortality 

rates and whether use of generational 

mortality tables is appropriate. 

Special Analyses 

It has been determined that this notice 

of proposed rulemaking is not a 

significant regulatory action as defined 

in Executive Order 12866. Therefore, a 

regulatory assessment is not required. It 

also has been determined that section 

553(b) of the Administrative Procedure 

Act (5 U.S.C. chapter 5) does not apply 

to these regulations, and because the 

regulation does not impose a collection 

of information on small entities, the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6) does not apply. Pursuant to 

section 7805(f) of the Code, this notice 

of proposed rulemaking will be 

submitted to the Chief Counsel for 

Advocacy of the Small Business 

Administration for comment on its 

impact on small business. 

Comments and Requests for Public 

Hearing 

Before these proposed regulations are 

adopted as final regulations, 

consideration will be given to any 

written (a signed original and eight (8) 

copies) or electronic comments that are 

submitted timely to the IRS. The IRS 

and the Treasury Department 

specifically request comments on the 

clarity of the proposed regulations and 

how they may be made easier to 

understand. All comments will be 

available for public inspection and 

copying. A public hearing will be 

scheduled if requested in writing by any 

person that timely submits written 

comments. If a public hearing is 

scheduled, notice of the date, time, and 

place for the public hearing will be 

published in the Federal Register. 

Drafting Information 

The principal authors of these 

regulations are Bruce Perlin, Lauson C. 

Green, and Linda S. F. Marshall, Office 

of Division Counsel/Associate Chief 

Counsel (Tax Exempt and Government 


rwilkins on PROD1PC63 with PROPOSALS
Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 29463 

Entities). However, other personnel 

from the IRS and the Treasury 

Department participated in the 

development of these regulations. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Amendments to the Regulations 

Accordingly, 26 CFR part 1 is 

proposed to be amended as follows: 

PART 1—INCOME TAXES 

Paragraph 1. The authority citation 

for part 1 continues to read, in part, as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

Par. 2. Section 1.430(h)(3)–1 is added 

to read as follows: 

§ 1.430(h)(3)–1 Mortality tables used to 

determine present value. 

(a) Basis for mortality tables—(1) In 

general. This section sets forth rules for 

the mortality tables to be used in 

determining present value or making 

any computation under section 430. 

Generally applicable mortality tables for 

participants and beneficiaries are set 

forth in this section pursuant to section 

430(h)(3)(A). In lieu of using the 

mortality tables provided under this 

section with respect to participants and 

beneficiaries, plan-specific substitute 

mortality tables are permitted to be used 

for this purpose pursuant to section 

430(h)(3)(C) provided that the 

requirements of § 1.430(h)(3)–2 are 

satisfied. Mortality tables that may be 

used with respect to disabled 

individuals are to be provided in 

guidance published in the Internal 

Revenue Bulletin. See 

§ 601.601(d)(2)(ii)(b) of this chapter. 

(2) Static tables or generational tables 

permitted. The generally applicable 

mortality tables provided under section 

430(h)(3)(A) are the static tables 

described in paragraph (a)(3) of this 

section and the generational mortality 

tables described in paragraph (a)(4) of 

this section. A plan is permitted to use 

either of those sets of mortality tables 

with respect to participants and 

beneficiaries pursuant to this section. 

(3) Static tables. The static mortality 

tables that are permitted to be used 

pursuant to paragraph (a)(2) of this 

section are updated annually to reflect 

expected improvements in mortality 

experience as described in paragraph 

(c)(2) of this section. Static mortality 

tables that are to be used with respect 

to valuation dates occurring during 2008 

are provided in paragraph (e) of this 

section. The mortality tables to be used 

with respect to valuation dates 

occurring in later years are to be 

provided in guidance published in the 

Internal Revenue Bulletin. See 

§ 601.601(d)(2)(ii)(b) of this chapter. 

(4) Generational mortality tables—(i) 

In general. The generational mortality 

tables that are permitted to be used 

pursuant to paragraph (a)(2) of this 

section are determined pursuant to this 

paragraph (a)(4) using the base mortality 

tables and projection factors set forth in 

paragraph (d) of this section. Under the 

generational mortality tables, the 

probability of an individual’s death at a 

particular age is determined as the 

individual’s base mortality rate (that is, 

the applicable mortality rate from the 

table set forth in paragraph (d) of this 

section for the age for which the 

probability of death is being 

determined) multiplied by the mortality 

improvement factor. The mortality 

improvement factor is equal to 

(1¥projection factor for that age) n, 

where n is equal to the projection 

period. For this purpose, the projection 

period is the number of years between 

2000 and the year for which the 

probability of death is being 

determined. 

(ii) Examples of calculation. As an 

example of the use of generational 

mortality tables under paragraph 

(a)(4)(i) of this section, for purposes of 

determining the probability of death at 

age 54 for a male annuitant born in 

1974, the base mortality rate is .005797, 

the projection factor is .020, and the 

projection period (the period from the 

year 2000 until the year the participant 

will attain age 54) is 28 years, so that the 

mortality improvement factor is 

.567976, and the probability of death at 

age 54 is .003293. Similarly, under these 

generational mortality tables, the 

probability of death at age 55 for the 

same male annuitant would be 

determined by using the base mortality 

rate and projection factor at age 55, and 

a projection period of 29 years (the 

period from the year 2000 until the year 

the participant will attain age 55). Thus, 

the base mortality rate is .005905, the 

projection factor is .019, so that the 

mortality improvement factor is .573325 

((1¥.019)29), and the probability of 

death at age 55 is .003385 (.573325 

times .005905). Because these 

generational mortality tables reflect 

expected improvements in mortality 

experience, no periodic updates are 

needed. 

(b) Use of the tables—(1) Separate 

tables for annuitants and 

nonannuitants—(i) In general. Separate 

tables are provided for use for 

annuitants and nonannuitants. The 

nonannuitant mortality table is applied 

to determine the probability of survival 

for a nonannuitant for the period before 

the nonannuitant is projected to 

commence receiving benefits. The 

annuitant mortality table is applied to 

determine the present value of benefits 

for each annuitant, and for each 

nonannuitant for the period beginning 

when the nonannuitant is projected to 

commence receiving benefits. For 

purposes of this section, an annuitant 

means a plan participant who has 

commenced receiving benefits and a 

nonannuitant means a plan participant 

who has not yet commenced receiving 

benefits (for example, an active 

employee or a terminated vested 

participant). A participant whose 

benefit has partially commenced is 

treated as an annuitant with respect to 

the portion of the benefit which has 

commenced and a nonannuitant with 

respect to the balance of the benefit. In 

addition, for any period in which an 

annuitant is projected to be receiving 

benefits, any beneficiary with respect to 

that annuitant is also treated as an 

annuitant for purposes of this paragraph 

(b)(1). 

(ii) Examples of calculation. As an 

example of the use of separate annuitant 

and nonannuitant tables under 

paragraph (b)(1)(i) of this section, with 

respect to a 45-year-old active 

participant who is projected to 

commence receiving an annuity at age 

55, the funding target would be 

determined using the nonannuitant 

mortality table for the period before the 

participant attains age 55 (so that, if the 

static mortality tables are used pursuant 

to paragraph (a)(3) of this section, the 

probability of an active male participant 

living from age 45 to age 55 using the 

table that applies for a plan year 

beginning in 2008 is 98.61%) and the 

annuitant mortality table for the period 

ages 55 and above. Similarly, if a 45- 

year-old terminated vested participant is 

projected to commence an annuity at 

age 65, the funding target would be 

determined using the nonannuitant 

mortality table for the period before the 

participant attains age 65 and the 

annuitant mortality table for ages 65 and 

above. 

(2) Small plan tables. If static 

mortality tables are used pursuant to 

paragraph (a)(3) of this section, as an 

alternative to the separate static tables 

specified for annuitants and 

nonannuitants pursuant to paragraph 

(b)(1) of this section, a combined static 

table that applies the same mortality 

rates to both annuitants and 

nonannuitants is permitted to be used 

for a small plan. For this purpose, a 

small plan is defined as a plan with 

fewer than 500 participants (including 

both active and inactive participants). 


rwilkins on PROD1PC63 with PROPOSALS
29464 Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 

(c) Construction of static tables—(1) 

Source of basic rates. The static 

mortality tables that are used pursuant 

to paragraph (a)(3) of this section are 

based on the base mortality tables set 

forth in paragraph (d) of this section. 

(2) Projected mortality improvements. 

