SECTION 3. DRAFTING

INFORMATION

The principal author of this notice is Alan S. Williams of the Office of Associate Chief Counsel (International). For further information regarding this Notice, contact Mr. Williams at (202) 317-6941 (not a toll-free number).

Updated Static Mortality Tables for Defined Benefit Pension Plans for 2018

Notice 2017–60

PURPOSE

This notice sets forth the mortality table that is used for purposes of determining minimum present value under § 417(e)(3) of the Internal Revenue Code (Code) and section 205(g)(3) of the Employee Retirement Income Security Act of 1974, Public Law No. 93-406, as amended, for distributions with annuity starting dates that occur during stability periods beginning in the 2018 calendar year. This mortality table is a modified unisex version of the mortality tables specified under § 430(h)(3)(A) of the Code, which have been revised pursuant to § 430(h)(3)(B) by T.D. 9826, for plan years beginning in 2018.

This notice also provides updated static mortality tables determined using the

methodology in § 1.430(h)(3)–1 prior to its amendment by T.D. 9826. These updated static mortality tables apply for plan years beginning during 2017 with respect to valuation dates occurring during 2018. These updated static mortality tables also apply for the plan year beginning during 2018 if the option under § 1.430(h)(3)– 1(f)(2) is used for the plan. The option under § 1.430(h)(3)–1(f)(2), which is available under certain circumstances for valuation dates occurring during 2018, is to apply mortality tables determined in accordance with regulations previously in effect.

BACKGROUND

Section 412 of the Code provides minimum funding requirements that generally apply for defined benefit plans. Section 412(a)(2) provides that § 430 specifies the minimum funding requirements that generally apply to defined benefit plans that are not multiemployer plans. Section 430(a) defines the minimum required contribution for such a plan by reference to the plan’s funding target for the plan year. Under § 430(d)(1), a plan’s funding target for a plan year generally is the present value of all benefits accrued or earned under the plan as of the first day of that plan year.

Section 430(h)(3) provides rules regarding the mortality tables that are generally used under § 430. Under § 430(h)(3)(A), except as provided in § 430(h)(3)(C) or (D), the Secretary is to prescribe by regulation mortality tables to be used in determining any present value or making any computation under § 430. Those tables are to be based on the actual experience of pension plans and projected trends in that experience. Section 430(h)(3)(B) requires the Secretary to revise any table in effect under § 430(h)(3)(A) at least every 10 years to reflect the actual experience of pension plans and projected trends in that experience.

Section 430(h)(3)(C) provides that, upon request by a plan sponsor and approval by the Secretary, substitute mortality tables that meet the applicable requirements may be used in lieu of the standard mortality tables provided under § 430(h)

Bulletin No. 2017–43 365 October 23, 2017

(3)(A). Section 430(h)(3)(D) provides for the use of separate mortality tables with respect to certain individuals who are entitled to benefits on account of disability.

Section 417(e)(3) generally provides that the present value of certain accelerated forms of benefit under a qualified pension plan (including single-sum distributions) must not be less than the present value of the accrued benefit using applicable interest rates and the applicable mortality table. Section 417(e)(3)(B) defines the term “applicable mortality table” as the mortality table specified for the plan year under § 430(h)(3)(A) (without regard to § 430(h)(3)(C) or (D)), modified as appropriate by the Secretary.

Section 1.430(h)(3)–1 was amended on October 5, 2017, by T.D. 9826, 82 F.R. 46388, to revise the mortality tables used under § 430(h)(3)(A) for plan years beginning on or after January 1, 2018. The mortality tables used under § 430(h)(3)(A) are based on the tables contained in the RP–2014 Mortality Tables Report, ³¹ adjusted for mortality improvement. Section 1.430(h)(3)–1 sets forth base mortality tables with a base year of 2006. For valuation dates during 2018, these base mortality tables are adjusted for mortality improvement using the mortality improvement rates contained in the Mortality Improvement Scale MP–2016 Report. ³²

Section 1.430(h)(3)–1(f)(2) provides under certain circumstances an option to apply mortality tables determined in accordance with regulations previously in effect for purposes of applying the rules of § 430 for the 2018 plan year. Under § 1.430(h)(3)–1(f)(2), for a plan for which substitute mortality tables are not used pursuant to § 1.430(h)(3)–2 for a plan year beginning during 2018, mortality tables determined in accordance with § 1.430(h) (3)–1 as in effect prior to amendment by T.D. 9826 (referred to in this notice as former § 1.430(h)(3)–1) may be used for purposes of applying the rules of § 430 for a valuation date occurring during 2018 if

the plan sponsor: (1) concludes that use of mortality tables determined in accordance with § 1.430(h)(3)–1 for that plan year would be administratively impracticable or would result in an adverse business impact that is greater than de minimis, and (2) informs the actuary for the plan of the intent to apply the option under § 1.430(h)(3)–1(f)(2).

