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The IRS Updates Static Mortality Tables for Defined Benefit Plans in 2018

In early October, the IRS issued new mortality tables to be applied to certain valuation calculations, such as pension lump sum payments, PBGC premiums, and minimum required contributions. IRS Notice 2017-60 specified the details of the regulation, which goes into effect in 2018.

The new tables reflect improved mortality, which will increase the value of pension liabilities and related payments. Many plan sponsors, who were anticipating this update for over a year, opened lump sum windows in 2016 and 2017 to take advantage of lower present value payment calculations prior to this change. In 2018, pension de-risking activity, such as lump sum windows, could drop off due to the higher associated costs.