The mortality rates under the base 

mortality tables are projected to improve 

using the projection factors provided in 

Projection Scale AA, as set forth in 

paragraph (d) of this section. Using 

these projection factors, the mortality 

rate for an individual at each age is 

determined as the individual’s base 

mortality rate (that is, the applicable 

base mortality rate from the table set 

forth in paragraph (d) of this section for 

the individual at that age) multiplied by 

the mortality improvement factor. The 

mortality improvement factor is equal to 

(1¥projection factor for that age)n, 

where n is equal to the projection 

period. The annuitant mortality rates for 

a plan year are determined using a 

projection period that runs from the 

calendar year 2000 until 7 years after 

the calendar year that contains the 

valuation date for the plan year. The 

nonannuitant mortality rates for a plan 

year are determined using a projection 

period that runs from the calendar year 

2000 until 15 years after the calendar 

year that contains the valuation date for 

the plan year. Thus, for example, for a 

plan year with a January 1, 2012, 

valuation date, the annuitant mortality 

rates are determined using a projection 

period that runs from 2000 until 2019 

(19 years) and the nonannuitant 

mortality rates are determined using a 

projection period that runs from 2000 

until 2027 (27 years). 

(3) Construction of combined tables 

for small plans. The combined mortality 

tables that are permitted to be used for 

small plans pursuant to paragraph (b)(2) 

of this section are constructed from the 

separate nonannuitant and annuitant 

tables using the weighting factors for 

small plans that are set forth in 

paragraph (d) of this section. The 

weighting factors are applied to develop 

these mortality tables using the 

following equation: Combined mortality 

rate = [nonannuitant rate * 

(1¥weighting factor)] + [annuitant rate 

* weighting factor]. 

(d) Base mortality tables and 

projection factors. The following base 

mortality tables and projection factors 

are used to determine generational 

mortality tables for purposes of 

determining present value or making 

any computation under section 430 as 

set forth in paragraph (a)(4) of this 

section. In addition, the following base 

mortality tables and projection factors 

are used to determine the static 

mortality tables that are used for 

purposes of determining present value 

or making any computation under 

section 430 as set forth in paragraphs 

(a)(3) and (c) of this section. See 

§ 1.430(h)(3)-2(c)(3) for rules regarding 

the required use of the projection factors 

set forth in this paragraph (d) in 

connection with a plan-specific 

substitute mortality table. 

Age 

Male Female 

Base nonannuitant 

mortality 

rates 

(year 2000) 

Base annuitant mortality rates 

(year 2000) 

Scale AA 

projection 

factors 

Weighting 

factors for 

small plans 

Base nonannuitant 

mortality 

rates 

(year 2000) 

Base annuitant mortality rates 

(year 2000) 

Scale AA 

projection 

factors 

Weighting 

factors for 

small plans 

1 ....................................... 0.000637 0.000637 0.020 .................... 0.000571 0.000571 0.020 ....................

2 ....................................... 0.000430 0.000430 0.020 .................... 0.000372 0.000372 0.020 ....................

3 ....................................... 0.000357 0.000357 0.020 .................... 0.000278 0.000278 0.020 ....................

4 ....................................... 0.000278 0.000278 0.020 .................... 0.000208 0.000208 0.020 ....................

5 ....................................... 0.000255 0.000255 0.020 .................... 0.000188 0.000188 0.020 ....................

6 ....................................... 0.000244 0.000244 0.020 .................... 0.000176 0.000176 0.020 ....................

7 ....................................... 0.000234 0.000234 0.020 .................... 0.000165 0.000165 0.020 ....................

8 ....................................... 0.000216 0.000216 0.020 .................... 0.000147 0.000147 0.020 ....................

9 ....................................... 0.000209 0.000209 0.020 .................... 0.000140 0.000140 0.020 ....................

10 ..................................... 0.000212 0.000212 0.020 .................... 0.000141 0.000141 0.020 ....................

11 ..................................... 0.000219 0.000219 0.020 .................... 0.000143 0.000143 0.020 ....................

12 ..................................... 0.000228 0.000228 0.020 .................... 0.000148 0.000148 0.020 ....................

13 ..................................... 0.000240 0.000240 0.020 .................... 0.000155 0.000155 0.020 ....................

14 ..................................... 0.000254 0.000254 0.019 .................... 0.000162 0.000162 0.018 ....................

15 ..................................... 0.000269 0.000269 0.019 .................... 0.000170 0.000170 0.016 ....................

16 ..................................... 0.000284 0.000284 0.019 .................... 0.000177 0.000177 0.015 ....................

17 ..................................... 0.000301 0.000301 0.019 .................... 0.000184 0.000184 0.014 ....................

18 ..................................... 0.000316 0.000316 0.019 .................... 0.000188 0.000188 0.014 ....................

19 ..................................... 0.000331 0.000331 0.019 .................... 0.000190 0.000190 0.015 ....................

20 ..................................... 0.000345 0.000345 0.019 .................... 0.000191 0.000191 0.016 ....................

21 ..................................... 0.000357 0.000357 0.018 .................... 0.000192 0.000192 0.017 ....................

22 ..................................... 0.000366 0.000366 0.017 .................... 0.000194 0.000194 0.017 ....................

23 ..................................... 0.000373 0.000373 0.015 .................... 0.000197 0.000197 0.016 ....................

24 ..................................... 0.000376 0.000376 0.013 .................... 0.000201 0.000201 0.015 ....................

25 ..................................... 0.000376 0.000376 0.010 .................... 0.000207 0.000207 0.014 ....................

26 ..................................... 0.000378 0.000378 0.006 .................... 0.000214 0.000214 0.012 ....................

27 ..................................... 0.000382 0.000382 0.005 .................... 0.000223 0.000223 0.012 ....................

28 ..................................... 0.000393 0.000393 0.005 .................... 0.000235 0.000235 0.012 ....................

29 ..................................... 0.000412 0.000412 0.005 .................... 0.000248 0.000248 0.012 ....................

30 ..................................... 0.000444 0.000444 0.005 .................... 0.000264 0.000264 0.010 ....................

31 ..................................... 0.000499 0.000499 0.005 .................... 0.000307 0.000307 0.008 ....................

32 ..................................... 0.000562 0.000562 0.005 .................... 0.000350 0.000350 0.008 ....................

33 ..................................... 0.000631 0.000631 0.005 .................... 0.000394 0.000394 0.009 ....................

34 ..................................... 0.000702 0.000702 0.005 .................... 0.000435 0.000435 0.010 ....................

35 ..................................... 0.000773 0.000773 0.005 .................... 0.000475 0.000475 0.011 ....................

36 ..................................... 0.000841 0.000841 0.005 .................... 0.000514 0.000514 0.012 ....................

37 ..................................... 0.000904 0.000904 0.005 .................... 0.000554 0.000554 0.013 ....................

38 ..................................... 0.000964 0.000964 0.006 .................... 0.000598 0.000598 0.014 ....................


rwilkins on PROD1PC63 with PROPOSALS
Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 29465 

Age 

Male Female 

Base nonannuitant 

mortality 

rates 

(year 2000) 

Base annuitant mortality rates 

(year 2000) 

Scale AA 

projection 

factors 

Weighting 

factors for 

small plans 

Base nonannuitant 

mortality 

rates 

(year 2000) 

Base annuitant mortality rates 

(year 2000) 

Scale AA 

projection 

factors 

Weighting 

factors for 

small plans 

39 ..................................... 0.001021 0.001021 0.007 .................... 0.000648 0.000648 0.015 ....................

40 ..................................... 0.001079 0.001079 0.008 .................... 0.000706 0.000706 0.015 ....................

41 ..................................... 0.001142 0.001157 0.009 0.0045 0.000774 0.000774 0.015 ....................

42 ..................................... 0.001215 0.001312 0.010 0.0091 0.000852 0.000852 0.015 ....................

43 ..................................... 0.001299 0.001545 0.011 0.0136 0.000937 0.000937 0.015 ....................

44 ..................................... 0.001397 0.001855 0.012 0.0181 0.001029 0.001029 0.015 ....................

