Suppose the IRS decides to use the SOA mortality tables

[My 2 cents]

Suppose that in 2016 or 2017 the IRS decides to mandate the use, for minimum funding and for lump sum calculations, mortality tables based in some fashion on the new Society of Actuaries mortality tables. Does anybody have any comments, yes or no, on what they expect with respect to the following?

1. Will the IRS tables include mortality improvements up to the year to which they apply, with no further mortality improvements for subsequent years (i.e., project mortality for 2018 to 2018 but static thereafter)? Or will the mandated mortality rates involve projected mortality improvements all the way out? The currently mandated tables do not require future mortality improvements for funding and do not involve future mortality improvements for lump sum determinations.

2. Is it safe to assume that the mandated lump sum mortality table will be a 50/50 unisex version of exactly the same sex-distinct mortality tables mandated for minimum funding? That is, both with assumed mortality improvements stopped at the current year or both with assumed mortality improvements all the way out?

Any other thoughts on the subject?

[david rigby]

Good questions, that deserve lots of discussion. Just my opinions:
1. I expect the change to be effective after 2016 (could be 2017 or 2018), and the funding requirement will permit, but not require, a projection. For 417 purposes, it seems very awkward to include a projection scale; IMHO, also not appropriate.

2. I agree, a 50/50 blend of the funding tables is the likely result.

I expect to submit more detailed comments, which I'm advised to send directly to Carolyn Zimmerman.

[FAPInJax]

Well, based on historical leanings (back when PPA was first initiated):

1 The change will be in 2016 (my best guess). The table will be mandated based on the fact that the IRS wants the ability to 'check' the results. This is why the tables are currently published and the software companies do not compute the various tables. The current tables already include a projection as you will notice the Applicable tables improve each year and I would expect this to continue.

2 The 50/50 blending of the optional small tables (male / female) to produce the Applicable table will continue.

[My 2 cents]

Well, based on historical leanings (back when PPA was first initiated):

1 The change will be in 2016 (my best guess). The table will be mandated based on the fact that the IRS wants the ability to 'check' the results. This is why the tables are currently published and the software companies do not compute the various tables. The current tables already include a projection as you will notice the Applicable tables improve each year and I would expect this to continue.

2 The 50/50 blending of the optional small tables (male / female) to produce the Applicable table will continue.

The SOA tables are fully projected (that is, the age 65 mortality rate depends not just on the year of projection but also on the year of birth. The age 65 mortality rate is lower for someone now age 50 than it is for someone now age 60). Do you think that the tables that will be mandated will use the currently-age-65 age 65 mortality rate irrespective of the participant's current age, the way that the currently mandated tables do?

[Effen]

It it too early to do anything except speculate on what we think the IRS will do. They are currently accepting comment letters and are reviewing the opinions of the commentators. They have given no information on the direction they are leaning.

I wouldn't be shocked if they go full generational for 436 and 417(e)(w/ unisex adjustments) They will be getting a lot of opinions from the ivory tower folks that fully generational is the only way to go. Other groups will argue for simplicity, at least in the 417(e) area.