Former § 1.430(h)(3)–1 provided for mortality tables based on the tables contained in the RP–2000 Mortality Tables Report, adjusted for mortality improvement. The regulations permitted plan sponsors to apply the projection of mortality improvement in either of two ways: (1) through use of static tables that were updated annually to reflect expected improvements in mortality, or (2) through use of generational tables. Former § 1.430(h)(3)–1(b)(1) generally required the use of separate tables for annuitant and nonannuitant periods for large plans (those with over 500 participants as of the valuation date). Sponsors of small plans (those with 500 or fewer participants as of the valuation date) were permitted to use combined tables that apply the same mortality rates to both annuitants and nonannuitants pursuant to former § 1.430(h)(3)– 1(b)(2). Former § 1.430(h)(3)–1(a)(3) provided that the static mortality tables for valuation dates occurring in years after 2008 were to be provided in the Internal Revenue Bulletin.

Rev. Rul. 2007–67, 2007–2 CB 1047, provides that, except as otherwise stated in future guidance, the applicable mortality table under § 417(e)(3) is a static mortality table set forth in published guidance that is developed based on a fixed blend of 50 percent of the static male combined mortality rates and 50 percent of the static female combined mortality rates used under § 1.430(h)(3)–1. Rev. Rul. 2007–67 also provides that the applicable mortality table for a calendar year applies to distributions with an

nuity starting dates that occur during stability periods that begin during that calendar year.

STATIC MORTALITY TABLES FOR 2018

Section 430

Section 1.430(h)(3)–1(e) provides the static mortality tables that generally apply for 2018 under section 430(h)(3)(A).

Static mortality tables for 2018 determined in accordance with former § 1.430(h)(3)–1 are set forth in Appendix A of this Notice. These static mortality tables apply under § 430(h)(3)(A): (1) for valuation dates occurring during 2018 with respect to plan years beginning during 2017, and (2) with respect to plan years beginning during 2018 if the option under § 1.430(h)(3)–1(f)(2) is used for a plan.

Section 417(e)(3)

The mortality table that applies under § 417(e)(3) for distributions with annuity starting dates occurring during stability periods beginning in 2018 is set forth in Appendix B of this Notice. The mortality rates in this table are derived from the mortality tables specified under § 430(h)(3)(A) for the 2018 plan year (which are set forth in § 1.430(h)(3)–1(e)) by following the procedures set forth in Rev. Rul. 2007–67. This mortality table applies to a plan for 2018 (including for purposes of § 1.430(d)–1(f)(4)(iii)(B)) regardless of whether the option under § 1.430(h)(3)–1(f)(2) is used for the plan.

Drafting Information

The principal authors of this notice are Arslan Malik and Linda S. F. Marshall of the Office of the Associate Chief Counsel (Tax Exempt and Government Entities). For further information regarding this notice, contact Arslan Malik or Linda Marshall at (202) 317-6700 (not a toll-free number).

31The RP–2014 Mortality Tables Report, as revised November 2014, is available at www.soa.org/Research/Experience-Study/pension/research-2014-rp.aspx .

32The Mortality Improvement Scale MP–2016 Report is available at www.soa.org/Research/Experience-Study/Pension/research-2016-mp.aspx .