45 ..................................... 0.001508 0.002243 0.013 0.0226 0.001124 0.001124 0.016 0.0084 

46 ..................................... 0.001616 0.002709 0.014 0.0272 0.001223 0.001223 0.017 0.0167 

47 ..................................... 0.001734 0.003252 0.015 0.0317 0.001326 0.001335 0.018 0.0251 

48 ..................................... 0.001860 0.003873 0.016 0.0362 0.001434 0.001559 0.018 0.0335 

49 ..................................... 0.001995 0.004571 0.017 0.0407 0.001550 0.001896 0.018 0.0419 

50 ..................................... 0.002138 0.005347 0.018 0.0453 0.001676 0.002344 0.017 0.0502 

51 ..................................... 0.002288 0.005528 0.019 0.0498 0.001814 0.002459 0.016 0.0586 

52 ..................................... 0.002448 0.005644 0.020 0.0686 0.001967 0.002647 0.014 0.0744 

53 ..................................... 0.002621 0.005722 0.020 0.0953 0.002135 0.002895 0.012 0.0947 

54 ..................................... 0.002812 0.005797 0.020 0.1288 0.002321 0.003190 0.010 0.1189 

55 ..................................... 0.003029 0.005905 0.019 0.2066 0.002526 0.003531 0.008 0.1897 

56 ..................................... 0.003306 0.006124 0.018 0.3173 0.002756 0.003925 0.006 0.2857 

57 ..................................... 0.003628 0.006444 0.017 0.3780 0.003010 0.004385 0.005 0.3403 

58 ..................................... 0.003997 0.006895 0.016 0.4401 0.003291 0.004921 0.005 0.3878 

59 ..................................... 0.004414 0.007485 0.016 0.4986 0.003599 0.005531 0.005 0.4360 

60 ..................................... 0.004878 0.008196 0.016 0.5633 0.003931 0.006200 0.005 0.4954 

61 ..................................... 0.005382 0.009001 0.015 0.6338 0.004285 0.006919 0.005 0.5805 

62 ..................................... 0.005918 0.009915 0.015 0.7103 0.004656 0.007689 0.005 0.6598 

63 ..................................... 0.006472 0.010951 0.014 0.7902 0.005039 0.008509 0.005 0.7520 

64 ..................................... 0.007028 0.012117 0.014 0.8355 0.005429 0.009395 0.005 0.8043 

65 ..................................... 0.007573 0.013419 0.014 0.8832 0.005821 0.010364 0.005 0.8552 

66 ..................................... 0.008099 0.014868 0.013 0.9321 0.006207 0.011413 0.005 0.9118 

67 ..................................... 0.008598 0.016460 0.013 0.9510 0.006583 0.012540 0.005 0.9367 

68 ..................................... 0.009069 0.018200 0.014 0.9639 0.006945 0.013771 0.005 0.9523 

69 ..................................... 0.009510 0.020105 0.014 0.9714 0.007289 0.015153 0.005 0.9627 

70 ..................................... 0.009922 0.022206 0.015 0.9740 0.007613 0.016742 0.005 0.9661 

71 ..................................... 0.010912 0.024570 0.015 0.9766 0.008309 0.018579 0.006 0.9695 

72 ..................................... 0.012892 0.027281 0.015 0.9792 0.009700 0.020665 0.006 0.9729 

73 ..................................... 0.015862 0.030387 0.015 0.9818 0.011787 0.022970 0.007 0.9763 

74 ..................................... 0.019821 0.033900 0.015 0.9844 0.014570 0.025458 0.007 0.9797 

75 ..................................... 0.024771 0.037834 0.014 0.9870 0.018049 0.028106 0.008 0.9830 

76 ..................................... 0.030710 0.042169 0.014 0.9896 0.022224 0.030966 0.008 0.9864 

77 ..................................... 0.037640 0.046906 0.013 0.9922 0.027094 0.034105 0.007 0.9898 

78 ..................................... 0.045559 0.052123 0.012 0.9948 0.032660 0.037595 0.007 0.9932 

79 ..................................... 0.054469 0.057927 0.011 0.9974 0.038922 0.041506 0.007 0.9966 

80 ..................................... 0.064368 0.064368 0.010 1.0000 0.045879 0.045879 0.007 1.0000 

81 ..................................... 0.072041 0.072041 0.009 1.0000 0.050780 0.050780 0.007 1.0000 

82 ..................................... 0.080486 0.080486 0.008 1.0000 0.056294 0.056294 0.007 1.0000 

83 ..................................... 0.089718 0.089718 0.008 1.0000 0.062506 0.062506 0.007 1.0000 

84 ..................................... 0.099779 0.099779 0.007 1.0000 0.069517 0.069517 0.007 1.0000 

85 ..................................... 0.110757 0.110757 0.007 1.0000 0.077446 0.077446 0.006 1.0000 

86 ..................................... 0.122797 0.122797 0.007 1.0000 0.086376 0.086376 0.005 1.0000 

87 ..................................... 0.136043 0.136043 0.006 1.0000 0.096337 0.096337 0.004 1.0000 

88 ..................................... 0.150590 0.150590 0.005 1.0000 0.107303 0.107303 0.004 1.0000 

89 ..................................... 0.166420 0.166420 0.005 1.0000 0.119154 0.119154 0.003 1.0000 

90 ..................................... 0.183408 0.183408 0.004 1.0000 0.131682 0.131682 0.003 1.0000 

91 ..................................... 0.199769 0.199769 0.004 1.0000 0.144604 0.144604 0.003 1.0000 

92 ..................................... 0.216605 0.216605 0.003 1.0000 0.157618 0.157618 0.003 1.0000 

93 ..................................... 0.233662 0.233662 0.003 1.0000 0.170433 0.170433 0.002 1.0000 

94 ..................................... 0.250693 0.250693 0.003 1.0000 0.182799 0.182799 0.002 1.0000 

95 ..................................... 0.267491 0.267491 0.002 1.0000 0.194509 0.194509 0.002 1.0000 

96 ..................................... 0.283905 0.283905 0.002 1.0000 0.205379 0.205379 0.002 1.0000 

97 ..................................... 0.299852 0.299852 0.002 1.0000 0.215240 0.215240 0.001 1.0000 

98 ..................................... 0.315296 0.315296 0.001 1.0000 0.223947 0.223947 0.001 1.0000 

99 ..................................... 0.330207 0.330207 0.001 1.0000 0.231387 0.231387 0.001 1.0000 

100 ................................... 0.344556 0.344556 0.001 1.0000 0.237467 0.237467 0.001 1.0000 

101 ................................... 0.358628 0.358628 0.000 1.0000 0.244834 0.244834 0.000 1.0000 

102 ................................... 0.371685 0.371685 0.000 1.0000 0.254498 0.254498 0.000 1.0000 

103 ................................... 0.383040 0.383040 0.000 1.0000 0.266044 0.266044 0.000 1.0000 

104 ................................... 0.392003 0.392003 0.000 1.0000 0.279055 0.279055 0.000 1.0000 

105 ................................... 0.397886 0.397886 0.000 1.0000 0.293116 0.293116 0.000 1.0000 

106 ................................... 0.400000 0.400000 0.000 1.0000 0.307811 0.307811 0.000 1.0000 

107 ................................... 0.400000 0.400000 0.000 1.0000 0.322725 0.322725 0.000 1.0000 


rwilkins on PROD1PC63 with PROPOSALS
29466 Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 

Age 

Male Female 

Base nonannuitant 

mortality 

rates 

(year 2000) 

Base annuitant mortality rates 

(year 2000) 

Scale AA 

projection 

factors 

Weighting 

factors for 

small plans 

Base nonannuitant 

mortality 

rates 

(year 2000) 

Base annuitant mortality rates 

(year 2000) 

Scale AA 

projection 

factors 

Weighting 

factors for 

small plans 

108 ................................... 0.400000 0.400000 0.000 1.0000 0.337441 0.337441 0.000 1.0000 

109 ................................... 0.400000 0.400000 0.000 1.0000 0.351544 0.351544 0.000 1.0000 

110 ................................... 0.400000 0.400000 0.000 1.0000 0.364617 0.364617 0.000 1.0000 

111 ................................... 0.400000 0.400000 0.000 1.0000 0.376246 0.376246 0.000 1.0000 

112 ................................... 0.400000 0.400000 0.000 1.0000 0.386015 0.386015 0.000 1.0000 

113 ................................... 0.400000 0.400000 0.000 1.0000 0.393507 0.393507 0.000 1.0000 

114 ................................... 0.400000 0.400000 0.000 1.0000 0.398308 0.398308 0.000 1.0000 

115 ................................... 0.400000 0.400000 0.000 1.0000 0.400000 0.400000 0.000 1.0000 

116 ................................... 0.400000 0.400000 0.000 1.0000 0.400000 0.400000 0.000 1.0000 

117 ................................... 0.400000 0.400000 0.000 1.0000 0.400000 0.400000 0.000 1.0000 

118 ................................... 0.400000 0.400000 0.000 1.0000 0.400000 0.400000 0.000 1.0000 

119 ................................... 0.400000 0.400000 0.000 1.0000 0.400000 0.400000 0.000 1.0000 

120 ................................... 1.000000 1.000000 0.000 1.0000 1.000000 1.000000 0.000 1.0000 

(e) Static mortality tables with respect 

to valuation dates occurring during 

2008. The following static mortality 

tables are used pursuant to paragraph 

(a)(3) of this section for determining 

present value or making any 

computation under section 430 with 

respect to valuation dates occurring 

during 2008. 

