44632 Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 

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 regulations for 

purposes of ERISA, as well as the Code. Thus, these 

Treasury regulations issued under section 430 of 

the Code apply as well for purposes of section 303 

of ERISA. 

(i) Contact Jason Yang, Aerospace 

Engineer, Engine Certification Office, FAA, 

Engine and Propeller Directorate, 12 New 

England Executive Park, Burlington, MA 

01803; telephone (781) 238–7747, fax (781) 

238–7199; e-mail: jason.yang@faa.gov, for 

more information about this AD. 

Material Incorporated by Reference 

(j) You must use the Rolls-Royce 

Deutschland Ltd & Co KG service information 

specified in Table 1 to perform the actions 

required by this AD. The Director of the 

Federal Register previously approved the 

incorporation by reference of the service 

information specified in Table 1 on February 

26, 2007 (72 FR 2610, January 22, 2007). 

Contact Rolls-Royce Deutschland Ltd & Co 

KG, Eschenweg 11, D–15827 Dahlewitz, 

Germany; telephone 49 (0) 33–7086–1768; 

fax 49 (0) 33–7086–3356 for a copy of this 

service information. You may review copies 

at the FAA, New England Region, 12 New 

England Executive Park, Burlington, MA; or 

at the National Archives and Records 

Administration (NARA). For information on 

the availability of this material at NARA, call 

202–741–6030, or go to: http:// 

www.archives.gov/federal-register/cfr/ibrlocations.html. 

TABLE 1—INCORPORATION BY REFERENCE

Service Bulletin No. Page Revision Date 

Da72–536: Total Pages: 23 .................................. All ............................................... 1 ................................................. August 25, 2003. 

Da72–538: Total Pages: 21 .................................. All ............................................... Original ....................................... June 10, 2005. 

Issued in Burlington, Massachusetts, on 

July 24, 2008. 

Carlos Pestana, 

Acting Manager, Engine and Propeller 

Directorate, Aircraft Certification Service. 

[FR Doc. E8–17423 Filed 7–30–08; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 1 

[TD 9419] 

RIN 1545–BG30 

Mortality Tables for Determining 

Present Value 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Final regulations. 

SUMMARY: This document contains final 

regulations providing guidance 

regarding the 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: Effective date: These regulations 

are effective July 31, 2008. 

Applicability date: Section 

1.430(h)(3)–1, which provides generally 

applicable mortality tables for single 

employer defined benefit pension plans, 

and § 1.431(c)(6)–1, which provides for 

the use of those mortality tables for 

multiemployer defined benefit pension 

plans, apply to plan years beginning on 

or after January 1, 2008. Section 

1.430(h)(3)–2, which provides rules 

regarding the approval and use of 

substitute mortality tables for single 

employer defined benefit pension plans, 

applies to plan years beginning on or 

after January 1, 2009. 

FOR FURTHER INFORMATION CONTACT: 

Lauson C. Green or Linda S.F. Marshall 

at (202) 622–6090 (not a toll-free 

number). 

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.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 


yshivers on PROD1PC62 with RULES
Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 44633 

2The RP–2000 Mortality Tables Report was 

released by the Society of Actuaries in July 2000. 

Society of Actuaries, RP–2000 Mortality Tables 

Report, at http://www.soa.org/ccm/content/ 

research-publications/experience-studies-tools/therp-2000-mortality-tables/. 

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. 

On February 2, 2007, the IRS issued 

final regulations under section 412(l)(7) 

(TD 9310, 72 FR 4955) setting forth 

mortality tables to be used in 

determining a plan’s current liability 

with respect to nondisabled pension 

plan participants during the 2007 plan 

year. Those updated mortality tables 

were based on the tables contained in 

the RP–2000 Mortality Tables Report.2

Those regulations permitted plans to 

use separate mortality tables for 

nonannuitant and annuitant periods, 

with different projection periods for 

annuitants and nonannuitants based on 

an estimate of the duration of the 

respective liabilities. Alternatively, 

plans were permitted to use a combined 

table that applied the same mortality 

rates to both annuitants and 

nonannuitants. 

