IRS Updates Mortality Improvement Rates, Static Mortality Tables

The IRS on Oct. 19 issued updated mortality improvement rates and static mortality tables for defined benefit plans for 2024. The update is contained in Notice 2023-73. 

Notice 2023-73 provides a mortality table for use in determining minimum present value under Internal Revenue Code Section (IRC) 417(e)(3) and Section 205(g)(3) of ERISA for distributions with annuity starting dates that occur during stability periods beginning in the 2024 calendar year.

Background

In TD 9983, the Department of the Treasury and IRS issued Treas. Reg. §1.430(h)(3)-1, which provides updated mortality tables, mortality improvement rates, and static mortality tables for DB plans, applicable for valuation dates occurring on or after Jan. 1, 2024. 

Treas. Reg. §1.430(h)(3)-1(a) provides that the mortality tables to be used in determining present value under IRC Section 430 are the generational mortality tables described in Treas. Reg. §1.430(h)(3)-1(b) and the static mortality tables for small plans described in Treas. Reg. §1.430(h)(3)-1(c). 

Static Mortality Tables for 2024

The static mortality tables for small plans for valuation dates occurring in 2024, which consist of separate mortality rates that apply for each gender, are set forth in Treas. Reg. §1.430(h)(3)-1(e).

The static mortality table that applies under IRC Section 417(e)(3) for distributions with annuity starting dates occurring during stability periods beginning in 2024 is set forth in the appendix to Notice 2023-73. The mortality rates in this table are derived from the mortality tables specified under IRC Section 430(h)(3)(A) for 2024 in accordance with the procedures set forth in Revenue Ruling (Rev. Rul.) 2007-67.

Rev. Rul. 2007-67 provides that, except as otherwise stated in future guidance, the applicable mortality table under IRC 417(e)(3) is a static mortality table set forth in published guidance that is developed based on a fixed blend of 50% of the static male combined mortality rates and 50% of the static female combined mortality rates used under Treas. Reg. §1.430(h)(3)-1. Rev. Rul. 2007-67 also provides that the applicable mortality table for a calendar year applies to distributions with annuity starting dates that occur during stability periods that begin during that calendar year.

To Be Published 

Notice 2023-73 will be published in Internal Revenue Bulletin 2023-45, which will be issued on Nov. 6, 2023.