Age 

Male Female 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combined 

table for 

small plans 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combines 

table for 

small plans 

1 ....................................................................................... 0.000400 0.000400 0.000400 0.000359 0.000359 0.000359 

2 ....................................................................................... 0.000270 0.000270 0.000270 0.000234 0.000234 0.000234 

3 ....................................................................................... 0.000224 0.000224 0.000224 0.000175 0.000175 0.000175 

4 ....................................................................................... 0.000175 0.000175 0.000175 0.000131 0.000131 0.000131 

5 ....................................................................................... 0.000160 0.000160 0.000160 0.000118 0.000118 0.000118 

6 ....................................................................................... 0.000153 0.000153 0.000153 0.000111 0.000111 0.000111 

7 ....................................................................................... 0.000147 0.000147 0.000147 0.000104 0.000104 0.000104 

8 ....................................................................................... 0.000136 0.000136 0.000136 0.000092 0.000092 0.000092 

9 ....................................................................................... 0.000131 0.000131 0.000131 0.000088 0.000088 0.000088 

10 ..................................................................................... 0.000133 0.000133 0.000133 0.000089 0.000089 0.000089 

11 ..................................................................................... 0.000138 0.000138 0.000138 0.000090 0.000090 0.000090 

12 ..................................................................................... 0.000143 0.000143 0.000143 0.000093 0.000093 0.000093 

13 ..................................................................................... 0.000151 0.000151 0.000151 0.000097 0.000097 0.000097 

14 ..................................................................................... 0.000163 0.000163 0.000163 0.000107 0.000107 0.000107 

15 ..................................................................................... 0.000173 0.000173 0.000173 0.000117 0.000117 0.000117 

16 ..................................................................................... 0.000183 0.000183 0.000183 0.000125 0.000125 0.000125 

17 ..................................................................................... 0.000194 0.000194 0.000194 0.000133 0.000133 0.000133 

18 ..................................................................................... 0.000203 0.000203 0.000203 0.000136 0.000136 0.000136 

19 ..................................................................................... 0.000213 0.000213 0.000213 0.000134 0.000134 0.000134 

20 ..................................................................................... 0.000222 0.000222 0.000222 0.000132 0.000132 0.000132 

21 ..................................................................................... 0.000235 0.000235 0.000235 0.000129 0.000129 0.000129 

22 ..................................................................................... 0.000247 0.000247 0.000247 0.000131 0.000131 0.000131 

23 ..................................................................................... 0.000263 0.000263 0.000263 0.000136 0.000136 0.000136 

24 ..................................................................................... 0.000278 0.000278 0.000278 0.000142 0.000142 0.000142 

25 ..................................................................................... 0.000298 0.000298 0.000298 0.000150 0.000150 0.000150 

26 ..................................................................................... 0.000329 0.000329 0.000329 0.000162 0.000162 0.000162 

27 ..................................................................................... 0.000340 0.000340 0.000340 0.000169 0.000169 0.000169 

28 ..................................................................................... 0.000350 0.000350 0.000350 0.000178 0.000178 0.000178 

29 ..................................................................................... 0.000367 0.000367 0.000367 0.000188 0.000188 0.000188 

30 ..................................................................................... 0.000396 0.000396 0.000396 0.000210 0.000210 0.000210 

31 ..................................................................................... 0.000445 0.000445 0.000445 0.000255 0.000255 0.000255 

32 ..................................................................................... 0.000501 0.000501 0.000501 0.000291 0.000291 0.000291 

33 ..................................................................................... 0.000562 0.000562 0.000562 0.000320 0.000320 0.000320 

34 ..................................................................................... 0.000626 0.000626 0.000626 0.000345 0.000345 0.000345 

35 ..................................................................................... 0.000689 0.000689 0.000689 0.000368 0.000368 0.000368 

36 ..................................................................................... 0.000749 0.000749 0.000749 0.000389 0.000389 0.000389 

37 ..................................................................................... 0.000806 0.000806 0.000806 0.000410 0.000410 0.000410 

38 ..................................................................................... 0.000839 0.000839 0.000839 0.000432 0.000432 0.000432 

39 ..................................................................................... 0.000869 0.000869 0.000869 0.000458 0.000458 0.000458 

40 ..................................................................................... 0.000897 0.000897 0.000897 0.000499 0.000499 0.000499 

41 ..................................................................................... 0.000928 0.000955 0.000928 0.000547 0.000547 0.000547 

42 ..................................................................................... 0.000964 0.001070 0.000965 0.000602 0.000602 0.000602 


rwilkins on PROD1PC63 with PROPOSALS
Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 29467 

Age 

Male Female 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combined 

table for 

small plans 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combines 

table for 

small plans 

43 ..................................................................................... 0.001007 0.001243 0.001010 0.000662 0.000662 0.000662 

44 ..................................................................................... 0.001058 0.001474 0.001066 0.000727 0.000727 0.000727 

45 ..................................................................................... 0.001116 0.001763 0.001131 0.000776 0.000779 0.000776 

46 ..................................................................................... 0.001168 0.002109 0.001194 0.000824 0.000882 0.000825 

47 ..................................................................................... 0.001225 0.002513 0.001266 0.000873 0.001037 0.000877 

48 ..................................................................................... 0.001284 0.002975 0.001345 0.000944 0.001244 0.000954 

49 ..................................................................................... 0.001345 0.003495 0.001433 0.001021 0.001502 0.001041 

50 ..................................................................................... 0.001408 0.004072 0.001529 0.001130 0.001812 0.001164 

51 ..................................................................................... 0.001472 0.004146 0.001605 0.001252 0.001931 0.001292 

52 ..................................................................................... 0.001538 0.004168 0.001718 0.001422 0.002142 0.001476 

53 ..................................................................................... 0.001647 0.004226 0.001893 0.001617 0.002415 0.001693 

54 ..................................................................................... 0.001767 0.004281 0.002091 0.001842 0.002744 0.001949 

55 ..................................................................................... 0.001948 0.004428 0.002460 0.002100 0.003130 0.002295 

56 ..................................................................................... 0.002177 0.004663 0.002966 0.002400 0.003586 0.002739 

57 ..................................................................................... 0.002446 0.004983 0.003405 0.002682 0.004067 0.003153 

58 ..................................................................................... 0.002758 0.005413 0.003926 0.002933 0.004565 0.003566 

59 ..................................................................................... 0.003046 0.005876 0.004457 0.003207 0.005130 0.004045 

60 ..................................................................................... 0.003366 0.006435 0.005095 0.003503 0.005751 0.004617 

61 ..................................................................................... 0.003802 0.007175 0.005940 0.003818 0.006418 0.005327 

62 ..................................................................................... 0.004180 0.007904 0.006825 0.004149 0.007132 0.006117 

63 ..................................................................................... 0.004680 0.008864 0.007986 0.004490 0.007893 0.007049 

64 ..................................................................................... 0.005082 0.009807 0.009030 0.004838 0.008715 0.007956 

65 ..................................................................................... 0.005476 0.010861 0.010232 0.005187 0.009613 0.008972 

66 ..................................................................................... 0.005994 0.012218 0.011795 0.005531 0.010586 0.010140 

67 ..................................................................................... 0.006363 0.013527 0.013176 0.005866 0.011632 0.011267 

68 ..................................................................................... 0.006557 0.014731 0.014436 0.006189 0.012774 0.012460 

69 ..................................................................................... 0.006876 0.016273 0.016004 0.006495 0.014055 0.013773 

70 ..................................................................................... 0.007009 0.017702 0.017424 0.006784 0.015529 0.015233 

71 ..................................................................................... 0.007888 0.019586 0.019312 0.007411 0.016975 0.016683 

72 ..................................................................................... 0.009646 0.021747 0.021495 0.008666 0.018881 0.018604 

73 ..................................................................................... 0.012283 0.024223 0.024006 0.010548 0.020673 0.020433 

74 ..................................................................................... 0.015799 0.027024 0.026849 0.013058 0.022912 0.022712 

75 ..................................................................................... 0.020195 0.030622 0.030486 0.016195 0.024916 0.024768 

76 ..................................................................................... 0.025470 0.034131 0.034041 0.019959 0.027451 0.027349 

77 ..................................................................................... 0.031624 0.038547 0.038493 0.024351 0.030694 0.030629 

78 ..................................................................................... 0.038657 0.043489 0.043464 0.029370 0.033835 0.033805 

79 ..................................................................................... 0.046569 0.049071 0.049064 0.035017 0.037355 0.037347 

80 ..................................................................................... 0.055360 0.055360 0.055360 0.041291 0.041291 0.041291 

81 ..................................................................................... 0.062905 0.062905 0.062905 0.045702 0.045702 0.045702 

82 ..................................................................................... 0.071350 0.071350 0.071350 0.050664 0.050664 0.050664 

83 ..................................................................................... 0.079534 0.079534 0.079534 0.056255 0.056255 0.056255 

84 ..................................................................................... 0.089800 0.089800 0.089800 0.062565 0.062565 0.062565 

85 ..................................................................................... 0.099680 0.099680 0.099680 0.070761 0.070761 0.070761 

86 ..................................................................................... 0.110516 0.110516 0.110516 0.080120 0.080120 0.080120 

87 ..................................................................................... 0.124300 0.124300 0.124300 0.090716 0.090716 0.090716 

88 ..................................................................................... 0.139683 0.139683 0.139683 0.101042 0.101042 0.101042 

89 ..................................................................................... 0.154366 0.154366 0.154366 0.113903 0.113903 0.113903 