On May 29, 2007, the IRS issued 

proposed regulations under section 

430(h)(3) (72 FR 29456). Those 

proposed regulations provide guidance 

regarding the mortality tables to be used 

for purposes of applying certain defined 

benefit plan funding requirements, 

including § 1.430(h)(3)–1, which 

provides generally applicable mortality 

tables, and § 1.430(h)(3)–2, which 

provides rules regarding the approval 

and use of substitute mortality tables. 

On May 31, 2007, the IRS issued Rev. 

Proc. 2007–37 (2007–1 CB 1433), which 

sets forth procedures by which a plan 

sponsor may request approval to use 

substitute mortality tables in accordance 

with proposed § 1.430(h)(3)–2, 

including guidelines for the 

construction of substitute mortality 

tables. See § 601.601(d)(2)(ii)(b) of this 

chapter. 

On January 31, 2008, the IRS issued 

Notice 2008–21 (2008–7 IRB 431). See 

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

Notice 2008–21 provides that, when 

certain pension funding regulations 

(including the § 1.430(h)(3)–2 

regulations issued under section 

430(h)(3)(C) regarding substitute 

mortality tables) are finalized, those 

final regulations will not apply to plan 

years beginning before January 1, 2009. 

For plan years beginning during 2008, 

taxpayers must follow applicable 

statutory provisions and can rely on the 

proposed regulations for compliance 

with those statutory provisions. Under 

Notice 2008–21, the IRS will not 

challenge a reasonable interpretation of 

section 430 (taking into account the 

items with respect to which guidance is 

provided in Notice 2008–21) for plan 

years beginning during 2008. 

Several comments were received on 

the proposed regulations, and no public 

hearing was requested or held. After 

consideration of the comments received, 

the IRS and the Treasury Department 

are issuing these final regulations to 

adopt the rules set forth in the proposed 

regulations with certain modifications 

that are noted in this preamble. 

Explanation of Provisions 

Generally Applicable Mortality Tables 

These regulations adopt the 

methodology set forth in the proposed 

regulations that the IRS will 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 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 regulations 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 these regulations, mortality 

tables to be used with respect to 

disabled individuals will be provided in 

guidance published in the Internal 

Revenue Bulletin (IRB). This guidance 

has been issued as Notice 2008–29 

(2008–12 IRB 637). See 

§ 601.601(d)(2)(ii)(b). 

The new mortality tables under 

section 430(h)(3)(A) are based on the 

tables contained in the RP–2000 

Mortality Tables Report because, as with 

the mortality tables used under section 

412(l)(7)(C)(ii), the IRS and the Treasury 

Department have determined that 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. 

Like the mortality tables provided in the 

final section 412(l) regulations, the 

mortality tables set forth in these 

regulations are gender-distinct because 

of significant differences between 

expected male mortality and expected 

female mortality. 

The mortality tables set forth in these 

regulations 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 


yshivers on PROD1PC62 with RULES
44634 Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 

3The 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. 

significantly different mortality 

experience. This is particularly true at 

typical ages for early retirees, where the 

number of health-induced 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 regulations, the annuitant 

mortality tables are 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 these 

regulations are based on expected 

mortality as of 2000 and reflect the 

impact of expected improvements in 

mortality. The 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 regulations set forth base tables 

for annuitants and nonannuitants, as 

well as a set of projection factors. The 

base tables set forth in the 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 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 

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 regulations. These 

projection factors are from Mortality 

Projection Scale AA, which was 

recommended for use in the UP–94 

Study 3 and in the RP–2000 Mortality 

Tables Report. 

