SECTION 3. PROCEDURE

Rev. Proc. 2008–3 is modified by deleting section 5.08. Rev. Proc. 2008–3 is amplified by adding the following to section 3.01:

Section 409A.—Inclusion in Gross Income of Deferred Compensation Under Nonqualified Deferred Compensation Plans.—The income tax consequences of establishing, operating, or participating in a nonqualified deferred compensation plan within the meaning of § 1.409A–1(a); whether a plan is described in § 1.409A–1(a)(3)(iv) or (v); whether a plan is a bona fide vacation leave, sick leave, or compensatory time plan described in § 1.409A–1(a)(5); and

October 20, 2008 935 2008–42 I.R.B.

under § 430(h)(3)(C) were published in § 1.430(h)(3)–2 in the Federal Register on July 31, 2008. This Rev. Proc. 2008–62 updates the procedures outlined in Rev. Proc. 2007–37 to reflect the changes in the final regulations.

Under both the proposed and final regulations, substitute mortality tables must reflect the actual mortality experience of the pension plan maintained by the plan sponsor for which the tables are to be used and that mortality experience must be credible. Separate mortality tables must be established for each gender under the plan, and a substitute mortality table is permitted to be established for a gender only if the plan has credible mortality experience with respect to that gender. If the mortality experience for one gender is credible but the mortality experience for the other gender is not credible, then the substitute mortality tables are used for the gender that has credible mortality experience, and the mortality tables under § 1.430(h)(3)–1 are used for the gender that does not have credible mortality experience. If separate mortality tables under § 430(h)(3)(D) are used for certain disabled individuals under a plan, then those individuals are disregarded for all purposes with respect to substitute mortality tables under § 430(h)(3)(C). Thus, if the mortality tables under § 430(h)(3)(D) are used for certain disabled individuals under a plan, mortality experience with respect to those individuals must be excluded in determining mortality rates for substitute mortality tables with respect to a plan.

Under the proposed regulations, a substitute mortality table would be based on credible mortality experience for a gender within a plan if and only if the mortality experience is based on at least 1,000 deaths within that gender over the period covered by the experience study. The experience study would be based on mortality experience data over a 2, 3, or 4-consecutive year period, the last day of which must be less than 3 years before the first day of the first plan year for which the substitute mortality tables are to apply. The final regulations retain the above provisions, except that the maximum period of the experience study is extended to a 5-consecutive year period. In addition, the final regulations provide that the Commissioner may allow further extensions of the maximum experience study period in future guidance.

(“regulations” or “final regulations”). This revenue procedure reflects the provisions of the final regulations, and includes the following changes from Rev. Proc. 2007–37: (1) The requirements in subsection 2.02 were updated to reflect the ability to use a period of up to 5 years (or such longer period as the Commissioner may permit in future guidance) for the Experience Study Period, and subsection 10.01 was revised to clarify that the Experience Study Period used to develop the unadjusted base tables must coincide with the Experience Study Period used to demonstrate credible mortality experience.

(2) Subsections 4.01 and 5.06 were updated to reflect the extension of the deadline for submitting requests to October 1, 2008, for substitute mortality tables to be used effective for plan years beginning in 2009. (3) The definition of the Base Year in subsection 5.03 was updated to reflect the revised definition in § 1.430(h)(3)–2(c)(2)(iii) of the final regulations.

(4) A new subsection 7.03 was inserted (and the former subsection 7.03 was renumbered as subsection 7.04) to permit plans within a Permissive Group to use different Experience Study Periods (subject to specified conditions) if the plans have different plan years.

(5) Subsection 9.01 was revised to reflect the requirement in § 1.430(h)(3)–2(d)(1) of the final regulations to increase the length of the period used to demonstrate lack of credible mortality experience if the Experience Study Period is longer than 4 years.

(6) A new subsection 9.06 was inserted to provide guidance for demonstrating lack of credible mortality experience when the Experience Study Period is developed using the approach in new subsection 7.03.

(7) A new subsection 9.07 was inserted to permit alternative means of demonstrating lack of credible mortality experience.

(8) One set of sample annuity values was eliminated with respect to nonannuitant mortality tables and adjustments were made to the date of birth used for the annuity values reported in subsection 13.03.

(9) References throughout the revenue procedure to “newly acquired” plans were changed to “newly affiliated” plans to con

form to the language in the final regulations.