90 ..................................................................................... 0.172706 0.172706 0.172706 0.125879 0.125879 0.125879 

91 ..................................................................................... 0.188113 0.188113 0.188113 0.138232 0.138232 0.138232 

92 ..................................................................................... 0.207060 0.207060 0.207060 0.150672 0.150672 0.150672 

93 ..................................................................................... 0.223365 0.223365 0.223365 0.165391 0.165391 0.165391 

94 ..................................................................................... 0.239646 0.239646 0.239646 0.177391 0.177391 0.177391 

95 ..................................................................................... 0.259578 0.259578 0.259578 0.188755 0.188755 0.188755 

96 ..................................................................................... 0.275506 0.275506 0.275506 0.199303 0.199303 0.199303 

97 ..................................................................................... 0.290981 0.290981 0.290981 0.212034 0.212034 0.212034 

98 ..................................................................................... 0.310600 0.310600 0.310600 0.220611 0.220611 0.220611 

99 ..................................................................................... 0.325288 0.325288 0.325288 0.227940 0.227940 0.227940 

100 ................................................................................... 0.339424 0.339424 0.339424 0.233930 0.233930 0.233930 

101 ................................................................................... 0.358628 0.358628 0.358628 0.244834 0.244834 0.244834 

102 ................................................................................... 0.371685 0.371685 0.371685 0.254498 0.254498 0.254498 

103 ................................................................................... 0.383040 0.383040 0.383040 0.266044 0.266044 0.266044 

104 ................................................................................... 0.392003 0.392003 0.392003 0.279055 0.279055 0.279055 

105 ................................................................................... 0.397886 0.397886 0.397886 0.293116 0.293116 0.293116 

106 ................................................................................... 0.400000 0.400000 0.400000 0.307811 0.307811 0.307811 

107 ................................................................................... 0.400000 0.400000 0.400000 0.322725 0.322725 0.322725 

108 ................................................................................... 0.400000 0.400000 0.400000 0.337441 0.337441 0.337441 

109 ................................................................................... 0.400000 0.400000 0.400000 0.351544 0.351544 0.351544 

110 ................................................................................... 0.400000 0.400000 0.400000 0.364617 0.364617 0.364617 

111 ................................................................................... 0.400000 0.400000 0.400000 0.376246 0.376246 0.376246 

112 ................................................................................... 0.400000 0.400000 0.400000 0.386015 0.386015 0.386015 


rwilkins on PROD1PC63 with PROPOSALS
29468 Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 

Age 

Male Female 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combined 

table for 

small plans 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combines 

table for 

small plans 

113 ................................................................................... 0.400000 0.400000 0.400000 0.393507 0.393507 0.393507 

114 ................................................................................... 0.400000 0.400000 0.400000 0.398308 0.398308 0.398308 

115 ................................................................................... 0.400000 0.400000 0.400000 0.400000 0.400000 0.400000 

116 ................................................................................... 0.400000 0.400000 0.400000 0.400000 0.400000 0.400000 

117 ................................................................................... 0.400000 0.400000 0.400000 0.400000 0.400000 0.400000 

118 ................................................................................... 0.400000 0.400000 0.400000 0.400000 0.400000 0.400000 

119 ................................................................................... 0.400000 0.400000 0.400000 0.400000 0.400000 0.400000 

120 ................................................................................... 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 

(f) Applicability date. This section 

applies for plan years beginning on or 

after January 1, 2008. 

Par. 3. Section 1.430(h)(3)–2 is added 

to read as follows: 

§ 1.430(h)(3)–2 Plan-specific substitute 

mortality tables used to determine present 

value. 

(a) In general. This section sets forth 

rules for the use of substitute mortality 

tables under section 430(h)(3)(C) in 

determining any present value or 

making any computation under section 

430 in accordance with § 1.430(h)(3)–

1(a)(1). In order to use substitute 

mortality tables, a plan sponsor must 

obtain approval to use substitute 

mortality tables for the plan in 

accordance with the procedures set 

forth in paragraph (b) of this section. 

Paragraph (c) of this section sets forth 

rules for the development of substitute 

mortality tables, including guidelines 

for determining whether a plan has 

sufficient credible mortality experience 

to use substitute mortality tables. 

Paragraph (d) of this section sets forth 

special rules regarding the use of 

substitute mortality tables. The 

Commissioner may, in revenue rulings 

and procedures, notices and other 

guidance published in the Internal 

Revenue Bulletin (see 

§ 601.601(d)(2)(ii)(b) of this chapter), 

provide additional guidance regarding 

approval and use of substitute mortality 

tables under section 430(h)(3)(C) and 

related matters. 

(b) Procedures for obtaining approval 

to use substitute mortality tables—(1) 

Written request to use substitute 

mortality tables—(i) General 

requirements. In order to use substitute 

mortality tables, a plan sponsor must 

submit a written request to the 

Commissioner that demonstrates that 

those substitute mortality tables meet 

the requirements of section 430(h)(3)(C) 

and this section. This request must state 

the first plan year and the term of years 

(not more than 10) that the tables are 

requested to be used. 

(ii) Time for written request—(A) In 

general. Except as provided in 

paragraph (b)(1)(ii)(B) of this section, 

substitute mortality tables cannot be 

used for a plan year unless the plan 

sponsor submits the written request 

described in paragraph (b)(1)(i) of this 

section at least 7 months prior to the 

first day of the first plan year for which 

the substitute mortality tables are to 

apply. 

(B) Special rule for requests submitted 

on or before October 1, 2007. 

Notwithstanding the rule of paragraph 

(b)(1)(ii)(A) of this section, the timing of 

the written request described in 

paragraph (b)(1)(i) of this section does 

not prevent a plan from using substitute 

mortality tables for a plan year provided 

that the written request is submitted no 

later than October 1, 2007. 

(2) Commissioner’s review of 

request—(i) In general. During the 180- 

day period that begins on the date the 

plan sponsor submits a request to use 

substitute mortality tables for a plan 

pursuant to this section, the 

Commissioner will determine whether 

the request to use substitute mortality 

tables satisfies the requirements of this 

section (including any published 

guidance issued pursuant to paragraph 

(a) of this section), and will either 

approve or deny the request. The 

Commissioner will deny a request if the 

request fails to meet the requirements of 

this section or if the Commissioner 

determines that a substitute mortality 

table does not sufficiently reflect the 

mortality experience of the applicable 

plan population. 

(ii) Request for additional 

information. The Commissioner may 

request additional information with 

respect to the submission. Failure to 

provide that information on a timely 

basis constitutes grounds for denial of 

the request. 

(iii) Deemed approval. Except as 

provided in paragraph (b)(2)(iv) of this 

section, if the Commissioner does not 

issue a denial within the 180-day review 

period, the request is deemed to have 

been approved. 

(iv) Extension of time permitted. The 

Commissioner and a plan sponsor may, 

before the expiration of the 180-day 

review period, agree in writing to 

extend that period, provided that any 

such agreement also specifies any 

revisions in the plan sponsor’s request, 

including any change in the requested 

term of use of the substitute mortality 

tables. 

(c) Development of substitute 

mortality tables—(1) Mortality 

experience requirements—(i) In general. 

Substitute mortality tables must reflect 

the actual mortality experience of the 

pension plan maintained by the plan 

sponsor for which the tables are to be 

used and that mortality experience must 

be credible mortality experience as 

described in paragraph (c)(1)(ii) of this 

section. Separate mortality tables must 

be established for each gender under the 

plan, and a substitute mortality table is 

permitted to be established for a gender 

only if the plan has credible mortality 

experience with respect to that gender. 

(ii) Credible mortality experience. 

There is credible mortality experience 

for a gender within a plan if and only 

if, over the period covered by the 

experience study described in paragraph 

(c)(2)(ii) of this section, there are at least 

1,000 deaths within that gender. 

(iii) Gender without credible mortality 

experience—(A) In general. If, for the 

first year for which a plan uses 

substitute mortality tables, one gender 

has credible mortality experience but 

the other gender does not have credible 

mortality experience, the substitute 

mortality tables are used for the gender 

that does have credible mortality 

experience and the mortality tables 

under § 1.430(h)(3)–1 are used for the 

gender that does not have credible 

mortality experience. For a subsequent 

plan year, the plan sponsor may 

continue to use substitute mortality 

tables for the gender with credible 

mortality experience without using 

substitute mortality tables for the other 


rwilkins on PROD1PC63 with PROPOSALS
Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 29469 

gender only if the other gender 

continues to lack credible mortality 

experience for that subsequent plan 

year. 

(B) Demonstration of lack of credible 

mortality experience for a gender. In 

order to demonstrate that a gender 

within a plan does not have credible 

mortality experience for a plan year, the 

mortality experience of that population 

must be analyzed using a 4-year 

experience study that ends less than 3 

years before the first day of that plan 

year. For example, if a plan uses 

substitute mortality tables based on 

credible mortality experience for its 

male population and the standard 

mortality tables under § 1.430(h)(3)–1 

for its female population, there must be 

an experience study which shows that 

the plan’s female population does not 

have at least 1,000 deaths in a 4-year 

period that ends less than 3 years before 

the first day of that plan year. 