The static mortality tables that are 

permitted to be used under the 

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 

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 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. 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 

nonannuitant rates for ages 71 through 

79 and the annuitant rates 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 apply 

with respect to valuation dates 

occurring during 2008 are set forth in 

these regulations, which also include an 

example of how to apply the tables in 

that year. The mortality tables to be 

used for valuation dates in subsequent 

years will be published in the Internal 

Revenue Bulletin. See 

§ 601.601(d)(2)(ii)(b). The IRS intends to 

publish a notice in the near future that 

provides a series of tables for valuation 

dates occurring during 2009 through 

2013. 

These regulations provide an option 

for smaller plans 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. The 

final regulations provide that the 

smaller plans to which this rule applies 

are plans where the total of active and 

inactive participants is 500 or fewer, 

and clarify that this participant count is 

determined as of the plan’s valuation 

date. The blended table is 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 have 

extended 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. 

Since the publication of proposed 

regulations under sections 430(h) and 


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Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 44635 

430(d), questions have arisen regarding 

whether small plans are required to 

apply mortality assumptions using the 

mortality tables provided under section 

430(h) for the period before a 

participant is projected to commence 

receiving benefits under the plan. Final 

regulations under section 430(d) are 

expected to clarify that the mortality 

tables provided under section 430(h) 

must be used to determine present 

values under section 430 when 

mortality assumptions are applied and 

that, in appropriate cases, it is 

permissible to assume no mortality for 

the period before a participant is 

projected to commence receiving 

benefits under the plan. 

Substitute Mortality Tables 

These regulations generally adopt the 

methodology set forth in the proposed 

regulations for the development and use 

of substitute mortality tables upon 

written request of the plan sponsor and 

approval of the Commissioner. Pursuant 

to section 430(h)(3)(C), substitute 

mortality tables apply in lieu of the 

mortality tables provided under section 

430(h)(3)(A) and § 1.430(h)(3)–1 for 

purposes of making present value 

determinations and other computations. 

Substitute mortality tables must 

reflect the actual mortality experience of 

the pension plan 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. 

The proposed regulations provided 

that a substitute mortality table would 

be based on credible mortality 

experience for a gender within a plan if 

and only if the mortality experience 

were based on at least 1,000 deaths 

within that gender over the period 

covered by the experience study. The 

proposed regulations required that the 

experience study 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 before 

the first day of the first plan year for 

which the substitute mortality tables are 

to apply. 

Commentators requested an 

expansion of this rule that would allow 

the plan to demonstrate credibility on 

the basis of divergence between the 

actual number of deaths and the number 

of deaths expected under the standard 

mortality tables in § 1.430(h)(3)–1. The 

IRS and the Treasury Department have 

rejected this suggestion because, 

although such a measure of divergence 

may show that the standard mortality 

tables are not necessarily the best 

estimate of future mortality under the 

plan, the existence of this divergence 

does not demonstrate that a particular 

alternative table reflects the actual 

experience of the pension plans 

maintained by the sponsor unless the 

experience study data reflects a 

sufficient number of deaths to support 

the use of that alternative table. 

The 1,000-death threshold in the 

proposed regulations was 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)). 

A number of commentators requested 

that substitute mortality tables be made 

available to plans with fewer annual 

deaths. For example, one commentator 

requested an extension of the 4-year 

maximum period for the mortality 

experience study in order to allow a 

smaller plan to satisfy the 1,000-death 

threshold. In response to these 

comments, these regulations lengthen 

the maximum period for the experience 

study and provide that the experience 

study for purposes of demonstrating 

1,000 deaths within a gender can be 

conducted over as long as a 5-year 

period. In addition, in accordance with 

the delegation of authority set forth in 

the regulations, the Commissioner may, 

in revenue rulings, notices or other 

guidance published in the Internal 

Revenue Bulletin (see 

§ 601.601(d)(2)(ii)(b)), provide for 

further extensions of this maximum 

experience study period. 

