Mortality Table for Terminating Cash Balance Plan

[KimberlyC]

My client terminated its cash balance plan effective December 31, 2014 and received a favorable IRS determination letter. The Plan provides that the applicable interest rate and the applicable mortality table under Section 417(e) are used to convert the participant's cash balance account to his or her accrued benefit (annuity) at normal retirment or the determination date. The mortality table is variable.

Only 1 insurance company was willing to bid on annuities for the few participants who did not elect lump sums. That insurance company will bid but only if it can used the 417(e) mortality table for 2015. This is odd since the variable mortality table likely will result in lower payouts -- absent a pandemic or nuclear disaster life expectancy will continue to increase. However, they claim they can't administer the variable mortality table.

My concerns are: (i) the annuity K must reflect the Plan and (ii) changing the plan mortality table could result in a Section 411(d)(6) violation. I have considered an amendment using the table that produces the greatest benefit, but I am not sure if the insurer will accept this. I am aware of Treas. Reg. Section 1.411(b)(5)-(e)(ii), which will become effective 1/1/2016. Any ideas on how to complete the termination?