October 23, 2017 366 Bulletin No. 2017–43

APPENDIX A

STATIC MORTALITY TABLES DETERMINED UNDER FORMER § 1.430(h)(3)–1(c) and (d) (APPLICABLE FOR VALUATION DATES IN 2018 FOR PLAN YEARS BEGINNING IN 2017 OR IF THE OPTION UNDER

§ 1.430(h)(3)–1(f)(2) IS USED)

Age MALE MALE MALE FEMALE FEMALE FEMALE

2018 Non-Annuitant

Mortality Rate

2018 Non-Annuitant

Mortality Rate

2018 Annuitant Mortality Rate

2018 Optional Combined

Table for Small

Plans

2018 Annuitant Mortality Rate

2018 Optional Combined

Table for Small

Mortality Rate Mortality Rate Plans Mortality Rate Mortality Rate Plans

1 0.000327 0.000327 0.000327 0.000293 0.000293 0.000293

2 0.000221 0.000221 0.000221 0.000191 0.000191 0.000191

3 0.000183 0.000183 0.000183 0.000143 0.000143 0.000143

4 0.000143 0.000143 0.000143 0.000107 0.000107 0.000107

5 0.000131 0.000131 0.000131 0.000097 0.000097 0.000097

6 0.000125 0.000125 0.000125 0.000090 0.000090 0.000090

7 0.000120 0.000120 0.000120 0.000085 0.000085 0.000085

8 0.000111 0.000111 0.000111 0.000075 0.000075 0.000075

9 0.000107 0.000107 0.000107 0.000072 0.000072 0.000072

10 0.000109 0.000109 0.000109 0.000072 0.000072 0.000072

11 0.000112 0.000112 0.000112 0.000073 0.000073 0.000073

12 0.000117 0.000117 0.000117 0.000076 0.000076 0.000076

13 0.000123 0.000123 0.000123 0.000080 0.000080 0.000080

14 0.000135 0.000135 0.000135 0.000089 0.000089 0.000089

15 0.000143 0.000143 0.000143 0.000100 0.000100 0.000100

16 0.000151 0.000151 0.000151 0.000107 0.000107 0.000107

17 0.000160 0.000160 0.000160 0.000116 0.000116 0.000116

18 0.000168 0.000168 0.000168 0.000118 0.000118 0.000118

19 0.000176 0.000176 0.000176 0.000115 0.000115 0.000115

20 0.000183 0.000183 0.000183 0.000112 0.000112 0.000112

21 0.000196 0.000196 0.000196 0.000109 0.000109 0.000109

22 0.000208 0.000208 0.000208 0.000110 0.000110 0.000110

23 0.000227 0.000227 0.000227 0.000116 0.000116 0.000116

24 0.000244 0.000244 0.000244 0.000122 0.000122 0.000122

25 0.000270 0.000270 0.000270 0.000130 0.000130 0.000130

26 0.000310 0.000310 0.000310 0.000144 0.000144 0.000144

27 0.000324 0.000324 0.000324 0.000150 0.000150 0.000150

28 0.000333 0.000333 0.000333 0.000158 0.000158 0.000158

29 0.000349 0.000349 0.000349 0.000167 0.000167 0.000167

30 0.000376 0.000376 0.000376 0.000189 0.000189 0.000189

31 0.000423 0.000423 0.000423 0.000236 0.000236 0.000236

32 0.000476 0.000476 0.000476 0.000269 0.000269 0.000269

33 0.000535 0.000535 0.000535 0.000292 0.000292 0.000292

34 0.000595 0.000595 0.000595 0.000312 0.000312 0.000312

35 0.000655 0.000655 0.000655 0.000330 0.000330 0.000330

36 0.000713 0.000713 0.000713 0.000345 0.000345 0.000345

37 0.000766 0.000766 0.000766 0.000360 0.000360 0.000360

38 0.000790 0.000790 0.000790 0.000376 0.000376 0.000376

39 0.000810 0.000810 0.000810 0.000394 0.000394 0.000394

Bulletin No. 2017–43 367 October 23, 2017

Age MALE MALE MALE FEMALE FEMALE FEMALE

2018 Non-Annuitant

Mortality Rate

2018 Non-Annuitant

Mortality Rate

2018 Annuitant Mortality Rate

2018 Optional Combined

Table for Small

Plans

2018 Annuitant Mortality Rate

2018 Optional Combined

Table for Small

Mortality Rate Mortality Rate Plans Mortality Rate Mortality Rate Plans

40 0.000828 0.000828 0.000828 0.000429 0.000429 0.000429

41 0.000847 0.000875 0.000847 0.000470 0.000470 0.000470

42 0.000872 0.000968 0.000873 0.000517 0.000517 0.000517

43 0.000902 0.001108 0.000905 0.000569 0.000569 0.000569

44 0.000938 0.001295 0.000944 0.000625 0.000625 0.000625