Development of a substitute mortality 

table under the 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 must be 

developed from a study of the mortality 

experience of the plan using amountsweighted data. The regulations set forth 

rules regarding development of 

amounts-weighted mortality rates for an 

age. The regulations provide that 

amounts-weighted mortality rates may 

be derived from amounts-weighted 

mortality rates for age groups. The 

regulations provide for grouping of ages 

and alternative methods of graduation 

in order to simplify the construction of 

substitute mortality tables. The 

regulations provide rules for 

determination of the base year for a 

substitute mortality table. These rules 

have been modified from the rules set 

forth in the proposed regulations to 

reflect the potential for a longer 

experience study period than permitted 

under the proposed regulations. 

In general, substitute mortality tables 

are permitted to be used for a plan for 

a plan year only if, for that plan year, 

substitute mortality tables are also 

approved and used 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. The final regulations clarify the 

application of this rule where plans 

maintained within a controlled group 

have different plan years. In such a case, 

a plan that uses substitute mortality 

tables for a plan year satisfies the 

requirement that all plans within the 

controlled group use substitute 

mortality tables for the plan year if all 

plans within the controlled group use 

substitute mortality tables for at least 

some portion of the plan year. Under the 

regulations, the use of substitute 

mortality tables for one plan is not 

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 that are 

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 


yshivers on PROD1PC62 with RULES
44636 Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 

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 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) for which substitute 

mortality tables are not used must be 

satisfied for each plan year for which 

substitute mortality tables are used. This 

demonstration is made for a plan 

population by showing that the 

population has not experienced at least 

1,000 deaths over a time period that 

satisfies the requirements set forth in 

the regulations. In general, 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 is made 

by counting the number of deaths for 

that plan population over a 4-year 

period. However, if the experience 

study period for the experience study on 

which the substitute mortality tables are 

based is longer than 4 years, 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 consecutive period for 

mortality experience that is the same 

length as the period of the experience 

study. In either case, the period for 

mortality experience that is used to 

demonstrate lack of credible mortality 

experience with respect to a plan year 

must end 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, 2009, using data 

obtained over a 4-year experience study 

period must 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 of members of 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, 2006 (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, 

2004, through December 31, 2007, 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 2010 as well 

because the less-than-3-years 

requirement is still met with respect to 

the 2010 plan year. However, the plan 

cannot use this same data to 

demonstrate lack of credible mortality 

experience for the 2011 plan year 

because the last day of the experience 

study used for the demonstration (the 

January 1, 2004–December 31, 2007 

period) is too distant in time (3 or more 

years) from the first day of the plan year 

(January 1, 2011). 

Although the regulations permit a 

plan sponsor to use a single 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 

(or 5-year period in the case of a plan 

using a 5-year experience study 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 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 minus 

the 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 regulations require separate 

tables to be established for males and 

females under a plan. Under the 

regulations, separate substitute 

mortality tables are permitted (but not 

required) to be established for separate 

populations within a gender, such as 

annuitants and nonannuitants or hourly 

and salaried individuals. The 

regulations provide that separate 

substitute mortality tables are permitted 

to be used for a separate population 

within a gender under a plan only if all 

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 is not 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 regulations 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 


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Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 44637 

experience, the plan may use substitute 

mortality tables with respect to that 

population even if the standard 

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

are used for the male salaried 

nonannuitant population (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 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. The 

proposed regulations implied that this 

exception applies only where a newly 

acquired plan does not use substitute 

mortality tables (and not to the case 

where a plan that uses substitute 

mortality tables is acquired by a plan 

sponsor that maintains other plans for 

which substitute mortality tables are not 

used). In response to commentator 

concerns, the final regulations replace 

the term ‘‘newly acquired plan’’ with 

the term ‘‘newly affiliated plan.’’ Thus, 

the final regulations eliminate the 

implication that this exception is 

unavailable in situations in which the 

acquiring plan sponsor does not use 

substitute mortality tables for its other 

plans but the acquired plan uses 

substitute mortality tables. 