(iv) Disabled individuals. Under 

section 430(h)(3)(D), separate mortality 

tables are permitted to be used for 

certain disabled individuals. If such 

separate mortality tables are used for 

those disabled individuals, then those 

individuals are disregarded for all 

purposes under this section. Thus, if the 

mortality tables under section 

430(h)(3)(D) are used for disabled 

individuals under a plan, mortality 

experience with respect to those 

individuals must be excluded in 

developing mortality rates for substitute 

mortality tables under this section. 

(2) Base table and base year—(i) In 

general. Development of a substitute 

mortality table under this section 

requires creation of a base table and 

identification of a base year under this 

paragraph (c)(2). The base table and base 

year are then used to determine a 

substitute mortality table under 

paragraph (c)(3) of this section. 

(ii) Experience study and base table 

requirements—(A) In general. The base 

table for a plan population must be 

developed from an experience study of 

the mortality experience of that plan 

population that generates amountsweighted mortality rates based on 

experience data for the plan over 2, 3, 

or 4 consecutive years. The last day of 

the final year reflected in the experience 

data must be less than 3 years before the 

first day of the first plan year for which 

the substitute mortality tables are to 

apply. For example, if July 1, 2008, is 

the first day of the first plan year for 

which the substitute mortality tables 

will be used, then an experience study 

using calendar year data must include 

data collected for a period that ends no 

earlier than December 31, 2005. 

(B) Amounts-weighted mortality rates. 

The amounts-weighted mortality rate for 

an age is equal to the quotient 

determined by dividing the sum of the 

accrued benefits (or payable benefits, in 

the case of individuals in pay status) for 

all individuals at that age at the 

beginning of the year who died during 

the year, by the sum of the accrued 

benefits (or payable benefits, in the case 

of individuals in pay status) for all 

individuals at that age at the beginning 

of the year, with appropriate 

adjustments for individuals who left the 

relevant plan population during the year 

for reasons other than death. Because 

amounts-weighted mortality rates for a 

plan cannot be determined without 

accrued (or payable) benefits, the 

mortality experience study used to 

develop a base table cannot include 

periods before the plan was established. 

(C) Grouping of ages. Amountsweighted mortality rates may be derived 

from amounts-weighted mortality rates 

for age groups. The Commissioner, in 

revenue rulings and procedures, notices, 

and other guidance, may specify 

grouping rules (for example, 5-year age 

groups, except for extreme ages such as 

ages above 100 or below 20) and 

methods for developing amountsweighted mortality rates for individual 

ages from amounts-weighted mortality 

rates initially determined for each age 

group. 

(D) Base table construction. The base 

tables must be constructed from the 

amounts-weighted mortality rates 

determined in paragraph (c)(2)(ii)(B) of 

this section. The base tables must be 

constructed either directly through 

graduation of the amounts-weighted 

mortality rates or indirectly by applying 

a level percentage to the applicable 

mortality table set forth in § 1.430(h)(3)–

1, provided that the adjusted table 

sufficiently reflects the mortality 

experience of the plan. The 

Commissioner also may permit the use 

of other recognized mortality tables in 

the construction of base tables, applying 

a similar mortality experience standard. 

(iii) Base year requirements. Where 

there are 2 years of experience data, the 

base year is the calendar year in which 

the first year of the experience data 

begins. Where there are 3 or 4 years of 

experience data, the base year is the 

calendar year in which the second year 

of the experience data begins. If the base 

table is constructed by applying a level 

percentage to a table set forth in 

§ 1.430(h)(3)–1, then the percentage 

must be applied to the table under 

§ 1.430(h)(3)–1 after it has been 

projected to the base year using 

Projection Scale AA, as set forth in 

§ 1.430(h)(3)–1(d). Thus, for example, if 

the base year of the mortality experience 

study is 2004, the applicable base (year 

2000) mortality rates must be projected 

four years prior to determining the level 

percentage to be applied to the 

applicable projected base (year 2000) 

mortality rates. 

(iv) Change in number of individuals 

covered by table. Experience data 

cannot be used to develop a base table 

if the number of individuals in the 

population covered by the table (for 

example, the male annuitant 

population) as of the last day of the plan 

year before the year the request to use 

substitute mortality tables is made, 

compared to the average number of 

individuals in that population over the 

years covered by the experience study 

on which the substitute mortality tables 

are based, reflects a difference of 20 

percent or more, unless it is 

demonstrated to the satisfaction of the 

Commissioner that the experience data 

is accurately predictive of future 

mortality of that plan population (taking 

into account the effect of the change in 

individuals) after appropriate 

adjustments to the data are made (for 

example, excluding data from 

individuals with respect to a spun-off 

portion of the plan). For this purpose, a 

reasonable estimate of the number of 

individuals in the population covered 

by the table may be used, such as the 

estimated number of participants and 

beneficiaries used for purposes of the 

PBGC Form 1–ES. 

(3) Determination of substitute 

mortality tables—(i) In general. A plan’s 

substitute mortality tables must be 

generational mortality tables. Substitute 

mortality tables are determined using 

the base mortality tables developed 

pursuant to paragraph (c)(2) of this 

section and the projection factors 

provided in Projection Scale AA, as set 

forth in § 1.430(h)(3)–1(d). Under the 

generational mortality tables, the 

probability of an individual’s death at a 

particular age is determined as the 

individual’s base mortality rate (that is, 

the applicable mortality rate from the 

base mortality table for the age for 

which the probability of death is being 

determined) multiplied by the mortality 

improvement factor. The mortality 

improvement factor is equal to 

(1¥projection factor for that age)n, 

where n is equal to the projection period 

(the number of years between the base 

year for the base mortality table and the 

calendar year in which the individual 

attains the age for which the probability 

of death is being determined). 

(ii) Example of calculation. As an 

example of the use of generational 

mortality tables under paragraph 

(c)(3)(i) of this section, if approved 


rwilkins on PROD1PC63 with PROPOSALS
29470 Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 

substitute mortality tables are based on 

data collected during 2005 and 2006, 

the base year would be the first year of 

experience (2005) because the substitute 

tables are based on two years of 

experience data. If the tables show a 

base mortality rate of .006000 for male 

annuitants at age 54, the probability of 

death at age 54 for a male annuitant 

born in 1974 would be determined 

using the base mortality rate of .006000, 

the age-54 projection factor of .020 

(pursuant to the Scale AA Projection 

Factors set forth in § 1.430(h)(3)–1(d)) 

and a projection period of 23 years. The 

projection period is the number of years 

between the base year of 2005 and the 

calendar year in which the individual 

reaches age 54. Accordingly, the 

mortality improvement factor would be 

.628347 and the probability of death at 

age 54 would be .003770. 

(4) Separate tables for specified 

populations—(i) In general. Except as 

provided in this paragraph (c)(4), 

separate substitute mortality tables are 

permitted to be used for separate 

populations within a gender under a 

plan only if—

(A) All individuals of that gender in 

the plan are divided into separate 

populations; 

(B) Each separate population has 

credible mortality experience as 

provided in paragraph (c)(4)(iii) of this 

section; and 

(C) The separate substitute mortality 

table for each separate population is 

developed using mortality experience 

data for that population. 

(ii) Annuitant and nonannuitant 

separate populations. Notwithstanding 

paragraph (c)(4)(i)(B) of this section, 

substitute mortality tables for separate 

populations of annuitants and 

nonannuitants within a gender may be 

used even if only one of those separate 

populations has credible mortality 

experience. Similarly, if separate 

populations that satisfy paragraph 

(c)(4)(i)(B) of this section are 

established, then any of those 

populations may be further subdivided 

into separate annuitant and 

nonannuitant subpopulations, provided 

that at least one of the two resulting 

subpopulations has credible mortality 

experience. The standard mortality 

tables under § 1.430(h)(3)–1 are used for 

a resulting subpopulation that does not 

have credible mortality experience. For 

example, in the case of a plan that has 

credible mortality experience for both 

its male hourly and salaried individuals, 

if the male salaried annuitant 

population has credible mortality 

experience, it may use substitute 

mortality tables with respect to that 

population even if the male salaried 

nonannuitant population uses the 

standard mortality tables under 

§ 1.430(h)(3)–1 (because that 

nonannuitant population does not have 

credible mortality experience). 

(iii) Credible mortality experience for 

separate populations. In determining 

whether a separate population within a 

gender has credible mortality 

experience, the requirements of 

paragraph (c)(1)(ii) of this section must 

be satisfied but, in applying that 

paragraph, the separate population 

should be substituted for the particular 

gender. In demonstrating that an 

annuitant or nonannuitant population 

within a gender or within a separate 

population does not have credible 

mortality experience, the requirements 

of paragraph (c)(1)(iii) of this section 

must be satisfied but, in applying that 

paragraph, the annuitant (or 

nonannuitant) population should be 

substituted for the particular gender. 