45 0.000979 0.001528 0.000991 0.000660 0.000668 0.000660

46 0.001015 0.001808 0.001037 0.000695 0.000754 0.000696

47 0.001053 0.002135 0.001087 0.000728 0.000883 0.000732

48 0.001092 0.002508 0.001143 0.000787 0.001055 0.000796

49 0.001133 0.002928 0.001206 0.000851 0.001270 0.000869

50 0.001174 0.003395 0.001275 0.000952 0.001527 0.000981

51 0.001215 0.003422 0.001325 0.001065 0.001643 0.001099

52 0.001257 0.003406 0.001404 0.001235 0.001861 0.001282

53 0.001346 0.003453 0.001547 0.001433 0.002141 0.001500

54 0.001444 0.003498 0.001709 0.001666 0.002481 0.001763

55 0.001608 0.003655 0.002031 0.001938 0.002889 0.002118

56 0.001815 0.003889 0.002473 0.002260 0.003377 0.002579

57 0.002060 0.004198 0.002868 0.002551 0.003869 0.003000

58 0.002347 0.004607 0.003342 0.002789 0.004341 0.003391

59 0.002592 0.005001 0.003793 0.003050 0.004880 0.003848

60 0.002865 0.005476 0.004336 0.003332 0.005470 0.004391

61 0.003268 0.006169 0.005107 0.003632 0.006104 0.005067

62 0.003594 0.006795 0.005868 0.003946 0.006783 0.005818

63 0.004064 0.007698 0.006936 0.004271 0.007507 0.006704

64 0.004413 0.008518 0.007843 0.004601 0.008288 0.007566

65 0.004756 0.009433 0.008887 0.004934 0.009143 0.008534

66 0.005259 0.010720 0.010349 0.005261 0.010069 0.009645

67 0.005583 0.011867 0.011559 0.005579 0.011063 0.010716

68 0.005695 0.012794 0.012538 0.005886 0.012149 0.011850

69 0.005972 0.014133 0.013900 0.006178 0.013368 0.013100

70 0.006026 0.015219 0.014980 0.006452 0.014770 0.014488

71 0.006827 0.016839 0.016605 0.007035 0.015984 0.015711

72 0.008428 0.018697 0.018483 0.008200 0.017778 0.017518

73 0.010830 0.020825 0.020643 0.009948 0.019270 0.019049

74 0.014033 0.023233 0.023089 0.012278 0.021358 0.021174

75 0.018037 0.026595 0.026484 0.015191 0.022993 0.022860

76 0.022841 0.029643 0.029572 0.018686 0.025332 0.025242

77 0.028446 0.033819 0.033777 0.022764 0.028612 0.028552

78 0.034852 0.038544 0.038525 0.027424 0.031540 0.031512

79 0.042059 0.043933 0.043928 0.032667 0.034821 0.034814

80 0.050067 0.050067 0.050067 0.038490 0.038490 0.038490

81 0.057467 0.057467 0.057467 0.042601 0.042601 0.042601

82 0.065843 0.065843 0.065843 0.047227 0.047227 0.047227

October 23, 2017 368 Bulletin No. 2017–43

Age MALE MALE MALE FEMALE FEMALE FEMALE

2018 Non-Annuitant

Mortality Rate

2018 Non-Annuitant

Mortality Rate

2018 Annuitant Mortality Rate

2018 Optional Combined

Table for Small

Plans

2018 Annuitant Mortality Rate

2018 Optional Combined

Table for Small

Mortality Rate Mortality Rate Plans Mortality Rate Mortality Rate Plans

83 0.073396 0.073396 0.073396 0.052439 0.052439 0.052439

84 0.083709 0.083709 0.083709 0.058321 0.058321 0.058321

85 0.092919 0.092919 0.092919 0.066628 0.066628 0.066628

86 0.103019 0.103019 0.103019 0.076203 0.076203 0.076203

87 0.117040 0.117040 0.117040 0.087152 0.087152 0.087152

88 0.132854 0.132854 0.132854 0.097072 0.097072 0.097072

89 0.146819 0.146819 0.146819 0.110532 0.110532 0.110532

90 0.165921 0.165921 0.165921 0.122153 0.122153 0.122153

91 0.180722 0.180722 0.180722 0.134140 0.134140 0.134140

92 0.200931 0.200931 0.200931 0.146213 0.146213 0.146213

93 0.216754 0.216754 0.216754 0.162113 0.162113 0.162113

94 0.232553 0.232553 0.232553 0.173875 0.173875 0.173875

95 0.254433 0.254433 0.254433 0.185013 0.185013 0.185013

96 0.270045 0.270045 0.270045 0.195353 0.195353 0.195353

97 0.285214 0.285214 0.285214 0.209923 0.209923 0.209923