Under the regulations, the use of 

substitute mortality tables for a plan is 

not prohibited merely because a newly 

affiliated 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 last day of the transition 

period described in section 

410(b)(6)(C)(ii) (without regard to any 

change in coverage during that period) 

for either the newly affiliated plan or 

the plan using substitute mortality 

tables, whichever is later. 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 newly 

affiliated plan) unless approval to use 

substitute mortality tables has been 

obtained with respect to the newly 

affiliated plan, or the newly affiliated 

plan cannot use substitute mortality 

tables because neither the males nor the 

females under the plan have credible 

mortality experience. For example, if on 

September 1, 2009, a plan sponsor of a 

plan that uses substitute mortality tables 

and that has a calendar year plan year 

acquires a business that maintains a 

plan that does not use substitute 

mortality tables and that has a plan year 

that ends June 30, the maintenance of 

the latter plan within the controlled 

group will not impair the continued use 

of substitute mortality tables by the 

former plan through the end of the plan 

year that ends on December 31, 2011. 

This is because December 31, 2010, is 

the last day of the period described in 

section 410(b)(6)(C)(ii) for the plan 

using substitute mortality tables, June 

30, 2011, is the last day of the period 

described in section 410(b)(6)(C)(ii) for 

the newly affiliated plan that does not 

use substitute mortality tables, and the 

last day of the plan year of the plan 

using substitute mortality tables that 

contains the later of those two dates is 

December 31, 2011. Similarly, if on 

September 1, 2009, a plan sponsor of a 

plan that uses substitute mortality tables 

and that has a calendar year plan year 

is acquired by an employer that 

maintains a plan that does not use 

substitute mortality tables and that has 

a plan year that ends June 30, the 

maintenance of the latter plan within 

the controlled group will not impair the 

continued use of substitute mortality 

tables by the former plan through the 

end of the plan year that ends on 

December 31, 2011. 

Under the regulations, a plan is 

treated as a newly affiliated 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). The regulations provide 

that a plan is also treated as a newly 

affiliated plan if it is established in 

connection with a transfer 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 affiliated plan 

that does not use substitute mortality 

tables, 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 

within the controlled group that 

includes the plan sponsor of the plan 

that uses substitute mortality tables. If a 

plan sponsor excludes mortality 

experience data prior to the date the 

plan became maintained within the 

controlled group that includes the plan 

sponsor of the plan that uses substitute 

mortality tables, the exclusion must 

apply for all populations within the 

plan. For example, it is impermissible to 

include the data for hourly individuals 

for the pre-acquisition 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 affiliated 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 regulations provide rules for 

aggregating plans for purposes of using 

substitute mortality tables. Under the 

regulations, in order to use a set of 

substitute mortality tables for two or 

more plans, the rules set forth in the 

regulations 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 

regulations 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 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 

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 


yshivers on PROD1PC62 with RULES
44638 Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 

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, 

which was provided under the proposed 

regulations, allowed plan sponsors 

sufficient time to review the proposed 

regulations and other guidance in order 

to prepare requests to use substitute 

mortality tables for use in 2008. In 

addition, 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 that begins during 2009 if the 

written request is submitted no later 

than October 1, 2008. This special rule 

allows plan sponsors sufficient time to 

review the final regulations in order to 

prepare requests to use substitute 

mortality tables for plan years that begin 

during 2009. 

Under the 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 regulations, the 

Commissioner may, in revenue rulings 

and procedures, notices or 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 intends to publish a revenue 

procedure in the near future that 

updates the requirements set forth in 

Rev. Proc. 2007–37 regarding approval 

to use substitute mortality tables to 

reflect the provisions of these final 

regulations. 

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. One commentator suggested 

that the 180-day period for approval of 

substitute mortality tables should 

automatically be tolled during any 

period between the time additional 

information is requested and received, 

and should resume after that 

information is received. These 

regulations do not adopt this suggestion. 

It is anticipated that the Commissioner 

and the taxpayer will establish a 

reasonable period for the taxpayer to 

collect and submit the requested data 

and extend the 180-day period to the 

extent necessary. 

