Significant Index No. 0430.00-00 • DEPARTMENT OF THE TREASURY TAJ! UUIPT MIO •OVUNMDITCNTtTIU DIVl9IOH Number: 202250017 Release Date: 12/16/2022 Re: Sub8titute Mortality Table Ruling Taxpayer= EIN: - SEP 2oim Plana for which substitute mortality tables are requested: Plan 1 • EIN: - (Plan No. ) Plan 2• EIN: - (Plan No. ) Plan 3• EIN: - (Plan No. ) OlhlM' defined benefit plane in the Taxpayer's controlled group: Plan4• EIN: - (Plan No. ) Plan 5• EIN: - (Plan No. ) Plan6• EIN: .. (Plan No. ) Dear This letter ia raaponse to the Taxpayer's request dated March 22, 2022 along with supplemental information provided by the Taxpayar'a aulhorlzed repraaentatives via electronic mail on May 27, 2022, June 10, 2022, and June 23. 2022.
2 The following facts and ,eprasentations have been submitted under penalties of perjury In support of the ruling requested. Plan 1. Plan 2. Plan 3, Plan 4, Plan 5, and Plan e are the only defined benefit retirement plans in the Taxpayer's controlled group. There was one additional defined benefit retirement plan that left the Taxpayers controlled group a of . . that was not included in tie Taxpayer's experience study. Taxpayer does not sponaor any multiple employer plans. Taxpayer raqa.ats approval for the following specific populations: • Plan 1. Plan 2. and Plan 3 combined - Male participants (annuitants and nonannuitants combined), including dilabled participants. • Plan 1. Plan 2, and Plan 3 combined - Female participants (annuitants and nonannuitants combined). including disabled participants. Taxpayer indicated that Plan e does not have credible mortality experience and therefore. the ataladafd mortality tables will be uaed for calculatione under Ndion 430 of the Internal Revenue Code (•Code,. Taxpayer is also requesting approval for substitute mortalily tablel for Plan 4 and Plan 5, which wil be addreaaecl in a aeparaf8 ruling letter. Taxpayer's proposed mortality rates were developed based on an experience atudv period from through with a baae year of Taxpayer's proposed mortality rates were calculated by adjusting the applicable standard mortality tables in aection 1.430(h)(3)-1(d) of the Treasury Regulations ("Regulationlj, using the mortality ratio and credibility weighting factor individually determined for each population, a ahown in the table below. Plan 1. Plan 2. and Plan 3 combined - Male participallta (annuitants and nonannuitants combined disabled • • Plan 1. Plan 2. and Plan 3 combined - Female participant$ (annuilarlta and nonannuitants · dilabled rvartiP.insffltfl llortallty ratio Crwdlbllty factor Taxpayer's request 18 made In accordance with section 430(h)(3)(C) of the Code, eection 303(h)(S) of the Employee Retirement Income Security 14d. of 1974, eection 1 .~)(3)-2 of the Regulations. and Revenue Procedure 2017-55. Saeed on the above fads and repreeentationl. the Taxpayer requeeta a ruling to use the substitute mortality tables for making computations under eection 430 of the Code.