(d) Special rules—(1) All plans in 

controlled group must use substitute 

mortality tables—(i) In general. Except 

as otherwise provided in this paragraph 

(d)(1), substitute mortality tables are 

permitted to be used for a plan only if 

the use of substitute mortality tables is 

approved under this section for each 

other pension plan subject to the 

requirements of section 430 that is 

maintained by the sponsor and by each 

member of the plan sponsor’s controlled 

group. For purposes of this section, the 

term controlled group means any group 

treated as a single employer under 

subsection (b), (c), (m), or (o) of section 

414. 

(ii) Plans without credible 

experience—(A) In general. For the first 

year for which a plan uses substitute 

mortality tables, the use of substitute 

mortality tables for the plan is not 

prohibited merely because another plan 

described in paragraph (d)(1)(i) of this 

section cannot use substitute mortality 

tables because neither the males nor the 

females under that other plan have 

credible mortality experience for a plan 

year. For each subsequent plan year, the 

plan sponsor may continue to use 

substitute mortality tables for the plan 

with credible mortality experience 

without using substitute mortality tables 

for the other plan only if neither the 

males nor the females under that other 

plan have credible mortality experience 

for that subsequent plan year. 

(B) Analysis of mortality experience. 

For each plan year in which a plan uses 

substitute mortality tables, in order to 

demonstrate that the male and female 

populations of another plan maintained 

by the plan sponsor (or by a member of 

the plan sponsor’s controlled group) do 

not have credible mortality experience, 

the requirements of paragraph 

(c)(1)(iii)(B) of this section must be 

satisfied for that plan year. Thus, a plan 

is not prohibited from using substitute 

mortality tables for a plan year merely 

because another plan in the controlled 

group of the plan sponsor does not have 

at least 1,000 male deaths and does not 

have at least 1,000 female deaths in a 4- 

year period that ends less than 3 years 

before the first day of that plan year. 

(iii) Newly acquired plans not using 

substitute mortality tables—(A) In 

general. The use of substitute mortality 

tables for a plan is not prohibited 

merely because a newly acquired plan 

does not use substitute mortality tables, 

but only through the last day of the plan 

year of the plan using substitute 

mortality tables that contains the end of 

the period described in section 

410(b)(6)(C). Thus, for the following 

plan year, the mortality tables 

prescribed under § 1.430(h)(3)–1 apply 

with respect to the plan (and all other 

plans within the plan sponsor’s 

controlled group, including the acquired 

plan) unless—

(1) Approval to use substitute 

mortality tables has been obtained with 

respect to the acquired plan pursuant to 

paragraph (b)(1) of this section; or 

(2) The acquired plan cannot use 

substitute mortality tables because 

neither the males nor the females under 

the plan have credible mortality 

experience as described in paragraph 

(c)(1)(ii) of this section (as determined 

in accordance with the rules of 

paragraph (d)(1)(iv) of this section). 

(B) Definition of newly acquired plan. 

For purposes of this section, a plan is 

treated as a newly acquired plan if it 

becomes maintained by the plan 

sponsor (or by a member of the plan 

sponsor’s controlled group) in 

connection with a merger, acquisition, 

or similar transaction described in 

§ 1.410(b)–2(f). In addition, a plan also 

is treated as a newly acquired plan for 

purposes of this section if a plan is 

established in connection with a 

transfer in accordance with section 

414(l) of assets and liabilities from 

another employer’s plan in connection 

with a merger, acquisition, or similar 

transaction described in § 1.410(b)–2(f). 

(iv) Demonstration of credible 

mortality experience for newly acquired 

plan—(A) In general. In general, in the 

case of a newly acquired plan described 

in paragraph (d)(1)(iii) of this section, 

the demonstration of whether credible 

mortality experience exists for the plan 

for a plan year may be made by either 

including or excluding mortality 

experience data for the period prior to 

the date the plan becomes maintained 

by a member of the new plan sponsor’s 


rwilkins on PROD1PC63 with PROPOSALS
Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 29471 

controlled group. If a plan sponsor 

excludes mortality experience data for 

the period prior to the date the plan 

becomes maintained within the new 

plan sponsor’s controlled group, the 

exclusion must apply for all populations 

within the plan. 

(B) Demonstration of credible 

mortality experience. Regardless of 

whether mortality experience data for 

the period prior to the date a newly 

acquired plan becomes maintained 

within the new plan sponsor’s 

controlled group is included or 

excluded for a plan year, the provisions 

of this section, including the 

demonstration of credible mortality 

experience in accordance with 

paragraph (c)(1)(ii) of this section, must 

be satisfied before substitute mortality 

tables may be used with respect to the 

plan. Thus, for example, the plan must 

meet the rule in paragraph (c)(2)(ii)(A) 

of this section that the base table be 

based on mortality experience data for 

the plan over a 2, 3, or 4-consecutive 

year period that ends less than 3 years 

before the first day of the plan year for 

which substitute mortality tables will be 

used. 

(C) Demonstration of lack of credible 

mortality experience. In the case of a 

newly acquired plan described in 

paragraph (d)(1)(iii) of this section, in 

order to demonstrate a lack of credible 

mortality experience with respect to a 

gender for a plan year, the rules of 

paragraph (c)(1)(iii)(B) of this section 

generally will apply. However, a special 

rule applies if the plan’s mortality 

experience demonstration for a plan 

year is made by excluding mortality 

experience for the period prior to the 

date the plan becomes maintained by a 

member of the new plan sponsor’s 

controlled group. In such a case, an 

employer is permitted to demonstrate a 

plan’s lack of credible mortality 

experience using an experience study 

period of less than four years, provided 

that the experience study period begins 

with the date the plan becomes 

maintained within the sponsor’s 

controlled group and ends not more 

than one year and one day before the 

first day of the plan year with respect to 

which the lack of credible mortality 

experience demonstration is made. 

Thus, if the transaction occurred on July 

1, 2010, in order to demonstrate a lack 

of credible mortality experience for 

males and females for the plan year 

beginning January 1, 2012 (the first day 

of the plan year following the section 

410(b)(6)(C) transition period), there 

must be an experience study which 

shows that the plan’s male and female 

populations each do not have 1,000 

deaths during the period from July 1, 

2010—December 31, 2010. Similarly, in 

order to perform the demonstration to 

show a lack of credible mortality 

experience for the plan year beginning 

January 1, 2013, there must be an 

experience study which shows that the 

plan’s male and female populations 

each do not have 1,000 deaths during 

the period from July 1, 2010—December 

31, 2011. 

(2) Duration of use of tables. Except 

as provided in paragraph (d)(4) of this 

section, substitute mortality tables are 

used with respect to a plan for the term 

of consecutive plan years specified in 

the plan sponsor’s written request to use 

such tables under paragraph (b)(1) of 

this section and approved by the 

Commissioner, or such shorter period 

prescribed by the Commissioner in the 

approval to use substitute mortality 

tables. Following the end of such term 

of use, or following any early 

termination of use described in 

paragraph (d)(4) of this section, the 

mortality tables specified in 

§ 1.430(h)(3)–1 apply with respect to the 

plan unless approval under paragraph 

(b)(1) of this section has been received 

by the plan sponsor to use substitute 

mortality tables for a further term. 

(3) Aggregation—(i) Permissive 

aggregation of plans. In order for a plan 

sponsor to use a set of substitute 

mortality tables with respect to two or 

more plans, the rules of this section are 

applied by treating those plans as a 

single plan. In such a case, the 

substitute mortality tables must be used 

for the aggregated plans and must be 

based on data collected with respect to 

those aggregated plans. 

(ii) Required aggregation of plans. In 

general, plans are not required to be 

aggregated for purposes of applying the 

rules of this section. However, for 

purposes of this section, a plan is 

required to be aggregated with any plan 

that was previously spun off from that 

plan for purposes of this section if the 

Commissioner determines that one 

purpose of the spinoff is to avoid the 

use of substitute mortality tables for any 

of the plans that were involved in the 

spinoff. 

(4) Early termination of use of 

tables—(i) General rule. A plan’s 

substitute mortality tables cannot be 

used as of the earliest of—

(A) The plan year in which the plan 

fails to satisfy the requirements of 

paragraph (c)(1) of this section 

(regarding credible mortality experience 

requirements and demonstrations); 

(B) The plan year in which the plan 

fails to satisfy the requirements of 

paragraph (d)(1) of this section 

(regarding use of substitute mortality 

tables by controlled group members); 

(C) The second plan year following 

the plan year in which there is a 

significant change in individuals 

covered by the plan as described in 

paragraph (d)(4)(ii) of this section; 

(D) The plan year following the plan 

year in which a substitute mortality 

table used for a plan population is no 

longer accurately predictive of future 

mortality of that population, as 

determined by the Commissioner or as 

certified by the plan’s actuary to the 

satisfaction of the Commissioner; or 

(E) The date specified in guidance 

published in the Internal Revenue 

Bulletin (see § 601.601(d)(2)(ii)(b) of this 

chapter) pursuant to a replacement of 

mortality tables specified under section 

430(h)(3)(A) and § 1.430(h)(3)–1 (other 

than annual updates to the static 

mortality tables issued pursuant to 

§ 1.430(h)–1(a)(3)). 

