Proposed Regulations Update Mortality Tables, Minimum Present Value Requirements For Defined Pension Plans

Summary

Near the end of 2016, the US Department of Treasury and the Internal Revenue Service published two significant sets of proposed regulations on issues pertaining to defined benefit pension plans, including mortality table updates that likely would increase pension funding liabilities for many plan sponsors.

In Depth

Near the end of 2016, the US Department of Treasury and the Internal Revenue Service (IRS) published two significant sets of proposed regulations on issues pertaining to defined benefit pension plans.

On December 29, 2016, Treasury and IRS issued proposed regulations that would update the mortality tables for single-employer defined benefit plans. Beginning in 2018, if finalized, the updated mortality tables are expected to increase plan funding liabilities and, by extension, Pension Benefit Guaranty Corporation (PBGC) variable rate premiums, as well as the value of lump sum distributions. Plan sponsors should be aware, though, that these