98 0.307507 0.307507 0.307507 0.218415 0.218415 0.218415

99 0.322050 0.322050 0.322050 0.225671 0.225671 0.225671

100 0.336045 0.336045 0.336045 0.231601 0.231601 0.231601

101 0.358628 0.358628 0.358628 0.244834 0.244834 0.244834

102 0.371685 0.371685 0.371685 0.254498 0.254498 0.254498

103 0.383040 0.383040 0.383040 0.266044 0.266044 0.266044

104 0.392003 0.392003 0.392003 0.279055 0.279055 0.279055

105 0.397886 0.397886 0.397886 0.293116 0.293116 0.293116

106 0.400000 0.400000 0.400000 0.307811 0.307811 0.307811

107 0.400000 0.400000 0.400000 0.322725 0.322725 0.322725

108 0.400000 0.400000 0.400000 0.337441 0.337441 0.337441

109 0.400000 0.400000 0.400000 0.351544 0.351544 0.351544

110 0.400000 0.400000 0.400000 0.364617 0.364617 0.364617

111 0.400000 0.400000 0.400000 0.376246 0.376246 0.376246

112 0.400000 0.400000 0.400000 0.386015 0.386015 0.386015

113 0.400000 0.400000 0.400000 0.393507 0.393507 0.393507

114 0.400000 0.400000 0.400000 0.398308 0.398308 0.398308

115 0.400000 0.400000 0.400000 0.400000 0.400000 0.400000

116 0.400000 0.400000 0.400000 0.400000 0.400000 0.400000

117 0.400000 0.400000 0.400000 0.400000 0.400000 0.400000

118 0.400000 0.400000 0.400000 0.400000 0.400000 0.400000

119 0.400000 0.400000 0.400000 0.400000 0.400000 0.400000

120 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000

Bulletin No. 2017–43 369 October 23, 2017

APPENDIX B

APPLICABLE MORTALITY TABLE FOR DISTRIBUTIONS SUBJECT TO § 417(e)(3) WITH ANNUITY STARTING

DATES OCCURRING IN STABILITY PERIODS BEGINNING IN 2018

Age Mortality Rate Age Mortality Rate Age Mortality Rate

0 0.002327

1 0.000141 41 0.000368 81 0.042142

2 0.000095 42 0.000400 82 0.047336

3 0.000076 43 0.000439 83 0.053242

4 0.000059 44 0.000486 84 0.059995

5 0.000052 45 0.000541 85 0.067626

6 0.000048 46 0.000608 86 0.076267

7 0.000044 47 0.000685 87 0.086016

8 0.000039 48 0.000775 88 0.096873

9 0.000035 49 0.000877 89 0.108929

10 0.000031 50 0.000995 90 0.122286

11 0.000033 51 0.001116 91 0.136576

12 0.000043 52 0.001267 92 0.151466

13 0.000053 53 0.001442 93 0.166679

14 0.000063 54 0.001645 94 0.182208

15 0.000073 55 0.001951 95 0.197901

16 0.000083 56 0.002348 96 0.215845

17 0.000093 57 0.002701 97 0.234417

18 0.000104 58 0.003092 98 0.253767

19 0.000114 59 0.003526 99 0.273753

20 0.000123 60 0.004029 100 0.294309

21 0.000135 61 0.004629 101 0.315174

22 0.000147 62 0.005297 102 0.336021

23 0.000157 63 0.006056 103 0.356761

24 0.000163 64 0.006793 104 0.377020

25 0.000160 65 0.007601 105 0.396564

26 0.000160 66 0.008513 106 0.415512

27 0.000163 67 0.009419 107 0.433450

28 0.000168 68 0.010399 108 0.450441

29 0.000175 69 0.011477 109 0.466489

30 0.000185 70 0.012664 110 0.481504

31 0.000197 71 0.013995 111 0.491560

32 0.000210 72 0.015486 112 0.498309

33 0.000225 73 0.017176 113 0.501231

34 0.000239 74 0.019081 114 0.500577

35 0.000253 75 0.021243 115 0.500000

36 0.000266 76 0.023707 116 0.500000

37 0.000282 77 0.026500 117 0.500000

38 0.000299 78 0.029713 118 0.500000

39 0.000318 79 0.033373 119 0.500000

40 0.000342 80 0.037591 120 1.000000

October 23, 2017 370 Bulletin No. 2017–43

Adjusted Applicable Dollar Amount for Fee Imposed by Sections 4375 and 4376

Notice 2017–61

I. PURPOSE

This notice provides the adjusted applicable dollar amount to be multiplied by the average number of covered lives for purposes of the fee imposed by §§ 4375 and 4376 of the Internal Revenue Code for policy years and plan years that end on or after October 1, 2017, and before October 1, 2018.