(ii) Significant change in coverage—

(A) Change in coverage from time of 

experience study. For purposes of 

applying the rules of paragraph 

(d)(4)(i)(C) of this section, a significant 

change in the individuals covered by a 

substitute mortality table occurs if there 

is an increase or decrease in the number 

of individuals of at least 20 percent 

compared to the average number of 

individuals in that population over the 

years covered by the experience study 

on which the substitute mortality tables 

are based. However, a change in 

coverage is not treated as significant if 

the plan’s actuary certifies in writing to 

the satisfaction of the Commissioner 

that the substitute mortality tables used 

for the plan population continue to be 

accurately predictive of future mortality 

of that population (taking into account 

the effect of the change in the 

population). 

(B) Change in coverage from time of 

certification. For purposes of applying 

the rules of paragraph (d)(4)(i)(C) of this 

section, a significant change in the 

individuals covered by a substitute 

mortality table occurs if there is an 

increase or decrease in the number of 

individuals covered by a substitute 

mortality table of at least 20 percent 

compared to the number of individuals 

in a plan year for which a certification 

described in paragraph (d)(4)(ii)(A) of 

this section was made on account of a 

prior change in coverage. However, a 

change in coverage is not treated as 

significant if the plan’s actuary certifies 

in writing to the satisfaction of the 

Commissioner that the substitute 

mortality tables used by the plan with 

respect to the covered population 

continue to be accurately predictive of 

future mortality of that population 

(taking into account the effect of the 

change in the plan population). 


rwilkins on PROD1PC63 with PROPOSALS
29472 Federal Register / Vol. 72, No. 102 / Tuesday, May 29, 2007 / Proposed Rules 

1This repeal became effective on January 1, 2007, 

in accordance with section 4305(a). 

2The Senate bill’s provisions were enacted ‘‘with 

modifications.’’ H. Conf. Rep. No. 109–203, at 1020 

(2005). 

3The Secretary’s functions under section 14504a 

have been delegated to the Administrator of the 

Federal Motor Carrier Safety Administration. 49 

CFR 1.73(a)(7), as amended, 71 FR 30833 (May 31, 

2006). 

(e) Applicability date. This section 

applies for plan years beginning on or 

after January 1, 2008. 

Par. 4. Section 1.431(c)(6)–1 is added 

to read as follows: 

§ 1.431(c)(6)–1 Mortality tables used to 

determine current liability. 

The mortality assumptions that apply 

to a defined benefit plan for the plan 

year pursuant to section 430(h)(3)(A) 

and § 1.430(h)(3)–1(a)(2) are used to 

determine a multiemployer plan’s 

current liability for purposes of 

applying the rules of section 431(c)(6). 

A multiemployer plan is permitted to 

apply either the static mortality tables 

used pursuant to § 1.430(h)(3)–1(a)(3) or 

generational mortality tables used 

pursuant to § 1.430(h)(3)–1(a)(4) for this 

purpose. However, for this purpose, a 

multiemployer plan is not permitted to 

use substitute mortality tables under 

§ 1.430(h)(3)–2. 

Kevin M. Brown, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 07–2631 Filed 5–23–07; 9:35 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Motor Carrier Safety 

Administration 

49 CFR Part 367 

[Docket No. FMCSA–2007–27871] 

RIN 2126–AB09 

Fees for Unified Carrier Registration 

Plan and Agreement 

AGENCY: Federal Motor Carrier Safety 

Administration (FMCSA), DOT. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This proposed rule would 

establish annual fees and a fee bracket 

structure for the Unified Carrier 

Registration Agreement as required 

under the Unified Carrier Registration 

Act of 2005, enacted as Subtitle C of the 

Safe, Accountable, Flexible, Efficient 

Transportation Equity Act: A Legacy for 

Users. 

DATES: You must submit comments on 

or before June 13, 2007. 

ADDRESSES: You may submit comments, 

identified by DOT DMS Docket Number 

FMCSA–2007–27871, by any of the 

following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Agency Web Site: http:// 

dms.dot.gov. Follow the instructions for 

submitting comments on the DOT 

electronic docket site. 

• Fax: 1–202–493–2251. 

• Mail: Docket Management Facility; 

U.S. Department of Transportation, 400 

Seventh Street, SW., Nassif Building, 

Room PL–401, Washington, DC 20590- 

0001. 

• Hand Delivery: Room PL–401 on 

the plaza level of the Nassif Building, 

400 Seventh Street, SW., Washington, 

DC, between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal 

Holidays. 

Instructions: All submissions must 

include the agency name and docket 

number (FMCSA–2004–27871) or 

Regulatory Identification Number (RIN) 

for this rulemaking (RIN 2126–AB09). 

Note that all comments received will be 

posted without change to http:// 

dms.dot.gov, including any personal 

information provided. Please see the 

Privacy Act heading for further 

information. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

dms.dot.gov at any time or to Room PL–

401 on the plaza level of the Nassif 

Building, 400 Seventh Street, SW., 

Washington, DC, between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal Holidays. 

Privacy Act: Anyone is able to search 

the electronic form for all comments 

received into any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an association, 

business, labor union, etc.). You may 

review DOT’s complete Privacy Act 

Statement in the Federal Register 

published on April 11, 2000 (65 FR 

19477) or you may visit http:// 

dms.dot.gov. Comments received after 

the comment closing date will be 

included in the docket and we will 

consider late comments to the extent 

practicable. FMCSA may, however, 

issue a final rule at any time after the 

close of the comment period. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Greg Parks, Regulatory Development 

Division, (202) 366–5370, FMCSA, 

Department of Transportation, 400 

Seventh Street, SW., Washington, DC 

20590 or by e-mail at: 

FMCSAregs@DOT.gov. 

SUPPLEMENTARY INFORMATION

I. Legal Basis for the Rulemaking 

This proposed rule involves the fees 

to be set for the Unified Carrier 

Registration Agreement established by 

49 U.S.C. 14504a, enacted by section 

4305(b) of the Safe, Accountable, 

Flexible, Efficient Transportation Equity 

Act: A Legacy for Users (SAFETEA–LU) 

(119 Stat. 1144, 1764 (2005)). New 

section 14504a establishes the Unified 

Carrier Registration Plan, ‘‘an 

organization * * * responsible for 

developing, implementing, and 

administering the unified carrier 

registration agreement’’ (49 U.S.C. 

14504a(a)(9)). The Unified Carrier 

Registration Agreement is ‘‘an interstate 

agreement governing the collection and 

distribution of registration and financial 

responsibility information provided and 

fees paid by motor carriers, motor 

private carriers, brokers, freight 

forwarders and leasing companies 

* * * ’’ (49 U.S.C. 14504a(a)(8)). 

Congress also repealed the statutory 

provisions of 49 U.S.C. 14504 governing 

the Single State Registration System 

(SSRS) (SAFETEA–LU section 4305(a)).1

The legislative history indicates that the 

purpose of the UCR Plan and Agreement 

is both to ‘‘replace the existing outdated 

system [SSRS]’’ for registration of 

interstate motor carrier entities with the 

States and to ‘‘ensure that States don’t 

lose current revenues derived from 

SSRS’’ (S. Rep. 109–120, at 2 (2005)).2

The statute provides for a 15–member 

Board of Directors for the UCR Plan and 

Agreement to be appointed by the 

Secretary of Transportation. The 

establishment of the UCR Board 

(‘‘Board’’) was announced in the 

Federal Register on May 12, 2006 (71 

FR 27777). Among its responsibilities, 

the Board must submit to the Secretary 

of Transportation 3 a recommendation 

for the initial annual fees to be assessed 

motor carriers, motor private carriers, 

freight forwarders, brokers and leasing 

companies under the UCR Agreement 

(49 U.S.C. 14504a(d)(7)(A)). FMCSA 

then is directed to set the fees within 90 

days after receiving the Board’s 

recommendation and after notice and 

opportunity for public comment (49 

U.S.C. 14504a(d)(7)(B)). 

II. Statutory Requirements for UCR 

Fees 

The statute specifies several relevant 

factors that must be considered by the 

Board and FMCSA in setting the fees 

(see 49 US.C. 14504a(d)(7)(A), (f)(I) and 

(g)). It specifies that fees are to be 

determined by FMCSA based upon the 

recommendation of the Board. In 


rwilkins on PROD1PC63 with PROPOSALS