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2008+ Dynamic Mortality

The tables are based on the RP-2000 mortality table, projected and further adjusted under a methodology outlined in the Preamble to Proposed Regulation §1.430(h)(3)–1 and Revenue Ruling 2007-67. By following this published methodology, we calculate the expected, or anticipated, static mortality table rates for any given year in the future. ProVal contains certain Mortality Rate Reference Table library entries that automatically produce these expected future tables during a Valuation or Core Projection; we refer to them as “dynamic” mortality tables (although the mortality rate table for any given year is a static table; thus the library entry can be considered a collection of static tables).

In addition to the dynamic tables intended to meet U.S. regulatory requirements, we include a dynamic version of the RP-2000 combined mortality table. Thus there are seven dynamic tables automatically included in ProVal’s Mortality Rate Reference Table library:

The second table listed above has the same mortality rates as the first table for annuitant ages (post-commencement) but zero mortalityrates for non-annuitant ages (pre-commencement). The same applies, respectively, to the fourth and third tables, as well as the sixth and fifth tables. For specific details about each table, see the list of mortality tables in the discussion of Decrement Tables under the Reference Tables command.

Rather than containing just fixed sets of mortality rates, with the exception of the RP-2000+ Combined Mortality Table, these tables specify mortality calculations expected to be issued by the IRS. None of the dynamic tables can be changed by the user and the values they produce depend on the plan year for which they will be used. That is, the 2008 mortality rates will be used at the 2008 valuation date (for the “2008 plan year”, assumed to begin on the valuation date in 2008), the 2009 rates will be used at the 2009 valuation date and so forth. If you open one of these dynamic tables in the Mortality Rate Table library, you will be required to enter the year for the rates you wish to View and the values for that year (only) will be displayed in the View.

In any year for which the static tables have already been issued by the IRS, the dynamic tables will contain the actual published rates, rather than a projection of expected rates.

If a dynamic mortality table is referenced for an accounting Valuation (or Core Projection) performed for end-of-year disclosure purposes, note that if you are starting with the set of Valuation Assumptions referenced by the expense Valuation (or Core Projection), then, for example, for a 1/1/2008 Valuation Date, ProVal is using the 2008 “slice” of mortality rates. Although, this is appropriate for the 2008 plan year’s expense valuation, consider whether you wish to use this “slice” for the 12/31/2008 disclosure valuation. If you wish to use instead the mortality rates of the following year’s “slice” of the dynamic mortality table as the year-end mortality basis (which would be the 2009 “slice, in our example), it is necessary to View the 2009 “slice” of mortality rates and save those rates in a static (i.e., not dynamic, containing just a single year’s rates) Mortality Rate Reference Table that you select for the Valuation Assumptions of your disclosure Valuation (or Core Projection) run.

Calculation of Rates – IRS Tables (U.S.)

The following example outlines the steps in the calculation of the rates for 2008 for the six IRS tables:

  1. Start with RP-2000, with separate rates for annuitants and non-annuitants (and for males and females).

  2. Project the non-annuitant table 23 years (23 = 2008 - 2000 + 15), and the annuitant table 15 years (15 = 2008 - 2000 + 7) using Scale AA. 2008 is the year for which the rates are being calculated, in this example, and 2000 is the base year for the RP-2000 table. The numbers 15 and 7 are adjustments chosen by the IRS to reflect the average timing of payments to non-annuitants and annuitants, respectively. To calculate the rates for 2009, project the non-annuitant table 24 years (24 = 2009 – 2000 + 15) and the annuitant table 16 years (16 = 2009 – 2000 + 7) using Scale AA. To calculate the rates for 2010, use 2010 in place of 2008 (and so forth for years 2011 and later).

  3. Replace the non-annuitant rates at age 80 and above with the annuitant rates.

  4. Replace the non-annuitant rates at ages 71-79 using the following: the total difference between the rates at ages 70 and 80 is divided by 55; the rate at age 71 is set equal to the rate at age 70 plus 1/55 of the total difference; the age 72 rate is equal to the rate at age 71 plus 2/55 of the total difference, etc..

  5. Replace the annuitant rates at age 40 and below with the non-annuitant rates.

  6. Replace the male annuitant rates at ages 41-49 using the same method described in step 4.

  7. Replace the female annuitant rates from ages 40-46 with the non-annuitant rates.

  8. Replace the female annuitant rates at ages 45-49 using the same method described in step 4, but with 21 in the denominator instead of 55. Note: In the Preamble to Regulation §1.430(h)(3)–1, the IRS describes this step as replacing rates at ages 47-49 using 10 in the denominator. However, the published tables for years 2008-2013 reflect replacement of ages 45-49 with 21 in the denominator. ProVal will use published tables in years for which tables have been issued and will use this latter method (21 in the denominator) for all years thereafter.

The calculations underlying the “IRS 2008+ Static Mortality (dynamic)” table end here.

For the other tables, continue with the steps below, as appropriate.

To combine the annuitant and non-annuitant rates, continue with this step:

  1. Create the small plan combined table using the applicable weighting factors at each age, to combine annuitant and non-annuitant mortality for each age.

The calculations underlying the “IRS 2008+ Small Plan Combined Static Mortality (dynamic)” table end here.

To produce the dynamic applicable mortality tables for IRC section 417(e) purposes, after step 9 continue as follows:

  1. Blend the male and female rates from the “IRS 2008+ Small Plan Combined Static Mortality (dynamic)” table, with an equal (50/50) weighting of male and female rates. 

This completes the calculations underlying the “IRS 2008+ Applicable Mortality Table for 417(e) (dynamic)” table.

To produce any of the three dynamic mortality tables that contain rates of 0 for pre-commencement mortality, enter the relevant rates into the Post-Commencement columns and enter 0 at all ages in the Pre-Commencement columns.

Calculation of Rates – RP-2000+ Combined Mortality Table (dynamic)

The “RP-2000+ Combined Mortality Table (dynamic)” is a dynamic projection of the RP-2000 Combined Healthy Mortality Table. The mortality rates are projected to the valuation year using Scale AA, with no further adjustments. This table is not intended to satisfy (U.S.) IRS or other regulatory requirements.