II. BACKGROUND

Section 4375 imposes a fee on the issuer of a specified health insurance policy for each policy year ending after September 30, 2012, and before October 1, 2019. Section 4376 imposes a fee on the plan sponsor of an applicable self-insured health plan for each plan year ending after September 30, 2012, and before October 1, 2019. The fee imposed by §§ 4375 and 4376 helps to fund the Patient-Centered Outcomes Research Trust Fund (PCORTF) and is calculated using the average number of lives covered under the policy or plan and the applicable dollar amount for that policy year or plan year. Under §§ 4375(a) and 4376(a), the applicable dollar amount is $2 for policy and plan years ending on or after October 1, 2013, and before October 1, 2014. ³³ Treas.

Reg. §§ 46.4375–1(c)(4) and 46.4376– 1(c)(3). Under §§ 4375(d) and 4376(d) and Treas. Reg. §§ 46.4375–1(c)(4) and 46.4376–1(c)(3), the applicable dollar amount for policy years and plan years ending in any Federal fiscal year beginning on or after October 1, 2014 is increased based on increases in the projected per capita amount of National Health Expenditures. Specifically, the applicable dollar amount is the sum of (i) The applicable dollar amount for the

policy year or plan year ending in the previous Federal fiscal year; plus (ii) The amount equal to the product

of (A) The applicable dollar amount

for the policy year or plan year ending in the previous Federal fiscal year; and (B) The percentage increase in the

projected per capita amount of the National Health Expenditures most recently released by the Department of Health and Human Services (HHS) before the beginning of the Federal fiscal year. Notice 2016–64, 2016–46, I.R.B. 726, provides that the adjusted applicable dollar amount for policy years and plan years that end on or after October 1, 2016, and before October 1, 2017, is $2.26.

III. ADJUSTED APPLICABLE DOLLAR AMOUNT

The applicable dollar amount that must be used to calculate the fee imposed by

§§ 4375 and 4376 for policy years and plan years that end on or after October 1, 2017, and before October 1, 2018, is $2.39. The increase from the prior amount is calculated by multiplying the adjusted applicable dollar amount for policy years and plan years ending in the previous Federal fiscal year, $2.26, by the percentage increase of the projected per capita amount of National Health Expenditures published by HHS on February 14, 2017. See : https:// www.cms.gov/Research-Statistics-Data- and-Systems/Statistics-Trends-and-Reports/ N a t i o n a l H e a l t h E x p e n d D a t a / NationalHealthAccountsProjected.html, Table 3. The percentage increase is calculated after adjustment to reflect updates to the data used to calculate the prior amount, $2.26, which was based on the per capita amounts of National Health Expenditures for 2016 and 2017 published by HHS on July 12, 2016.

IV. EFFECTIVE DATE

This notice is effective for policy years and plan years ending on or after October 1, 2017.

V. DRAFTING INFORMATION

The principal author of this notice is Stephanie L. Caden of the Office of Associate Chief Counsel (Tax Exempt & Government Entities). For further information regarding this notice, contact Ms. Caden at (202) 317-5500 (not a toll-free number).

33The applicable dollar amount is $1 for policy and plan years ending before October 1, 2013.

Bulletin No. 2017–43 371 October 23, 2017