IRS Modifies Procedure for Plan Sponsors to Request IRS Approval for Mortality Tables Used in Determining Present Value of Single-Employer DB Pension Plans

The Internal Revenue Service (IRS) released Revenue Procedure 2025-21 intended to modify section 12 of Revenue Procedure 2024-32 that explains the procedure for plan sponsors of single-employer defined benefit to request IRS approval to use the plan-specific substitute mortality tables for calculating present value for minimum funding purposes.

The revision affects plans with significant changes in coverage:

(1) In general. If a substitute mortality table was first approved for use for a plan year that began before January 1, 2025, and the number of individuals covered by the substitute mortality table is less than 80 percent or more than 120 percent of the average number of individuals in that population over the 12-month periods covered by the experience study, then the substitute mortality table may not be used for a plan year beginning on or after January 1, 2026. This termination, which is pursuant to § 1.430(h)(3)-2(c)(6)(ii)(E), applies without regard to whether the actuary makes the certification described in § 1.430(h)(3)-2(c)(6)(iii)(A).

(2) Exception for plans using a mortality ratio determined with combined genders. If Substitute Base Tables for a plan (or plans) were developed using the option in § 1.430(h)(3)-2(d)(6) to determine a single mortality ratio for both genders in a population, then the early termination of the permitted use of a substitute mortality table specified in section 12.02(1) will not apply if the total number of individuals covered by the substitute mortality tables developed using that mortality ratio is not less than 80 percent and not more than 120 percent of the average number of individuals in the population used to determine that mortality ratio over the 12-month periods covered by the experience study, provided that the plan actuary certifies in writing to the satisfaction of the Commissioner that the substitute mortality tables used for the population continue to be accurately predictive of future mortality of that population (taking into account the effect of the change in the population) as described in § 1.430(h)(3)-2(c)(6)(iii)(A). 

Revenue Procedure 2025-21 is effective for all requests for approval to use plan-specific substitute mortality tables in accordance with § 430(h)(3)(C) for which the first year that the substitute mortality tables would apply begins on or after January 1, 2026.

(updated May 7, 2025)

The Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) published a final rule that updates the requirements plan sponsors of single-employer defined benefit plans must meet to obtain IRS approval to use mortality tables specific to the plan in calculating present value for minimum funding purposes (as a substitute for the generally applicable mortality tables).

In addition, the IRS released Revenue Procedure 2024-32, explaining the procedure for plan sponsors to request IRS approval to use the plan-specific substitute mortality tables in accordance with § 430(h)(3)(C) and § 1.430(h)(3)-2 of the Treasury Regulations. It also specifies the date when the previously-approved substitute mortality table must be terminated in conjunction with the replacement of the generally applicable mortality tables specified in § 430(h)(3)(A) and § 1.430(h)(3)-1.

Additional information:

• Sponsors of single-employer pensions need to meet certain minimum funding requirements, calculating the value of all included benefits.
• These regulations affect participants in, beneficiaries of, employers maintaining, and administrators of certain retirement plans.
• A request for approval to use substitute mortality tables for that plan year can be submitted until October 31, 2024, provided that the plan sponsor agrees to a 90-day extension of the standard 180-day review period.

The final rule is effective July 31, 2024, and applies to plan years beginning on or after January 1, 2025.

Revenue Procedure 2024-32 is effective for all requests for approval to use plan-specific substitute mortality tables in accordance with § 430(h)(3)(C) for which the requested effective plan year begins on or after January 1, 2025.

(Posted July, 2024)