3 Taxpayer requests this ruling to be effective for a period of up to olan years beginning with the plan year commencing Taxpayer's propoaed bate mortally rates are• follows: SUbdtute Mortality Tables PropoHd for UN beginning wltll the plan vwcommenclng ... ,.., ..... Pa1lclpanta. F ...... Parllclpanta, Including Dill.,_, Including Dlubled Ana Partlcinanla Partlclnanta 1 2 3 4 5 6 7 8 I 9 ; 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
4 Male Participants, Female P•rtlclpants, lncf1;1dlng DIN~ Including Dlubled Aae Partlclnants Partlclnants 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
Male Partlclpana, Female Partlclpams, Including Disabled Including Dlaabled Aaa Partlclnants Partlclnanw 76 77 78 79 80 81 82 83 84 85 88 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117
6 Male Padlclpania, Including DIAbled Particl nta Female ~rtlclpants, Including Disabled Partlcl nts Section 430(h)(3)(A) of the COde states, in relevant part, that the Secretary shall by regulation prescribe mortality tables to be used in determining any present value of making any computation under section 430 of the Code. Section 430(h)(3)(C) of the Coda states, that upon request by the plan sponeor and approval by the Secretary. a mortality table ahall be used in determining any present value or making any computation under section 430 of the Code during the period of conaecutiVe plan years (not to exoeed 10) specified in the request. Section 430(h)(3)(C)(ii) of the Code states, in relevant part, a substitute mortality table shall 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 sptnoff or merger or otherwise, or • the date on which the plan actuary detennines that such substitute mortality table does not meet the following requirements of Section 430(h)(3)(C)(HI) of the Code. Section 430(h)(3)(C)(iii) of the Code states, in retevant part, that a mortality table meets the requinunenbs of this section if: o there is a sufficient number of plan partteipants. and the pension plans have been maintained for a sufficient period of time, to have credible information necessary, and o such substitute mortality table reflects the actual e)(J)erience of the pension plans maintained by the sponsor .and projected trends in general mortality experience. Section 1.430(h)(3)-2(~)(3) of the Regulations &tatee, in relevant part. that the base year for the base subatitute mortality table ii the calendar year that contains the day before the midpoint of the experience study~- Additionally, a plan's substitute mortality tables must be generational mortafity table~1. Section 1.430(h)(3)-2(~)(6)0i) of the Regulations states, in relevant part, that a plan's substitute mortatfty tables must not be USEld beginning with the earliest of: • For a pJan uaing a substitute mortaUtx table for only one gender, the first plan year for which there rs fufJ or partial Grediblc mortality information with rNpec:t to
7 the other gender that had lacked credible mortality infonnation (unlela an approved substitute mortality table is used for that gender). • The firat plan year in which the plan fails to satisfy the requirement that other plans and populations in the controlled group muet also use substitute mortality tables unlese it can be demonstrated that they ck> not have credible mortality information (taking into account the transitk>n period for newly affiliated companies), • The ucond plan yearfoJlowing the plan year for which there is a significant change in individuals covered by the plain as deeaibed in Section 1.430(h)(3)- 2(c)(8)(iD) of the Regulations. • The pJan 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 detennined by the Commissioner or as certified by the plan's actuary to the satisfaction of the Commisaioner, or · • The date specified in guidance published in the Internal Revenue Bulletin pursuant to a replacement of mortality tables specified under section 430(h)(3)(A) of the Code and section 1.430{h)(3)-1 of the Regulations, other than annual updates to the static mortality tables issued pursuant to section 1,430(h)(3)-1 (a)(3) of the Regulations or changes to the mortality improvement rates pursuant to section 1.430(h)(3)-1 (a)(2)(i)(C) of the Regutations. Section 1.430(h)(3)-2(c)(6)(iii) of the Regulations atatea, in relevant part, a significant change in the individuals covered by a substitute mortality table for a plan year occurs if the number of individuals covered by the substitute mortality tabfe for the plan year is le8a than 80% or more than 120% of either the average number of indivfduafs In that population over the years covered by the experience study on which the aubatitute mortality tablea are based, or the number of individuals covered by the substitute mortality table in a plan year for which a certification (described below) was made on account of a prior change in coverage. However, a change in coverage is not treated aa significant tf the plan's actuary oertifiea in writing to the·~ of the C,ommissioner that the substitute mortality table& used for the population continue to be accurately predictive of future mortaJity of that population (taking into account the effect of the change In the pop1.11at1on)~ Section 1.430(h)(3)-2(d)(2) of the Regulations states, in relevant part, that the experience study period must consist of 2, 3, 4, or 5 con$8CUtive 12-month periods, and must be the same period for all populations. The last day of thtt experience study period must be leas than 3 yeara before the first day of the first plan year for which the eubstitute mortarity tables are to apply.