The regulations provide rules 

regarding the duration of use of 

substitute mortality tables. Under the 

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 

regulations 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 

regulations 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)) pursuant to a 

replacement of mortality tables 

specified under section 430(h)(3)(A) 

(other than annual updates to the static 

mortality tables). 

Effective/Applicability Date 

Section 1.430(h)(3)–1, which provides 

generally applicable mortality tables, 

applies to plan years beginning on or 

after January 1, 2008. Section 

1.430(h)(3)–2, which provides rules 

regarding the approval and use of 

substitute mortality tables, applies to 

plan years beginning on or after January 

1, 2009. Taxpayers may rely on the 

provisions of § 1.430(h)(3)–2 for plan 

years beginning during 2008. For 

example, taxpayers can use the 

exceptions contained in § 1.430(h)(3)–

2(d)(1) from the general rule that all 

controlled group members must use 

substitute mortality tables in order for 

any controlled group member to use 

substitute mortality tables. Because 

section 430(h)(3) provides that 

substitute mortality tables can be used 

only if the use of those tables is 

approved by the Secretary, taxpayers 

can use substitute mortality tables for 

plan years beginning during 2008 only 

if those mortality tables were approved 

by the IRS under the procedures set 

forth in Rev. Proc. 2007–37. 

Special Analyses 

It has been determined that this 

Treasury decision is not a significant 

regulatory action as defined in 

Executive Order 12866. Therefore, a 

regulatory assessment is not required. It 

is hereby certified that the collection of 

information contained in this regulation 

will not have a significant economic 

impact on a substantial number of small 

entities. Pension plans of small entities 

generally are precluded from requesting 

to use substitute mortality tables 

pursuant to § 1.430(h)(3)–2 because they 

will not have 1,000 deaths for a 

permitted population over a permissible 

mortality experience study period as 

required under § 1.430(h)(3)–2(c)(1)(ii) 

and, thus, will not have credible 

mortality experience as required by the 

regulation. Accordingly, a regulatory 

flexibility analysis is not required. 

Pursuant to section 7805(f) of the 

Internal Revenue Code, the notice of 

proposed rulemaking preceding these 

regulations was submitted to the Small 

Business Administration for comment 

on its impact on small business. 

Drafting Information 

The principal authors of these 

regulations are Lauson C. Green and 

Linda S. F. Marshall, Office of Division 


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Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 44639 

Counsel/Associate Chief Counsel (Tax 

Exempt and Government 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 

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 500 


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44640 Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 

or fewer participants (including both 

active and inactive participants) on the 

valuation date. 

(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 Male Male Male Female Female Female 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 ....................


yshivers on PROD1PC62 with RULES
Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 44641 

Age 

Male Male Male Male Female Female Female 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 

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

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 


yshivers on PROD1PC62 with RULES
44642 Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 

Age 

Male Male Male Male Female Female Female 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 

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

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 Male Male Female Female Female 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combined 

table for 

small plans 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combined 

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 


yshivers on PROD1PC62 with RULES
Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 44643 

Age 

Male Male Male Female Female Female 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combined 

table for 

small plans 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combined 

table for 

small plans 

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

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 


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Age 

Male Male Male Female Female Female 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combined 

table for 

small plans 

Non-annuitant mortality rates Annuitant 

mortality 

rates 

Optional 

combined 

table for 

small plans 

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

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) Effective/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 or 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 this 

paragraph (b)(1)(ii), 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. 

(C) Special rule for requests submitted 

on or before October 1, 2008, with 

respect to plan years beginning during 

2009. 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 that begins during 2009 

provided that the written request is 

submitted no later than October 1, 2008. 

