From: Groom Law Group
On August 9, 2017, the U.S. Treasury Department and the Internal Revenue Service sent the final mortality table regulations to the Office of Management and Budget for review. The regulations were reclassified as “economically significant”, making them subject to additional review processes under Executive Order 12866 (and potentially the “2 for 1” regulation rule and “net incremental cost of zero” provisions under Executive Order 13771).
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The period needed for the OMB review casts doubts on whether the regulation will become effective in 2018. Since the Pension Protection Act became effective, the latest that the IRS has issued mortality tables for the upcoming plan year was September 29, 2008 (IRS Notice 2008-85). Plan administrators and actuaries need time to incorporate the new mortality provisions into their calculations. This lead time is especially relevant since participants often make their retirement decisions based on information they receive from plans several months before their actual retirement dates. If the new tables are adopted in late 2017 andare effective in 2018, participants may make decisions based on incorrect information regarding their benefit amounts. Additionally, PPA added a certification schedule for plans’ funded status, which can result in penalties if the plan’s actuary cannot make the calculations necessary to certify the plan’s status before April 1st (or at least complete a range certification) for a calendar year plan.