8 Section 1.430(h)(3)-2(d)(4) of the Regulations states, in Nlevant part. that the bale mortality rates are determined by multiplying the mortality rate from the atandard mor1alily table by the mortality ratio. Section 1.430(h)(3)-2(e)(1) of the Regulalionll "8tel. in relevant part, that If 1he actual number of deal'IS ii leea than the ful creclNty thnllhold. then the baee mortality ratN are detetmined Uling a partial cra:libilly TJl8ighting factor. 8eclion 1.430(h)(3)-2(f) of the Regulatione providee epecial rutee for newly-affiliated plana-a plan is a newly-affiliated plan if the plan sponsor becomes a member of the new contl\:ilad group in connection wtth a merger, acquisition, or similar transaction d11a.ibed inf 1.410(b)-2(f). A plan also ii treated aa a newly-affiliated plan for purpo111 of this aection If the plan ii eatabli8hed in connection with a trantfer of auets and liabilitiN from another employer'• plan in connection with a merger. acquisition, or 8lmilar transaction described In § 1.410(b)-2(f). The Internal Revenue Service has reviewed the subatttute mortality rates and •upporting information and haa det8rmlnad that baMd on the infonnation submitted, the ratN were developed in accordance with aection 1 .430(h)(3)-2 of the Regutationa and Revenue Procedure 2017-65. Permlnlon ta hereby granted for 1he Taxpayer to uee the propoaed aubdtule mortality ,.._ shown abo1'M for partlcipanta in Plan 1, Plan 2, and Plan 3 (Including disabled participanta). The approved IIUbalitule mortality ralea (shown above) mu8t be applied on a genntlonal balia. • provided in section 1.430(h)(3)-2(c)(3) of the Regulations. Your attention 18 called 1D the early termination rulee under aection 430(h)(3)(C) of the Code and eeotJon 1.430(h)(3)-2(c)(6) of the Regulation., which dNcribe the cln::umltancea in which the ute of the approved substitute mortality table• wil terminate before the end of the approved period (described above). VVe also draw your attention to the fact that the male participanta in Plan 6 (annuitants and nonannuitantl combined, including dilabled male participanta) experteno.d deachs and female par1iclpanta in Plan 6 (annuitants and nonannuitanta combined. Including diaabled female participanta) experienc ■ d deatha during the experience study period. Note that 1heee populations wil have credlble mortally axperiance if ttaey experience at least 100 deaths during &fff period comtapOnding to the length of the experience atudy UNd tc>conatruct the approved tubetitute mortality tables (tlhown above). It is important to monitor hee populations to eneure that appropriate action is taken, should 1h18 oacur. to avoid violating the early termination rules under l8Ction 1.430(h)(3)-2(c)(6) of the Regulations. A certiftcatlon muet be provided each year that is required under the Regulations. aa de8ol1bed abovo, aignod by 1he onrollod lGluafy for oaGh impaotod plan. to evoid the
9 early termination rules due to a significant change in coverage under aeclion 1.430(h)(3)-2(c)(8) of the Regulationa. The certification muat state that the substitute mortality tablea continue to be accurataly predictive of the expected future mortality for the plan. The oerttncallon must also contain a statement that • The er-lollect actuary ii current with educational requlnamenta set forth by the as well • any other actuarial delignations aaaanad: • The enrolled actuary was personally involved in the delermination that the substitute mortality table ii atil accurataly predictive and provides the actuarys belt _.?Dllte for 1he Plan; • In datefminlng that the subatitute mortality table ia still accurately predictive. the enrolled actuary took Into consideration the el8ct of buaineu C01'11bNtions, plan mergers or aptnoffl, aettlemanWother risk transfers, and other events that would have 8imilar effecta on the relevant populationa; and, • The emolted actuary has 1he apec;lfic knowledge and experience to make the judgemen1s set forth above and.,.. to these reprwntations. All certificationl must be provided on or before the date Fonn 5500 is filed for each plan year for which the certification ia required and must be accompanied by the auppo,1lng information relied upon by the enrolled actuary to make that certification. To the extent