(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 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 


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Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 44645 

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 

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 

general, in order to demonstrate that a 

gender within a plan does not have 

credible mortality experience for a plan 

year, the demonstration that the gender 

population within the plan has fewer 

than 1,000 deaths over a 4-year period 

must be made using a 4-year period 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 

obtained over a 4-year experience study 

period for its male population and the 

standard mortality tables under 

§ 1.430(h)(3)–1 for its female 

population, there must be a 

demonstration 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. However, if the experience 

study period described in paragraph 

(c)(2)(ii)(A) of this section exceeds 4 

years, then 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 over a 

period that is the same length as the 

experience study on which the 

substitute mortality tables are based and 

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 that is 

collected over an experience study 

period. The minimum length of the 

experience study period is 2 years. The 

maximum length of the experience 

study period is 5 years, but can be 

extended by the Commissioner in 

revenue rulings, notices, or other 

guidance published in the Internal 

Revenue Bulletin (see 

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

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, 2009, 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, 2006. 

(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, notices, or other 

guidance published in the Internal 

Revenue Bulletin (see 

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

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 

amounts-weighted 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. The base 

year is the calendar year that contains 

the day before the midpoint of the 

experience study period. 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 2005, the applicable base (year 

2000) mortality rates must be projected 

5 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 


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44646 Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 

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 

substitute mortality tables are based on 

data collected during 2005 and 2006, 

the base year would be 2005 because 

2005 would be the year that contains the 

day before the midpoint of the 

experience study period. 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, the plan may use substitute 

mortality tables with respect to that 

population even if the standard 

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

are used for the male salaried 

nonannuitant population (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 (c)(1)(ii), 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 for a 

plan year only if, for that plan year (or 

any portion of that plan year), substitute 

mortality tables are also approved and 

used 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 paragraph (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 (or a period that is the 

length of the experience study period if 

the experience study period under 

paragraph (c)(2)(ii)(A) of this section is 

longer than 4 years) that ends less than 

3 years before the first day of that plan 

year. 

(iii) Newly affiliated 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 affiliated 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 last 

day of the period described in section 

410(b)(6)(C)(ii) for either the newly 

affiliated plan or the plan using 

substitute mortality tables, whichever is 

later. Thus, for the following plan year, 

the mortality tables prescribed under 


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Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 44647 

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

plan (and all other plans within the plan 

sponsor’s controlled group, including 

the newly affiliated plan) unless—

(1) Approval to use substitute 

mortality tables has been obtained with 

respect to the newly affiliated plan 

pursuant to paragraph (b)(1) of this 

section; or 

(2) The newly affiliated 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 affiliated plan. 

For purposes of this section, a plan is 

treated as a newly affiliated 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). A plan also is treated as 

a newly affiliated plan for purposes of 

this section if the plan is established in 

connection with a transfer 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 affiliated 

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

case of a newly affiliated 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 

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 

affiliated 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-year or longer 

consecutive 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 affiliated 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. 

(D) Example. The following example 

illustrates the application of this 

paragraph (d)(1): 

Example. (i) Employer A is a corporation 

and maintains Plan M, which has a calendar 

year plan year and has obtained approval to 

use substitute mortality tables for 10 years 

beginning with the plan year that begins on 

January 1, 2009. Employer B is a corporation 

and maintains Plan N, which does not use 

substitute mortality tables and has a calendar 

year plan year. On July 1, 2010, Employer A 

acquires 100% of the stock of Employer B. 

(ii) Pursuant to paragraph (d)(1)(iii) of this 

section, the maintenance of Plan N within 

the controlled group that maintains Plan M 

does not impair the use of substitute 

mortality tables by Plan M through the end 

of the plan year that ends on December 31, 

2011. 

(iii) Pursuant to paragraph (d)(1)(iii) of this 

section, beginning with the plan year that 

begins on January 1, 2012, Plan M continues 

to use substitute mortality tables only if 

either Plan N obtains approval to use 

substitute mortality tables or Employer A can 

demonstrate that Plan N does not have 

credible mortality experience. Pursuant to 

paragraph (d)(1)(iv)(C) of this section, 

Employer A is permitted to either exclude 

mortality experience date for the period of 

time before July 1, 2010 (the date Plan N 

became maintained with Employer A’s 

controlled group), or include that mortality 

experience data for purposes of 

demonstrating that Plan N does not have 

credible mortality experience. Thus, if there 

is an experience study that shows that the 

male and female populations of Plan N each 

do not have 1,000 deaths during the period 

from July 1, 2010, through December 31, 

2010, then the maintenance of Plan N within 

the Employer A’s controlled group does not 

impair Plan M’s use of substitute mortality 

tables for Plan M’s 2012 plan year. 

(iv) For Plan M’s 2013 plan year, pursuant 

to paragraph (d)(1)(iv)(C) of this section, the 

maintenance of Plan N within Employer A’s 

controlled group does not impair Plan M’s 

use of substitute mortality tables if there is 

an experience study that shows that the male 

and female populations of Plan N each do not 

have 1,000 deaths during the period from 

July 1, 2010, through 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); 


yshivers on PROD1PC62 with RULES
44648 Federal Register / Vol. 73, No. 148 / Thursday, July 31, 2008 / Rules and Regulations 

(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)(3)–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). 

(e) Effective/Applicability date. This 

section applies for plan years beginning 

on or after January 1, 2009. 

■ 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. 

(a) 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. 

(b) Effective/applicability date. This 

section applies for plan years beginning 

on or after January 1, 2008. 

Linda E. Stiff, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: July 20, 2008. 

Eric Solomon, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. E8–17492 Filed 7–30–08; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 20 

[TD 9414] 

RIN 1545–BE52 

Grantor Retained Interest Trusts—

Application of Sections 2036 and 2039; 

Correction 

AGENCY: Internal Revenue Service (IRS), 

Treasury. 

ACTION: Correcting amendment. 

SUMMARY: This document contains a 

correction to final regulations (TD 9414) 

that were published in the Federal 

Register on Monday, July 14, 2008 (73 

FR 40173). The final regulations provide 

guidance on the portion of property 

transferred to a trust or otherwise, that 

is properly includible in a grantor’s 

gross estate under Internal Revenue 

Code (Code) sections 2036 and 2039 if 

the grantor has retained the use of the 

property or the right to an annuity, 

unitrust, or other payment from such 

property for life, for any period not 

ascertainable without reference to the 

grantor’s death, or for a period that does 

not in fact end before the grantor’s 

death. 

DATES: The correction is effective on 

July 31, 2008 and applicable to the 

estates of decedents dying after August 

16, 1954. 

SUPPLEMENTARY INFORMATION: 

Background 

The final regulations (TD 9414) that is 

the subject of this correction are under 

sections 2036 and 2039 of the Code. 

List of Subjects for 26 CFR Part 20 

Estate taxes, Reporting and 

recordkeeping requirements. 

Correction of Publication 

■ Accordingly, 26 CFR part 20 is 

corrected by making the following 

correcting amendment: 

PART 20—ESTATE TAX; ESTATES OF 

DECEDENTS DYING AFTER AUGUST 

16, 1954 

■ Paragraph 1. The authority citation 

for part 20 continues to read in part as 

follows: 

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

■ Par. 2. Section 20.2036–1 is amended 

by adding paragraph (a)(3)(ii) to read as 

follows: 

§ 20.2036–1 Transfers with retained life 

estate. 

(a) * * * 

(3) * * * 

(ii) The right, either alone or in 

conjunction with any other person or 

persons, to designate the person or 

persons who shall possess or enjoy the 

transferred property or its income 

(except that, if the transfer was made 

before June 7, 1932, the right to 

designate must be retained by or 

reserved to the decedent alone). 

* * * * * 

Cynthia E. Grigsby, 

Senior Federal Register Liaison Officer, 

Publications and Regulations Branch, Legal 

Processing Division, Associate Chief Counsel 

(Procedure and Administration). 

[FR Doc. E8–17500 Filed 7–30–08; 8:45 am] 

BILLING CODE 4830–01–P 


yshivers on PROD1PC62 with RULES