poasl)le. pleaaa alao provide the folo\:,ing aupportna information: • The number of actual deathl dumg the e>eperience study period uaed to develop the substitute mortality tables and the beginning and ending dates of the experience study period. · • A table 1howlng the number of expected deaths and actual deaths, ,aported aeparatety for each plan year beginning with deatha during the plan year beginning on . lhrough the plan year immediately preceding the moat recent actuarial valuation. and in total. • A tabla ahowing the mortality gainalloue8, reported ~ for each plan year beginning with the plan year beginning on . through the plan year immediately preceding the moat recent actuarial valuation. • A table limilar to 1he ltablly demonatndion NtqUired under section 8 of Revenue Procedure 2017-M. showing 1he average number of parliclpanta in the population included In the axparianoe study and the number of participants in the population • of the end of each plan year, beginning with through the pa, year immediately preceding the moat recent actuarial valuation, axpreued both u a headcount and • a pe,oantage of the average number of participants in the experience study. • A table showing a compadeon of. o the average ages, and 0 the perc:enlage of the population. by the following monthly single life annuity bracbte: • l.fflder $100,
10 • between $100 and $250, • betWeen $250 to $500, • between $500 to $1,000, • between $1,000 and $1,500, and • $1,500 and over, along with the _average age and average benefit amount for the population in total. This information should also be provided for the population in the experience study and at the end of each plan year, beginning with the valuation date for the firat plan year that the certification is required, through the date immediately preceding the most recent actuarial valuation at the time the information 11 reported. • An explanation of any material changes in the population. This information must be provided to Mr. David M. Ziegler (or to another individual designated by the Internal Revenue Service) at the following address: Internal Revenue Service Attn: Mr. David M. Ziegler TE/GE: -SE:T:EP:RA:T;A2 IR--8213 1111 conatitution Ave. NW Washington DC 20224-0002 Failure to provide this information by the due data may result in a requirement that the standard mortality tables must be used for purposes of section 430 of the Code, beginning with the earlier of: (1) the plan year for which the deadline for providing this infonnation ia miesed, or (2) the date required for ear1y termination of the use of the substitute mortality tablea pursuant to section 1.430(h)(3)"'.2(c)(6) of the Regulations. No opinion is expressed as to the tax treatment of the tranaaction described herein under the provisions of any other section of either the Code or Regulations which may be applicable thereto, as appropriate. ln granting this approval, we have only considentd whether the substitute mortality rates were developed in accordance with section 1.430(h)(3)-,2 of the Regulations and Revenue Procedure 2017-55. Accordingly, we are not expressing any opinion as to the accuracy or acceptability of any calculations or other matar~I submitted with your request This ruling is directed only to the taxpayer that requested it. Section 611 O(k)(3) of the Code providaa that it may not be used or cited by others as precedent --- -------------
11 VVhen fiUng Form 5500 for the plan years for which the substitute mortality tables are UHd, please note the information that la raquired to be attached to Schedule SB (Actuarial Information) in acoordanoe with the inetructions to that form. Punauant to a power of attorney on file with this office, a copy of this letter ruling is being sent to your authorized representativea. Additionally. a copy of thia letter ruling le being aant to the Manager, EP Claeaification in Houston, Texaa and to the Manager, EP Compliance Unit in Chicago, Illinois. If you wish to inquiie about this ruling, please contact (ID Badge Nt.Bl'lber ) at ( ) . Please address au correspondence to SE:T:EP:RA:T:A2. Enclo8uras Sincerely yours, David M. Ziegler, Manager Employee Plana Actuarial Group 2 Notice 437, Notice of Intention to Disclose (Rulings) A deleted copy of the ruling cc: