The Twenty-First Annual Institute on Current Issues in International Taxation, jointly sponsored by the Internal Revenue Service and the George Washington University Law School, will be held on December 8 and 9, 2008, at the J.W. Marriott Hotel in Washington, D.C.

Final regulations under section 1361 of the Code contain guidance on S corporations with respect to the American Jobs Creation Act of 2004 (AJCA) and the Gulf Opportunity Zone Act of 2005 (GOZA). The regulations clarify certain shareholder rules. The regulations provide certain S corporation stock disposition rules for various trusts. The regulations describe information that needs to be provided in the electing small business trust (ESBT) election statement if an ESBT has certain powers. The regulations clarify the definition of a potential current beneficiary of an ESBT in certain situations. The regulations provide that the Commissioner may provide relief for inadvertent qualified subchapter S subsidiary (QSub) terminations and inadvertently invalid QSub elections. The regulations provide for the treatment of losses when S corporation stock is transferred between spouses or incident to divorce. Notice 2005-91 obsoleted.

Proposed regulations under section 336(e) of the Code provide rules that, when finalized, would permit taxpayers to make an election to treat certain sales, exchanges, and distributions of another corporation’s stock as taxable sales of that corporation’s assets.

Section 382. This notice concerns the application of section 382(h) of the Code to banks.

Extension of replacement period for livestock sold on account of drought. This notice explains the circumstances under which the 4-year replacement period under section 1033(e)(2) of the Code is extended for livestock sold on account of drought. The Appendix to this notice contains a list of the counties that experienced exceptional, extreme, or severe drought during the preceding 12-month period ending August 31, 2008. Taxpayers may use this list to determine if an extension is available.

This notice provides that the Treasury Department and the IRS will treat a tax-exempt “qualified tender bond” (as defined in Notice 2008-41) or “tax-exempt commercial paper” (as defined in section 2 of this notice) that is purchased by its “governmental issuer” (as defined in Notice 2008-41) on a temporary basis as continuing in effect without resulting in a reissuance or retirement of the purchased tax-exempt bond if the governmental issuer holds the bond until not later than December 31, 2009. This notice also extends the final date for the purchase of bonds pursuant to a qualified tender right, and the final date on which covered waivers of interest rate caps are disregarded, to December 31, 2009. Notice 2008-41 amended and supplemented.

This procedure provides areas affected by section 409A of the Code in which rulings will not be issued. Rev. Proc. 2008-3 modified and amplified.

This procedure provides guidance with respect to the application of section 1058(a) of the Code to situations in which securities are originally transferred pursuant to an agreement that meets the requirements of section 1058(b), the transferee subsequently defaults under the agreement as a direct or indirect result of its bankruptcy (or the bankruptcy of an affiliate), and as soon as is commercially practicable (but in no event more than 30 days following the default), the transferor applies collateral provided pursuant to the agreement to the purchase of identical securities.

This announcement contains clarification to filing procedures for Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, filed electronically. These changes are effective immediately. Announcement 2008-19 superseded.

This notice provides updated static mortality tables to be used in applying the minimum funding requirements to single employer defined benefit pension plans that do not choose to use generational mortality tables and are not approved to use employer-specific substitute mortality tables. These mortality tables are also used for multiemployer plans for purposes of applying certain funding requirements. These tables apply for purposes of calculating the funding target and other items for valuation dates occurring during the calendar years 2009 through 2013.

This notice provides relief for funding deadlines and other requirements for plans in certain counties affected by Hurricane Ike. Relief is provided pursuant to section 7508A(b) of the Code for certain plans affected by a Presidentially declared disaster.

This procedure provides areas affected by section 409A of the Code in which rulings will not be issued. Rev. Proc. 2008-3 modified and amplified.

This document sets forth the procedure by which the sponsor of a defined benefit plan, other than a multiemployer plan, may request and obtain approval for the use of plan-specific substitute mortality tables in accordance with section 430(h)(3)(C) of the Code and section 303(h)(3)(C) of the Employee Retirement Income Security Act of 1974 (ERISA), as amended. Rev. Proc. 2007-37 updated.

This document contains a correction to final and temporary regulations (T.D. 9417, 2008-37 I.R.B. 693) relating to the averaging of farm and fishing income in computing income tax liability.

This document contains a correction to proposed regulations (REG-161695-04, 2008-37 I.R.B. 699) relating to the averaging of farm and fishing income in computing income tax liability.

This announcement contains clarification to filing procedures for Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, filed electronically. These changes are effective immediately. Announcement 2008-19 superseded.

Internal Revenue Service (IRS), Treasury.

Final regulations.

This document contains final regulations that provide guidance regarding certain changes made to the rules governing S corporations under the American Jobs Creation Act of 2004 and the Gulf Opportunity Zone Act of 2005. The final regulations replace obsolete references in the current regulations and allow taxpayers to make proper use of the provisions that made changes to prior law. The final regulations include guidance on the S corporation family shareholder rules, the definitions of “powers of appointment” and “potential current beneficiaries” (PCBs) with regard to electing small business trusts (ESBTs), the allowance of suspended losses to the spouse or former spouse of an S corporation shareholder, and relief for inadvertently terminated or invalid qualified subchapter S subsidiary (QSub) elections. The final regulations affect S corporations and their shareholders.

Effective Date: These regulations are effective on August 14, 2008.

Applicability Dates: For dates of applicability, see §§1.1361-4(a)(9)(ii), 1.1361-6, 1.1362-4(g) and 1.1366-5.

Charles J. Langley, Jr., (202) 622-3060 (not a toll-free number).

Accordingly, 26 CFR parts 1 and 602 are amended as follows:

The principal author of these regulations is Charles J. Langley, Jr. of the Office of Associate Chief Counsel (Passthroughs and Special Industries).

* * * * *

The Internal Revenue Service and Treasury Department are studying the proper treatment under section 382(h) of the Internal Revenue Code (Code) of certain items of deduction or loss allowed after an ownership change to a corporation that is a bank (as defined in section 581) both immediately before and after the change date (as defined in section 382(j)). As described below under the heading Reliance on Notice, such banks may rely upon this guidance unless and until there is additional guidance.

For purposes of section 382(h), any deduction properly allowed after an ownership change (as defined in section 382(g)) to a bank with respect to losses on loans or bad debts (including any deduction for a reasonable addition to a reserve for bad debts) shall not be treated as a built-in loss or a deduction that is attributable to periods before the change date.

Corporations described in section 1 of this notice may rely on the treatment set forth in this notice, unless and until there is additional guidance.

This notice does not address the application of any provision of the Code other than section 382.

The principal author of this notice is Mark S. Jennings of the Office of Associate Chief Counsel (Corporate). For further information regarding this notice, contact Mark S. Jennings at (202) 622-7750 (not a toll-free call).

This notice provides the static mortality tables to be used under § 430(h)(3)(A) of the Internal Revenue Code (Code) and § 303(h)(3)(A) of the Employee Retirement Income Security Act of 1974 (ERISA). These tables apply for purposes of calculating the funding target and other items for valuation dates occurring during calendar years 2009 through 2013.

This notice also includes a modified “unisex” version of the mortality tables for use in determining minimum present value under § 417(e)(3) of the Code and § 205(g)(3) of ERISA for distributions with annuity starting dates that occur during stability periods beginning in calendar years 2009 through 2013.

Section 412 of the Code provides minimum funding requirements that generally apply for defined benefit plans. The Pension Protection Act of 2006, Public Law 109-280 (PPA), makes extensive changes to those minimum funding requirements that generally apply for plan years beginning on or after January 1, 2008. Section 430, which was added by PPA, specifies the minimum funding requirements that apply to defined benefit plans that are not multiemployer plans pursuant to § 412. Section 430(a) defines the minimum required contribution for a defined benefit plan that is not a multiemployer plan by reference to the plan’s funding target for the plan year.

Section 430(h)(3) provides rules regarding the mortality tables to be 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 such 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)(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. These separate mortality tables are permitted to be used with respect to disabled individuals in lieu of the generally applicable mortality tables provided pursuant to § 430(h)(3)(A) or the substitute mortality tables under § 430(h)(3)(C).

On July 31, 2008, the IRS issued final regulations under § 430(h)(3), at 73 FR 44632 (T.D. 9419, 2008-40 I.R.B. 790). These regulations provide for mortality tables, based on the tables contained in the RP-2000 Mortality Tables Report^[1], adjusted for mortality improvement using Projection Scale AA as recommended in that report. Section 1.430(h)(3)-1 generally requires the use of separate tables for nonannuitant and annuitant 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) are permitted to use a combined table that applies the same mortality rates to both annuitants and nonannuitants.

Section 1.430(h)(3)-1 of the final regulations outlines the methodology that the IRS will use to establish mortality tables as provided under § 430(h)(3)(A). The mortality tables set forth in § 1.430(h)(3)-1 are based on expected mortality as of 2000 and reflect the impact of expected improvements in mortality. The regulations permit plan sponsors to apply the projection of mortality improvement in either of two ways: through use of static tables that are updated annually to reflect expected improvements in mortality, or through use of generational tables. The regulations include static mortality tables for use in actuarial valuations as of valuation dates occurring in 2008 and provide that the mortality tables for valuation dates occurring in future years are to be provided in the Internal Revenue Bulletin.

Section 1.412(l)(7)-1(a), issued February 2, 2007, provides that for plan years beginning on or after January 1, 2008, the mortality tables described in § 430(h)(3)(A) are to be used to determine current liability under § 412(l)(7) of the Code for nondisabled participants. This is relevant for plans for which the effective date of § 430 is delayed, pursuant to sections 104 through 106 of PPA.

Section 1.431(c)(6)-1 of the final regulations, issued July 31, 2008, provides that the same mortality assumptions that apply for purposes of § 430(h)(3)(A) and § 1.430(h)(3)-1(a)(2) are used to determine a multiemployer plan’s current liability for purposes of applying the full-funding rules of § 431(c)(6). For this purpose, a multiemployer plan is permitted to apply either the annually-adjusted static mortality tables or the generational mortality tables.

Section 417(e)(3) generally provides that the present value of certain benefits under a qualified pension plan (including single-sum distributions) cannot be less than the present value of the accrued benefit using applicable interest rates and the applicable mortality table. Under § 1.417(e)-1(d)(1), these rules must also be used to compute the present value of a plan benefit for purposes of determining whether consent for a distribution is required under § 411(a)(11)(A).

For plan years beginning on or after January 1, 2008, § 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.

Rev. Rul. 2007-67, 2007-48 I.R.B. 1047, provides that, except as otherwise stated in future guidance, the applicable mortality table under § 417(e)(3) for 2008 is based on a fixed blend of 50% of the static male combined mortality rates and 50% of the static female combined mortality rates promulgated under § 1.430(h)(3)-1(c)(3) of the proposed regulations (which have since been issued as final regulations). The applicable mortality table for purposes of § 417(e)(3) is not a generational table. Rev. Rul. 2007-67 also provides that the applicable mortality table for a given year applies to distributions with annuity starting dates that occur during stability periods that begin during that calendar year. Rev. Rul. 2007-67 further states that the § 417(e)(3) applicable mortality table for each subsequent year will be published in future guidance and, except as provided in that future guidance, will be determined from the § 430(h)(3)(A) tables on the same basis as the applicable mortality table for 2008. This notice sets forth the § 417(e)(3) applicable mortality table for distributions with annuity starting dates that occur during stability periods that begin during calendar years 2009 through 2013.

The static mortality tables that apply under § 430(h)(3)(A) for valuation dates occurring in years 2009 through 2013 are set forth in the appendix to this notice. The mortality rates in these tables have been developed from the base rates, projection factors, and weighting factors set forth in § 1.430(h)(3)-1, using the blending techniques described in the preamble to those regulations.

The static mortality tables that apply under § 417(e)(3) for distributions with annuity starting dates occurring during stability periods beginning in years 2009 through 2013 are set forth in the appendix to this notice in the column labeled “Unisex.” These tables were derived from the tables used for § 430(h)(3)(A) following the procedures set forth in Rev. Rul. 2007-67.

The principal author of this notice is Carolyn E. Zimmerman of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this notice, please contact Ms. Zimmerman at retirementplanquestions@irs.gov.

This notice provides guidance regarding an extension of the replacement period under § 1033(e) of the Internal Revenue Code for livestock sold on account of drought in specified counties.

.01 Nonrecognition of Gain on Involuntary Conversion of Livestock. Section 1033(a) generally provides for nonrecognition of gain when property is involuntarily converted and replaced with property that is similar or related in service or use. Section 1033(e)(1) provides that a sale or exchange of livestock (other than poultry) held by a taxpayer for draft, breeding, or dairy purposes in excess of the number that would be sold following the taxpayer’s usual business practices is treated as an involuntary conversion if the livestock is sold or exchanged solely on account of drought, flood, or other weather-related conditions.

.02 Replacement Period. Section 1033(a)(2)(A) generally provides that gain from an involuntary conversion is recognized only to the extent the amount realized on the conversion exceeds the cost of replacement property purchased during the replacement period. If a sale or exchange of livestock is treated as an involuntary conversion under § 1033(e)(1) and is solely on account of drought, flood, or other weather-related conditions that result in the area being designated as eligible for assistance by the federal government, § 1033(e)(2)(A) provides that the replacement period ends four years after the close of the first taxable year in which any part of the gain from the conversion is realized. Section 1033(e)(2)(B) provides that the Secretary may extend this replacement period on a regional basis for such additional time as the Secretary determines appropriate if the weather-related conditions that resulted in the area being designated as eligible for assistance by the federal government continue for more than three years. Section 1033(e)(2) is effective for any taxable year with respect to which the due date (without regard to extensions) for a taxpayer’s return is after December 31, 2002.

Notice 2006-82, 2006-2 C.B. 529, provides for extensions of the replacement period under § 1033(e)(2)(B). If a sale or exchange of livestock is treated as an involuntary conversion on account of drought and the taxpayer’s replacement period is determined under § 1033(e)(2)(A), the replacement period will be extended under § 1033(e)(2)(B) and Notice 2006-82 until the end of the taxpayer’s first taxable year ending after the first drought-free year for the applicable region. For this purpose, the first drought-free year for the applicable region is the first 12-month period that (1) ends August 31; (2) ends in or after the last year of the taxpayer’s 4-year replacement period determined under § 1033(e)(2)(A); and (3) does not include any weekly period for which exceptional, extreme, or severe drought is reported for any location in the applicable region. The applicable region is the county that experienced the drought conditions on account of which the livestock was sold or exchanged and all counties that are contiguous to that county.

A taxpayer may determine whether exceptional, extreme, or severe drought is reported for any location in the applicable region by reference to U.S. Drought Monitor maps that are produced on a weekly basis by the National Drought Mitigation Center. U.S. Drought Monitor maps are archived at www.drought.unl.edu/dm/archive.html.

In addition, Notice 2006-82 provides that the Internal Revenue Service will publish in September of each year a list of counties, districts, cities, or parishes (hereinafter “counties”) for which exceptional, extreme, or severe drought was reported during the preceding 12 months. Taxpayers may use this list instead of U.S. Drought Monitor maps to determine whether exceptional, extreme, or severe drought has been reported for any location in the applicable region.

The Appendix to this notice contains the list of counties for which exceptional, extreme, or severe drought was reported during the 12-month period ending August 31, 2008. Under Notice 2006-82, the 12-month period ending on August 31, 2008, is not a drought-free year for an applicable region that includes any county on this list. Accordingly, for a taxpayer who qualified for a four-year replacement period for livestock sold or exchanged on account of drought and whose replacement period is scheduled to expire at the end of 2008 (or, in the case of a fiscal year taxpayer, at the end of the taxable year that includes August 31, 2008), the replacement period will be extended under § 1033(e)(2) and Notice 2006-82 if the applicable region includes any county on this list. This extension will continue until the end of the taxpayer’s first taxable year ending after a drought-free year for the applicable region.

The principal author of this notice is Seoyeon Park of the Office of Associate Chief Counsel (Income Tax and Accounting). For further information regarding this notice, contact Ms. Park at (202) 622-4960 (not a toll-free call).

The Internal Revenue Service, the Department of Labor’s Employee Benefits Security Administration (“EBSA”), and the Pension Benefit Guaranty Corporation (“PBGC”) are providing relief in connection with certain employee benefit plans because of damage caused by Hurricane Ike (“Ike”). The relief provided by this notice is in addition to the relief already provided by the Service, EBSA, and the PBGC to victims of Ike.

A. Provisions Relating to Disaster Relief.

Section 7508A(b) of the Code provides that, in the case of a pension or other employee benefit plan, or any sponsor, administrator, participant, beneficiary, or other person with respect to such plan, affected by a Presidentially declared disaster or a terroristic or military action, the Secretary of the Treasury may prescribe a period of up to 1 year which may be disregarded in determining the date by which any action is required or permitted to be completed. No plan is to be treated as failing to be operated in accordance with its terms solely because the plan disregards any period by reason of such relief. Sections 518 and 4002(i) of the Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406 (“ERISA”) authorize the provision of parallel relief under Titles I and IV of ERISA.

B. Pre-Pension Protection Act of 2006. The following provisions apply to periods for which relevant changes made by the Pension Protection Act of 2006, Public Law 109-280 (120 Stat. 780) (“PPA”), do not apply (generally plan years beginning before January 1, 2008).

Section 412(a) of the Code and section 302(a) of ERISA provide that, in order for a plan to meet the minimum funding standards of the Code and ERISA, the plan must not have an accumulated funding deficiency as of the end of any plan year. Section 412(c)(10) of the Code and section 302(c)(10) of ERISA provide that, for purposes of satisfying the minimum funding requirements of the Code and ERISA, any contributions for a plan year made by an employer by the end of the 8¹/₂-month period following the end of such plan year are deemed to have been made on the last day of the plan year. For a plan with a 2007 calendar-year plan year, this 8¹/₂-month period ends on September 15, 2008.

Section 412(d) of the Code and section 303 of ERISA provide for waivers of the minimum funding requirements in the event of temporary substantial business hardship. In order for a plan other than a multiemployer plan to receive such a waiver, § 412(d)(4) of the Code and section 303(d)(1) of ERISA provide that an application for such a waiver must be submitted no later than the 15th day of the 3rd month beginning after the close of the plan year for which the waiver is sought. Thus, for example, in order for a plan to receive a waiver of the minimum funding requirements for a plan year that ended on June 30, 2008, the sponsor of the plan must have submitted an application by September 15, 2008.

Section 412(m)(1) of the Code and section 302(e)(1) of ERISA impose a higher rate of interest on any unpaid required quarterly installments for certain plans with a funded current liability percentage of less than 100 percent for the preceding plan year. Section 412(m)(5) of the Code and section 302(e)(5) of ERISA increase the required quarterly installments to the amount needed to prevent a liquidity shortfall (as defined in those sections). For a 12-month plan year beginning on October 1, 2007, the due dates for the required installments are January 15, 2008, April 15, 2008, July 15, 2008, and October 15, 2008.

Section 412(n) of the Code and section 302(f) of ERISA provide, for certain plans with a funded current liability percentage of less than 100 percent for the plan year, that a lien arises in favor of the plan if the required installments or any other payment required under those sections are not made to the plan before the due date for such installment or other payment and if the aggregate unpaid balance of such installments or other payments exceeds $1,000,000. The lien may be perfected by the PBGC.

Under the PBGC’s premium regulations, contributions may be taken into account for determining a plan’s unfunded vested benefits for a premium payment year or a plan’s entitlement to the full funding limit exemption from the variable-rate premium for a premium payment year if the contributions (1) are for a plan year before the premium payment year and (2) are made on or before the earlier of (a) the due date for payment of the variable-rate premium or (b) the date the variable-rate premium is paid (29 CFR §§ 4006.4(b)(2)(iv) and 4006.5(a)(5)). In addition, there are Title IV reporting requirements arising from certain late contributions (e.g., 29 CFR § 4043.25).

C. Post-PPA (Single Employer Pension Plans). The following provisions apply to periods for which relevant changes made by PPA apply (generally plan years beginning after December 31, 2007).

Section 412(a) of the Code and section 302(a) of ERISA require that an employer that sponsors a single employer pension plan contribute the minimum required contribution determined under § 430 of the Code and section 303 of ERISA (or, in the case of a money purchase plan, as required under the terms of the plan) for the plan year. Section 430(j)(1) of the Code and section 303(j)(1) of ERISA provide that the due date for payment of the minimum required contribution for a plan year is 8¹/₂-months after the close of the plan year.

Section 412(c) of the Code and section 302(c) of ERISA provide for waivers of the minimum funding requirements in the event of temporary substantial business hardship. In order for a plan other than a multiemployer plan to receive such a waiver, § 412(c)(5) of the Code and section 302(c)(5) of ERISA provide that an application for such a waiver must be submitted no later than the 15th day of the 3rd month beginning after the close of the plan year for which the waiver is sought. Thus, for example, in order for a plan to receive a waiver of the minimum funding requirements for the plan year beginning January 1, 2008, and ending June 30, 2008, the sponsor of the plan must have submitted an application by September 15, 2008.

Section 430(j)(3) of the Code and section 303(j)(3) of ERISA impose a higher rate of interest with respect to late quarterly installments for a plan with a funding shortfall for the prior plan year. Section 430(j)(4) of the Code and section 303(j)(4) of ERISA increase the quarterly installments to the amount needed to prevent a liquidity shortfall (as defined in those sections). For a plan with a calendar-year plan year, the due dates for the required quarterly installments for the 2008 plan year are April 15, 2008, July 15, 2008, October 15, 2008, and January 15, 2009.

Section 430(k) of the Code and section 303(k) of ERISA provide, for certain plans with a funding target attainment percentage of less than 100 percent for the plan year, that a lien arises in favor of the plan if the required installments or any other payment required under those sections are not made to the plan before the due date for such installment or other payment and if the aggregate unpaid balance of such installments or other payments exceeds $1,000,000. The lien may be perfected by the PBGC.

Section 436 of the Code and section 206(g) of ERISA impose certain benefit restrictions that are applied based on a plan’s adjusted funding target attainment percentage for the plan year. For this purpose, § 436(h)(2) of the Code and section 206(g)(7)(B) of ERISA provide that a plan’s adjusted funding target attainment percentage for the plan year is conclusively presumed to be less than 60 percent from the first day of the 10^th month of the plan year through the end of the plan year if no certification of the adjusted funding target attainment percentage for the plan year is made before the first day of the 10^th month of the plan year. For a plan with a 2008 calendar-year plan year, the deadline for this certification is September 30, 2008. Section 436(h)(3) of the Code and section 206(g)(7)(C) of ERISA require, in certain cases in which no certification of the adjusted funding target attainment percentage for a plan year is made before the first day of the 4^th month of such year, that the plan’s adjusted funding target attainment percentage is presumed to be equal to 10 percentage points less than the adjusted funding target attainment percentage for the preceding plan year for a period of time beginning on the first day of the 4^th month. For a plan year beginning July 1, 2008, the deadline for this certification is September 30, 2008.

Section 101(j)(1) of ERISA provides that the plan administrator of a single employer plan is required to provide written notice to participants and beneficiaries within 30 days after the date the plan has become subject to a benefit restriction under section 206(g)(1) of ERISA (under which the payment of certain unpredictable contingent event benefits is restricted) or section 206(g)(3) of ERISA (under which the payment of certain accelerated benefit distributions is restricted). Section 101(j)(2) of ERISA provides that, for a single employer plan under which benefit accruals are restricted under section 206(g)(4) of ERISA because the plan’s adjusted funding target attainment percentage is less than 60 percent, the plan administrator is required to provide written notice to participants and beneficiaries within 30 days after the earlier of the plan’s valuation date or the date the adjusted funding target attainment percentage is presumed to be less than 60 percent for the plan year pursuant to section 206(g)(7)(B) of ERISA.

Under the PBGC’s premium regulations, contributions may be taken into account for determining a plan’s unfunded vested benefits for a premium payment year if the contributions (1) are for a plan year before the premium payment year and (2) are made on or before the earlier of (a) the due date for payment of the variable-rate premium or (b) the date the variable-rate premium is paid (29 CFR § 4006(c)). In addition, there are Title IV reporting requirements arising from certain late contributions (e.g., 29 CFR § 4043.25).

D. Post-PPA (Multiemployer Defined Benefit Plans). The following provisions apply to periods for which relevant changes made by PPA apply.

Section 432(b)(3)(A) of the Code and section 305(b)(3)(A) of ERISA provide special rules for certain multiemployer defined benefit plans. For a plan that is subject to those requirements, the plan actuary must certify whether or not the plan is in endangered status for the plan year, whether or not the plan is or will be in critical status for the plan year, and, in the case of a plan which is in a funding improvement or rehabilitation period, whether or not the plan is making the scheduled progress in meeting the requirements of its funding improvement or rehabilitation plan. The deadline for this certification for a plan year is the 90th day of the plan year. Section 432(c)(1) of the Code and section 305(c)(1) of ERISA require, for the first plan year that a multiemployer plan is in endangered status, that the plan sponsor adopt a funding improvement plan no later than 240 days following the required date for the actuarial certification of endangered status. Section 432(e)(1) of the Code and section 305(e)(1) of ERISA require, for the first plan year that a multiemployer plan is in critical status, that the plan sponsor adopt a rehabilitation plan no later than 240 days following the required date for the actuarial certification of critical status. For a multiemployer plan that is in endangered or critical status for its 2008 calendar-year plan year, this date is November 25, 2008.

Pursuant to § 7508A(b) of the Code, the relief set forth in this Part III applies to an Affected Plan. A plan is an Affected Plan only if any of the following were located in the counties of Brazoria, Chambers, Galveston, Harris, Jefferson, Liberty, Montgomery, or Orange in the State of Texas as of September 7, 2008: the principal place of business of the employer that maintains the plan (in the case of a single employer plan, determined disregarding the rules of § 414(b) and (c) of the Code); the principal place of business of employers that employ more than 50 percent of the active participants covered by the plan (in the case of a plan covering employees of more than one employer, determined disregarding the rules of § 414(b) and (c)); the office of the plan or the plan administrator; the office of the primary record keeper serving the plan; or the office of the enrolled actuary or other advisor that had been retained by the plan or the employer to make funding determinations or certifications for which the due date falls between the period beginning on September 7, 2008, and ending on December 15, 2008. For purposes of the preceding sentence, the term “office” includes only the worksite of those individuals, and the location of any records, necessary to determine the plan’s funding requirements for the relevant period.

A. Pre-PPA. The following relief applies to periods for which relevant changes made by PPA do not apply (generally plan years beginning before January 1, 2008).

For any plan that is an Affected Plan, if the date described in § 412(c)(10) or 412(m) of the Code and section 302(c)(10) or 302(e) of ERISA for making a contribution falls within the period beginning on September 7, 2008, and ending on December 15, 2008, then the deadline for that contribution is postponed to December 15, 2008. If the deadline described in § 412(d)(4) of the Code and section 303(d)(1) of ERISA for applying for a waiver for an Affected Plan falls within the period beginning on September 7, 2008, and ending on December 15, 2008, then that deadline is postponed to December 15, 2008.

The relief set forth in this paragraph applies under Title IV of ERISA for purposes of determining a plan’s unfunded vested benefits for a premium payment year or entitlement to the full funding limit exemption from the variable-rate premium for a premium payment year. For any plan for which this notice extends a date described in § 412(c)(10) of the Code and section 302(c)(10) of ERISA, a contribution for any plan year before the premium payment year may be taken into account if it is made on or before the earlier of (1) the extended § 412(c)(10)/section 302(c)(10) date under this notice or (2) the date of the plan’s variable-rate premium filing (or, if applicable, the plan’s amended variable-rate premium filing) for the premium payment year.

B. Post-PPA (Single Employer Pension Plans). The following relief applies to periods for which relevant changes made by PPA apply (generally plan years beginning after December 31, 2007).

For any plan that is an Affected Plan, if the date described in § 430(j)(1) or 430(j)(3) of the Code and section 303(j)(1) or 303(j)(3) of ERISA for making a contribution falls within the period beginning on September 7, 2008, and ending on December 15, 2008, then the date for that contribution is postponed to December 15, 2008. If the date described in § 412(c)(5) of the Code and section 302(c)(5) of ERISA for applying for a waiver for an Affected Plan falls within the period beginning on September 7, 2008, and ending on December 15, 2008, then that deadline is postponed to December 15, 2008. If the date described in § 436(h)(2) or 436(h)(3) of the Code and section 206(g)(7)(B) or 206(g)(7)(C) of ERISA for certification of the adjusted funded target attainment percentage falls within the period beginning on September 7, 2008, and ending on December 15, 2008, then the date by which such certification must be made is postponed to December 15, 2008.

With respect to any plan that is an Affected Plan, if the deadline for furnishing a notice required under section 101(j)(1) or (2) of ERISA falls within the period beginning on September 7, 2008, and ending on December 15, 2008, then the date by which such notice must be furnished is postponed to December 15, 2008.

The relief set forth in this paragraph applies under Title IV of ERISA for purposes of determining a plan’s unfunded vested benefits for a premium payment year or the variable-rate premium for a premium payment year. For any plan for which this notice extends a date described in § 430(j)(1) of the Code and section 303(j)(1) of ERISA, a contribution for any plan year before the premium payment year may be taken into account if it is made on or before the earlier of (1) the extended § 430(j)(1)/section 303(j)(1) contribution due date under this notice or (2) the date of the plan’s variable-rate premium filing (or, if applicable, the plan’s amended variable-rate premium filing) for the premium payment year.

C. Post-PPA (Multiemployer Defined Benefit Plans).

If the deadline described in § 432(c)(1) or 432(e)(1) of the Code and section 305(c)(1) or 305(e)(1) of ERISA by which a plan sponsor of an Affected Plan that is in endangered or critical status must adopt a funding improvement plan or a rehabilitation plan falls within the period beginning on September 7, 2008, and ending on December 15, 2008, then that deadline is postponed to December 15, 2008. For any plan that is an Affected Plan, if the date described in § 432(b)(3)(A) of the Code and section 305(b)(3)(A) of ERISA by which the plan actuary must certify whether or not the plan is in endangered status for the plan year and whether or not the plan is or will be in critical status for the plan year falls within the period beginning on September 7, 2008, and ending on December 15, 2008, then the date by which that certification must be made is postponed to December 15, 2008. If the date by which a certification of an Affected Plan’s status is postponed in accordance with the preceding sentence, the date described in § 432(c)(1) or 432(e)(1) of the Code and section 305(c) or 305(e) of ERISA by which the plan sponsor of an Affected Plan that is in critical or endangered status must adopt a funding improvement plan or a rehabilitation plan nonetheless continues to be determined based on the original deadline for the certification of the plan’s status.

The principal authors of this notice are David Ziegler and Roger Kuehnle of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this notice, please contact the Employee Plans’ taxpayer assistance telephone service at 1-877-829-5500, between the hours of 8:00 a.m. and 4:30 p.m. Eastern Time, Monday through Friday (a toll-free number). Mr. Ziegler and Mr. Kuehnle can be contacted via e-mail at RetirementPlanQuestions@irs.gov.

This notice amends and supplements Notice 2008-41, 2008-15 I.R.B. 742 (April 14, 2008), regarding reissuance standards for tax-exempt bonds. (Defined terms in Notice 2008-41 shall have the same meanings when used in this notice.) This notice expands the circumstances and time periods during which the Treasury Department and the Internal Revenue Service (“IRS”) will treat a tax-exempt bond that is purchased by its state or local governmental issuer as continuing in effect without resulting in a reissuance or retirement of the purchased tax-exempt bond solely for purposes of § 103 and §§ 141 through 150 of the Internal Revenue Code, as amended (“Code”). (Except as noted, section references in this notice are to the Code and the Income Tax Regulations.) This notice is intended to provide flexibility to assist state and local governments in efforts to facilitate liquidity and stability in the short-term sector of the tax-exempt bond market.

In response to auction failures and liquidity constraints in the auction rate bond sector of the tax-exempt bond market, § 4 of Notice 2008-41 provides a special temporary rule which allows governmental issuers to purchase their own tax-exempt auction rate bonds on a temporary basis without resulting in a reissuance or retirement of the purchased tax-exempt bonds solely for purposes of § 103 and §§ 141 to 150. To be eligible for that special rule, a governmental issuer must purchase the tax-exempt auction rate bonds before October 1, 2008, and hold those bonds for not more than a 180-day period from the date of purchase.

Recently, circumstances affecting liquidity and stability in the credit markets have extended beyond the auction rate bond sector to affect other sectors of the short-term tax-exempt bond market, including other “qualified tender bonds” (as defined in § 3.2 of Notice 2008-41) (e.g., variable rate demand bonds with seven-day put options) and tax-exempt commercial paper. In the case of commercial paper, a special rule under § 1.150-1(c)(4)(ii) allows certain short-term tax-exempt bonds issued pursuant to the same commercial paper program to be treated as part of the same issue. For purposes of this notice, references to “tax-exempt commercial paper” means tax-exempt bonds issued pursuant to the same commercial paper program that are treated as a single issue under this special rule in § 1.150-1(c)(4)(ii).

This notice expands the circumstances and time periods during which governmental issuers may purchase their own tax-exempt bonds to include the purchase and holding of all qualified tender bonds and tax-exempt commercial paper through the end of 2009. This notice also extends certain other time deadlines for special rules in Notice 2008-41.

3.1 Expanded Temporary Rule Allowing Governmental Issuers to Purchase Their Own Tax-Exempt Bonds. Solely for purposes of § 103 and §§ 141 through 150, the Treasury Department and the IRS will treat a tax-exempt “qualified tender bond” (as defined in Notice 2008-41) or “tax-exempt commercial paper” (as defined in § 2 of this notice) that is purchased by its “governmental issuer” (as defined in Notice 2008-41) on a temporary basis as continuing in effect without resulting in a reissuance or retirement of the purchased tax-exempt bond if, irrespective of when the governmental issuer purchases the bond (including a purchase of a bond before October 1, 2008), the governmental issuer holds the bond until not later than December 31, 2009. Subsequent to the end of this period, a governmental issuer generally may not hold its own bond without causing a reissuance or retirement of such bond under the general rules in § 3.1 of Notice 2008-41 and other applicable law.

Thus, recognizing that the purchased bond is treated as continuing in effect without resulting in a reissuance or retirement of that bond solely for purposes of § 103 and §§ 141 through 150 during the permitted holding period until not later than December 31, 2009 (“permitted holding period”), the governmental issuer may refund the purchased bond with a refunding bond, tender the purchased bond for purchase in a qualified tender right in its capacity as a bondholder, or otherwise resell the purchased bond during this permitted holding period. Further, in the case of the purchase of any particular obligation of tax-exempt commercial paper, including a purchase of such a particular obligation at maturity, a refinancing of that purchased tax-exempt commercial paper during the permitted holding period will be treated as part of the same issue as the issue of which the purchased tax-exempt commercial paper was a part. After the end of this permitted holding period, however, a governmental issuer generally may not hold its own bond without causing a reissuance or retirement of such bond under the general rules in Notice 2008-41 and other applicable law.

3.2 Extension of Certain Other Time Limits for Special Rules in Notice 2008-41. Section 3.2(3)(b) of Notice 2008-41 regarding operating rules for qualified tender rights is amended to extend the final date for purchase of bonds pursuant to qualified tender rights for which the special 180-day holding period applies (in lieu of the general 90-day holding period rule for this purpose) from October 1, 2008 to December 31, 2009. Section 6.2 of Notice 2008-41 regarding the treatment of certain waivers of interest rate caps on tax-exempt auction rate bonds is amended to extend the final date on which covered waivers of interest rate caps are disregarded from October 1, 2008 to December 31, 2009.

3.3 No Inferences on Law. This notice provides administrative relief in furtherance of public policy to promote liquidity and stability in the short-term tax-exempt bond market. Except with respect to the administrative relief expressly provided in this notice, no inference should be drawn from this notice regarding any other Federal tax issues affecting tax-exempt bonds or any other security. In addition, this notice is not intended to address any other Federal tax issue implicated in the transactions described in this notice allowing governmental issuers to purchase their own tax-exempt bonds on a temporary basis in prescribed circumstances.

This notice amends and supplements Notice 2008-41.

This notice is effective as of March 25, 2008, which is the effective date of Notice 2008-41. Issuers of tax-exempt bonds may apply and rely on this notice to the same extent and in the same manner as provided in § 8 of Notice 2008-41.

The principal author of this notice is Timothy L. Jones, of the Office of Associate Chief Counsel (Financial Institutions and Products). However, other personnel from the IRS and the Treasury Department participated in its development. For further information regarding this notice, contact Mr. Jones at (202) 622-3980 (not a toll-free call).

This revenue procedure modifies and amplifies Rev. Proc. 2008-3, 2008-1 I.R.B. 110, with respect to areas in which rulings and determination letters will not be issued as to the tax consequences of arrangements described in § 409A of the Internal Revenue Code. As described below, this revenue procedure does not provide for the Service to issue rulings on the application of § 409A to nonqualified deferred compensation plans, but does provide for the issuance of rulings in other areas with respect to compensation plans that may be covered by § 409A.

.01 Section 5 of Rev. Proc. 2008-3 lists specific areas for which the Internal Revenue Service (Service) temporarily is not issuing rulings and determinations because those matters are under study.

.02 Section 3.01 of Rev. Proc. 2008-3 reflects those areas in which rulings or determination letters will not be issued with respect to specific questions and problems.

.03 Section 5.08 of Rev. Proc. 2008-3 provides that the Service will not rule on the tax consequences of arrangements described in § 409A, including rulings as to whether an arrangement is an arrangement described in § 409A.

.04 Section 409A provides certain requirements applicable to nonqualified deferred compensation plans. If a plan does not meet those requirements, participants in the plan are required to immediately include amounts deferred under the plan in income and pay additional taxes on such income.

.05 The Treasury Department and the Service have issued final regulations under § 409A (T.D. 9321, 2007-19 I.R.B. 1123 [72 Fed. Reg. 19234] (April 17, 2007)). The final regulations apply to taxable years beginning on or after January 1, 2009. Notice 2007-86, 2007-46 I.R.B. 990. The final regulations define the terms nonqualified deferred compensation plan and deferral of compensation for purposes of § 409A. See § 1.409A-1(a) & (b).

.06 Since publication of the final regulations, the Treasury Department and Service have issued Notice 2007-100, 2007-52 I.R.B. 1243, providing transitional relief and guidance on the correction of certain failures of a nonqualified deferred compensation plan to comply with § 409A in operation. Section V of Notice 2007-100 requests comments on all aspects of a potential corrections program in which taxpayers could correct certain failures to comply with § 409A(a) in the operation of a nonqualified deferred compensation plan.

.07 Based on experience with the private letter ruling program, the Service has determined that section 5.08 of Rev. Proc. 2008-3 unnecessarily restricts the ability of the Service to issue private letter rulings under Rev. Proc. 2008-1, 2008-1 I.R.B. 1 and Rev. Proc. 2008-4, 2008-1 I.R.B. 121. For example, the existing no-rule policy prevents the Service from issuing private letter rulings with respect to estate and gift tax consequences of proposed inter vivos or testamentary transfers of rights under nonqualified deferred compensation plans, even though such issues do not directly involve the application of § 409A. Also, the Service has been unable to issue private letter rulings concerning issues arising under the Federal Insurance Contributions Act (FICA) with respect to nonqualified deferred compensation.

.08 In light of the final regulations becoming applicable on January 1, 2009, and the issuance of Notice 2007-100, the Service has decided to modify and amplify Rev. Proc. 2008-3. The Service will continue not to issue rulings concerning the income tax consequences of establishing, operating, or participating in a nonqualified deferred compensation plan described in § 409A, but the Service generally will rule on the application of certain other tax law provisions (such as FICA and estate and gift taxes) to taxpayers who participate in those plans. Specifically, rulings will not be issued with respect to the following: the income tax (including income tax withholding) consequences of establishing, operating, or participating in a nonqualified deferred compensation plan as defined in § 1.409A-1(a); whether a plan is described in § 1.409A-1(a)(3)(iv) (certain plans subject to a totalization agreement and similar plans) or § 1.409A-1(a)(3)(v) (certain broad-based foreign retirement plans); whether a plan is a bona fide vacation leave, sick leave, or compensatory time plan described in § 1.409A-1(a)(5); and whether a plan provides for the deferral of compensation under § 1.409A-1(b) (including whether an amount is a short-term deferral and whether certain stock rights, foreign plans, and separation pay plans are subject to § 409A).

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 whether a plan provides for the deferral of compensation under § 1.409A-1(b).

Rev. Proc. 2008-3 is modified and amplified.

This revenue procedure applies to rulings and determination letters issued after September 25, 2008.

The principal author of this revenue procedure is Bill Schmidt of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt & Government Entities). For further information regarding this revenue procedure, contact Mr. Schmidt at (202) 622-6030 (not a toll-free call).

.01 The purpose of this revenue procedure is to set forth the procedure by which the sponsor of a defined benefit plan, other than a multiemployer plan, may request and obtain approval for the use of plan-specific substitute mortality tables in accordance with § 430(h)(3)(C) of the Internal Revenue Code (Code) and § 303(h)(3)(C) of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

.02 This revenue procedure is an update of Rev. Proc. 2007-37, 2007-25 I.R.B. 1433. Rev. Proc. 2007-37 was based on the proposed regulations issued under § 430(h)(3)(C) of the Code and § 303(h)(3)(C) of ERISA published in the Federal Register on May 29, 2007, at 72 FR 29456 [REG-143601-06, 2007-24 I.R.B. 1398] (“proposed regulations”). Final regulations under § 430(h)(3)(C) were published in § 1.430(h)(3)-2 in the Federal Register on July 31, 2008, at 73 FR 44632 [T.D. 9419, 2008-40 I.R.B. 790] (“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 conform to the language in the final regulations.

.01 Section 412 of the Code provides minimum funding requirements for defined benefit pension plans. Section 430, which was added by the Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780 (“PPA ’06”), specifies the minimum funding requirements for defined benefit plans other than multiemployer plans pursuant to § 412 and is generally effective for plan years beginning on or after January 1, 2008. Section 430(h)(3)(A) sets forth rules regarding the use of generally applicable mortality tables for purposes of § 430. Section 430(h)(3)(C) and § 303(h)(3)(C) of ERISA provide that the Secretary of the Treasury may approve substitute mortality tables to be used in determining any present value or making any computation under those sections for a period not to exceed ten years. Mortality tables meet the requirements for substitute mortality tables if the pension plan has a sufficient number of plan participants and the plan has been maintained for a sufficient period of time in order to have credible mortality experience, and such tables reflect the actual experience of the plan and projected trends in general mortality experience of participants in pension plans. Except as provided by the Secretary, a plan sponsor cannot use substitute mortality tables for any plan unless substitute mortality tables are established and used for each other plan subject to § 430 of the Code that is maintained by the plan sponsor and the plan sponsor’s controlled group.

.02 Section 1.430(h)(3)-1 of the Income Tax Regulations, which sets forth rules regarding the use of generally applicable mortality tables for purposes of § 430, and § 1.430(h)(3)-2, which sets forth rules for the use of substitute mortality tables under § 430(h)(3)(C), were published in the Federal Register in proposed form on May 29, 2007. Rev. Proc. 2007-37 was issued to provide procedures under which sponsors of eligible plans could request and obtain approval for plan-specific mortality tables in accordance with proposed regulation § 1.430(h)(3)-2. Final regulations 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.

Development of a substitute mortality table under the regulations requires creation of a base table (Base Table) and identification of a base year (Base Year), which are then used to determine generational substitute mortality tables. The Base Table must be developed from a study of the mortality experience of the plan using amounts-weighted data. The regulations also set forth rules regarding development of amounts-weighted mortality rates for an age and the determination of the Base Year. The regulations provide that amounts-weighted mortality rates may be derived from amounts-weighted mortality rates for age groups.

The regulations provide that Base Tables may be constructed either directly through graduation of amounts-weighted mortality rates or indirectly by applying a level percentage to tables prescribed by § 430(h)(3)(A), provided that the resulting tables sufficiently reflect the plan’s mortality experience. The Service may permit the construction of Base Tables through application of a level percentage to other recognized mortality tables, applying similar standards to ensure that the resulting tables are sufficiently reflective of the plan’s mortality experience.

The final regulations provide that a plan sponsor cannot use substitute mortality tables for any plan for a plan year unless substitute mortality tables are established and used for each other plan subject to § 430 that is maintained by the plan sponsor and the plan sponsor’s controlled group for that plan year (or, for plans with different plan years, a portion of that plan year). Under the regulations, the use of substitute mortality tables for one plan would not be prohibited merely because another plan maintained by the plan sponsor (or by a member of the plan sponsor’s controlled group) cannot use substitute mortality tables because neither the males nor the females under that other plan have credible mortality experience for a plan year. Thus, if a sponsor’s controlled group maintains two pension plans subject to § 430, each of which has credible mortality experience for at least one gender, then either both plans must obtain approval from the Service to use substitute mortality tables or neither plan may use substitute mortality tables. By contrast, if, for one of those plans, neither males nor females have credible mortality experience, then the plan without credible mortality experience will not interfere with the ability of the plan with credible mortality experience to use substitute mortality tables.

.01 Compliance with Regulations. Requests submitted on or after December 1, 2008, must satisfy the requirements of final regulation § 1.430(h)(3)-2 and this Rev. Proc. 2008-62. Requests submitted before December 1, 2008, may either satisfy those requirements or, alternatively, may satisfy the requirements of proposed regulation § 1.430(h)(3)-2 and Rev. Proc. 2007-37.

.02 Submission. Requests for the use of substitute mortality tables must be submitted to:

The user fee required by paragraph (10) of subsection 6.01 of Rev. Proc. 2008-8, 2008-1 I.R.B. 233, or its successors, must be sent with such requests.

.03 Necessary Procedural Documents. A request will not be considered unless it complies with paragraphs (1) through (3) of this subsection 3.03, below.

(1) The request (and any subsequently provided additional information) must be signed by the employer maintaining the plan(s) (the “applicant”) or an authorized representative of the applicant who must be identified in (a), (b), (c), (d) or (e) of paragraph (11) of subsection 9.02 of Rev. Proc. 2008-4, 2008-1 I.R.B. 121, or its successors. Where an authorized representative signs the request or will appear before the Service in connection with the request, a properly signed and dated Form 2848, Power of Attorney and Declaration of Representative, must be submitted with the request.An individual is not an authorized representative of the applicant merely on account of being the administrator or trustee of the plan.

(2) The request also must contain a declaration in the following form: “Under penalties of perjury, I declare that I have examined this request, or this modification to the request, including accompanying documents, and, to the best of my knowledge and belief, the request or the modification contains all the relevant facts relating to the request, and such facts are true, correct, and complete.” This declaration must be signed by the applicant (e.g., an authorized officer of a corporation). The signature of an individual with a power of attorney will not suffice for the declaration. See paragraph (13) of subsection 9.02 of Rev. Proc. 2008-4.

(3) Because a request for the use of substitute mortality tables constitutes a request for a ruling, compliance with § 6110 of the Code is also required. Section 601.201 of the Statement of Procedural Rules sets forth the requirements applicable to requests for rulings and determination letters which are subject to § 6110. Section 601.201(e) furnishes specific instructions to applicants.

The applicant must provide with the request either a statement of proposed deletions and the statutory basis for each proposed deletion, or a statement that no information other than names, addresses, and taxpayer identifying numbers need be deleted.

.04 Checklist. A checklist has been provided in Appendix A, which must be signed and dated by the applicant or authorized representative and placed on top of the request.

.01 In General. A request for the use of substitute mortality tables generally must be submitted at least 7 months prior to the first day of the first plan year for which the substitute mortality tables are to apply. Thus, for example, if the first plan year to which substitute mortality tables are to apply is the plan year that begins January 1, 2010, then the deadline is June 1, 2009. Notwithstanding the generally applicable deadline, a request to use substitute mortality tables for a plan year that begins during 2009 is timely if it is submitted on or before October 1, 2008.

.02 Incomplete Requests. Generally, an incomplete request for the use of substitute mortality tables will be summarily denied absent mutual agreement of the Service and the applicant to extend the 180-day period specified under § 430(h)(3)(C)(v)(II). Except as provided in subsection 5.06 of this revenue procedure, the applicant should not assume that the Service will agree to extend the 180-day period for a request that does not include substantially all of the applicable information specified in sections 5 through 13 of this revenue procedure.

.01 The Service will deny a request if the request fails to meet the requirements of this revenue procedure or if the Service determines that a substitute mortality table does not sufficiently reflect the mortality experience of the applicable plan population.

.02 If separate mortality tables are used for disabled individuals pursuant to § 430(h)(3)(D), then those individuals are disregarded for all purposes under this revenue procedure.

.03 A separate request must be made with respect to each plan (the “Plan”), or group of plans that are permissively aggregated (the “Permissive Group”), for which the use of a substitute mortality table or tables is requested. The request must include a complete copy of the Base Tables that will form the basis for the substitute mortality tables that will be used. The request must state the first day of the first plan year for which the substitute mortality tables are to be applicable (the “Requested Effective Plan Year”) and must state the term of years (not more than 10) that the tables are requested to be used.

Each request also must identify the Base Year of the Base Tables. Under § 1.430(h)(3)-2(c)(2)(iii), the base year is the calendar year that contains the day before the midpoint of the Experience Study Period. For example, if an Experience Study Period consists of the 5-consecutive-year period beginning July 1, 2006, and ending June 30, 2011, the midpoint of the Experience Study Period is January 1, 2009, and the Base Year is 2008. If the Experience Study Period reflects different plan years for plans within the Permissive Group as described in subsection 7.03, the midpoint is determined taking into account the total number of years and months reflected in the Experience Study Period.

.04 The request must include a description of the populations within the Plan (or the Permissive Group) for which the use of substitute mortality tables is requested and a description of the populations, if any, for which the use of substitute mortality tables is not requested.

For example, if the use of substitute mortality tables is requested for nondisabled female individuals (but for no other individuals) where separate mortality tables are used for disabled individuals pursuant to § 430(h)(3)(D), then the population for whom the use of substitute mortality tables is requested would be described as “Nondisabled Females” and the population for whom the use of substitute mortality tables is not requested would be described as “Nondisabled Males.”

Similarly, if the use of substitute mortality tables is requested for male annuitants (but not male nonannuitants) and for females on a combined annuitant/nonannuitant basis, in each case including disabled individuals, then the populations for whom the use of substitute mortality tables is requested would be described as “Male Annuitants” and “Females,” and the population for whom the use of substitute mortality tables is not requested would be described as “Male Nonannuitants.”

.05 The request must include the plan identification information described in Section 6, the credible mortality experience demonstrations described in Section 7, the stability demonstrations described in Section 8, the lack of credible mortality experience demonstrations described in Section 9, the unadjusted mortality experience described in Section 10, the Base Table construction methods as set forth in Section 11 or 12, and the demonstrations with respect to the Base Tables described in Section 13.

.06 If there are other plans subject to § 430 maintained by the applicant, or members of the applicant’s controlled group, that have credible mortality experience for which the use of substitute mortality tables will be requested in a separate request, then the Service will not summarily deny the request for the use of substitute mortality tables on the grounds that all plans with credible mortality experience maintained by the applicant would not be using substitute mortality tables, but only if the applicant requests that the 180-day review period provided under § 430(h)(3)(C)(v)(II) not begin for the initial request and any such separate request until the date all such separate requests have been received, and only if those separate requests are submitted within 90 days after the receipt of the initial request (and no later than the deadline that applies to each such separate request under section 4 of this revenue procedure). In the absence of such a request for a delay in the start of the 180-day review period, or if all such separate requests are not submitted within 90 days after the receipt of the initial request, the Service will summarily deny the request for the use of substitute mortality tables on the grounds that all plans with credible mortality experience maintained by the applicant would not be using substitute mortality tables.

Example. Employer E maintains Plans A and B, both of which are calendar year plans that have each had over 2,500 deaths in each of the last five years. Employer E submits a request for the use of substitute mortality tables for Plan A for the 2010 plan year that is received on February 15, 2009 (the “A Request”). To avoid denial of the A Request on the grounds that all plans with credible mortality experience maintained by the applicant would not be using substitute mortality tables, Employer E requests that the 180-day review period of the A Request not begin until the receipt of a separate request for the 2010 plan year from Employer E for the use of substitute mortality tables by Plan B. The Service agrees to defer commencement of the 180-day period, but will summarily deny the application unless Employer E submits a separate request for the use of substitute mortality tables for Plan B no later than May 15, 2009.

.07 If two or more plans are permissively aggregated for the purpose of constructing substitute mortality tables, then such plans are treated as a single plan for all purposes of this revenue procedure. Accordingly, if two or more plans are permissively aggregated, then all populations within the plans must be so aggregated.

Example. Employer F maintains Plans C, D, and E, each of which had 500 male deaths and 100 female deaths in each of the last five years. Employer F may request to use one substitute male mortality table and one substitute female mortality table for the aggregation of Plans C, D, and E. However, Employer F may not aggregate Plans C, D, and E and request to use one substitute female mortality table for Plans C, D, and E, and three separate substitute male mortality tables for Plans C, D, and E.

.01 The following plan information must be provided for the Plan (or for each plan within the Permissive Group) for which the use of substitute mortality tables is requested:

(1) Plan name;

(2) Plan number;

(3) Plan year (i.e., calendar, or if fiscal, the first and last day);

(4) Employer identification number;

(5) Date of plan establishment; and

(6) Copies of the actuarial valuation reports for each plan year which begins or ends during the Experience Study Period as defined in section 7 of this revenue procedure.

.02 The following information must be provided for each plan that is subject to § 430 maintained by the applicant, or members of the applicant’s controlled group, for which the use of substitute mortality tables is not requested:

(1) Plan name;

(2) Plan number;

(3) Plan year (i.e., calendar, or if fiscal, the first and last day);

(4) Employer identification number;

(5) Date of plan establishment;

(6) If the plan is a newly affiliated plan under § 1.430(h)(3)-2(d)(1)(iii)(B), the date of the merger, acquisition, or similar transaction described in § 1.410(b)-2(f), and the last day of the plan year described in § 1.430(h)(3)-2(d)(1)(iii)(A); and

(7) The Lack of Credible Mortality Experience Demonstration Period, or, if the plan is not required to identify such a period, the applicable exception. (See section 9 of this revenue procedure.)

.03 The following additional information must be provided with respect to each plan that is subject to § 430 that is maintained by the applicant, or member of the applicant’s controlled group, that was spun off from another plan that is maintained by the applicant within the five-year period preceding the date of the request:

(1) The plan name and the plan number of the spun off plan, and the plan name and number of the plan from which the spinoff occurred;

(2) The employer identification number of the employer maintaining the spun off plan and the employer identification number of the employer maintaining the plan from which the spinoff occurred;

(3) The date of the spinoff;

(4) The approximate number of individuals covered by the spun off plan as of the date of the spinoff and the approximate number of individuals covered by the plan from which the spinoff occurred, prior to the spinoff; and

(5) The reason for the spinoff.

.01 The applicant’s request must identify the period of time covered by the mortality experience study (the “Experience Study Period”) used to develop the Base Table(s) and must identify the Base Year. Different Experience Study Periods for different populations within a plan are not permitted. Except as provided in subsections .02 and .03 of this section, different Experience Study Periods for different plans within the Permissive Group are not permitted. Thus, a plan that does not have mortality experience for the entire Experience Study Period may not be included in the Permissive Group. Similarly, a plan that was acquired subsequent to the first day of the Experience Study Period may be included in the Permissive Group only if the applicant includes mortality experience for the full Experience Study Period. Thus, in such cases, the mortality experience study must include mortality experience that occurred before the date of acquisition.

.02 A plan that came into existence by reason of a spinoff from the Plan (or from a plan within the Permissive Group) during the Experience Study Period may be included in the Permissive Group. In such a case, the period of time covered by the mortality experience study with respect to the spun off plan will begin as of the date of the spinoff. However, the mortality experience of the individuals covered by the spun off plan from the first day of the Experience Study Period to the date of the spinoff would be included as part of the experience of the single plan that existed before the spinoff.

.03 If separate plans within a Permissive Group have different plan years, the Experience Study Period may consist of a combination of different periods for analyzing the experience data for each plan, provided that the period for each plan:

(1) is based on the plan year for that plan,

(2) consists of the same number of years,

(3) ends less than 3 years before the first day of the first plan year for which the substitute mortality table is to apply for any plan in the Permissive Group, and

(4) minimizes the total period of time covered by the overall Experience Study Period by overlapping (to the greatest extent possible) the periods used to analyze experience data for each plan in the Permissive Group.

For example, consider a Permissive Group consisting of two plans, Plan A with a calendar-year plan year and Plan B with a March 1-February 28 plan year, with experience data gathered by plan years for each plan. If the plan sponsor submits a request to use substitute mortality tables for the Permissive Group effective with the plan year beginning January 1, 2009, for Plan A and March 1, 2009, for Plan B, the plan sponsor may use an Experience Study Period ending as early as December 31, 2006, based on the first day of the plan year for Plan A. If the plan sponsor wishes to use the approach provided in this subsection .03 and uses a 4-year period ending on December 31, 2006, to analyze the experience data for Plan A, the period used to analyze the experience data for Plan B must be a 4-year period ending on February 28, 2007. The Experience Study Period in this case would be the period beginning January 1, 2003, and ending February 28, 2007.

.04 In order to demonstrate credible mortality experience, the number of deaths during each year of the Experience Study Period (and, in total, for the entire Experience Study Period) within each population for which the use of substitute mortality tables is requested must be provided in tabular form.

.01 The following information must be provided in tabular form for each population within the Plan (or plans within the Permissive Group) for which the use of a substitute mortality table is requested, aggregating all plans that have the same plan year:

(1) The average number of individuals within the population during the Experience Study Period; and

(2) The number of individuals within the population as of the last day of the plan year immediately preceding the plan year during which the use of substitute mortality tables is requested.

A reasonable estimate of the number of plan individuals, such as the estimated number of participants and beneficiaries used for purposes of PBGC Form 1-ES, may be used to provide the information requested in paragraph (2) of this subsection 8.01.

.02 If the difference between paragraphs (1) and (2) of subsection 8.01 within any population, for any plan year, reflects a difference of 20 percent or more, then an analysis that shows that the mortality experience during the Experience Study Period is still accurately predictive of the future mortality of the population must be submitted.

.01 General Rule. For all plans maintained by the applicant, except as described in subsections .02 and .03 of this section, the period of time used to demonstrate a lack of credible mortality experience must be identified (the “Lack of Credible Mortality Experience Demonstration Period”). This period must consist of at least 4 consecutive years, with the last such year ending less than 3 years before the first day of the plan year for which lack of credible mortality experience is being demonstrated. However, if the Experience Study Period used for the substitute mortality tables for the Permissive Group is longer than 4 years, then the Lack of Credible Mortality Experience Demonstration Period must include the same number of years as the Experience Study Period and must end less than 3 years before the first day of the plan year for which lack of credible mortality experience is being demonstrated. See subsection .06 of this section for rules that apply when the Experience Study Period is a combination of different periods as described in subsection 7.03.

.02 General Exception. Plans described in paragraph (1), (2), or (3) of this subsection 9.02 are not required to identify a Lack of Credible Mortality Experience Demonstration Period.

(1) Plans for which the use of substitute mortality tables is requested for all populations (other than disabled populations for whom the tables prescribed under § 430(h)(3)(D) are used);

(2) Plans for which the use of substitute mortality tables has previously been approved by the Service and the term of years of such approval ends subsequent to the last day of the Requested Effective Plan Year; and

(3) Newly affiliated plans for which the last day of the plan year described in § 1.430(h)(3)-2(d)(1)(iii)(A) is a date on or after the first day of the plan year for which the use of substitute mortality tables is requested.

.03 Exception for Certain Newly Affiliated Plans. Newly affiliated plans (as defined in § 1.430(h)(3)-2(d)(1)(iii)(B)) for which the last day of the plan year described in § 1.430(h)(3)-2(d)(1)(iii)(A) is a date prior to the first day of the plan year for which the use of substitute mortality tables is requested, and for which the applicant has elected not to include mortality experience prior to the date of the acquisition, may identify a Lack of Credible Mortality Experience Demonstration Period consisting of fewer years than otherwise required under subsection .01 of this section. For such plans, the Lack of Credible Mortality Experience Demonstration Period must begin no later than the date the plan became newly affiliated and end not more than one year and one day before the first day of the plan year for which the use of substitute mortality tables is requested.

.04 Demonstration of Plan-Wide Lack of Credible Mortality Experience. The following information must be provided in tabular form for each plan that is not within the Permissive Group and which does not fall within one of the exceptions provided in subsection .02 of this section:

(1) The number of male deaths during the Lack of Credible Mortality Experience Demonstration Period; and

(2) The number of female deaths during the Lack of Credible Mortality Experience Demonstration Period.

.05 Demonstration of Lack of Credible Mortality Experience for Certain Populations. The number of male and female deaths during the Lack of Credible Mortality Experience Demonstration Period must be provided in tabular form for each relevant population within the Plan (or plans within the Permissive Group) for which the use of substitute mortality tables is not requested.

The relevant populations for this purpose would, for example, be nondisabled females if the request was to use a substitute mortality table for nondisabled males (but for no other individuals) where separate mortality tables were used for disabled individuals pursuant to § 430(h)(3)(D). Similarly, the relevant populations would be male nonannuitants and females, in each case including disabled individuals, if the request was to use a substitute mortality table for male annuitants (but not for male nonannuitants) where separate mortality tables were not used for disabled individuals pursuant to § 430(h)(3)(D).

.06 Application when Experience Study Period is a Combination of Different Periods as Described in Subsection 7.03. For plans or populations within a Permissive Group, if the Experience Study Period covers a period of more than 4 years because it consists of a combination of 4-year (or longer) periods for analyzing the experience data for individual plans included in the Permissive Group, the Lack of Credible Mortality Experience Demonstration Period must also consist of a combination of 4-year periods for each plan (or such longer periods as used for the Experience Study Period), subject to the same constraints as in subsection 7.03.

For example, the Permissive Group illustrated in subsection 7.03 used an Experience Study Period consisting of 4 years based on the plan year for Plan A and 4 years based on the plan year of Plan B (for an overall Experience Study Period of 4 years and 2 months). Therefore, lack of credible mortality experience must be demonstrated for any populations within that Permissive Group for which substitute mortality tables are not requested, on the basis of a Lack of Credible Mortality Experience Demonstration Period covering a 4-year period corresponding to the plan year for the plan covering the population (for an overall Lack of Credible Mortality Experience Demonstration Period of 4 years and 2 months). Accordingly, for demonstrations applying to plan years beginning in 2011, the Lack of Credible Mortality Experience Demonstration Period could either be based on 4-year periods ending December 31, 2008, for populations covered under Plan A and February 28, 2009, for populations covered under Plan B, or on 4-year periods ending December 31, 2009, for populations covered under Plan A and February 28, 2010, for populations covered under Plan B.

However, if the overall Experience Study Period is less than 4 years in length, or if the population or plan for which lack of credibility experience is being demonstrated is not in the Permissive Group, then the general rule of subsection .01 of this section is applied based on the number of years of data used for each plan in the Permissive Group. For example, if the periods used to analyze experience data for Plans A and B were only 2 years in length, the Lack of Credible Mortality Experience Demonstration Period for any plans or populations within the Permissive Group could either be a period of 4 years (with both plans using the same period of time to analyze experience data) or 4 years and 2 months (using 4-year periods corresponding to the plan year for each plan to analyze the experience data). In either case, the Lack of Credible Mortality Experience Demonstration Period must end less than 3 years before the first day of any plan year for which lack of credible mortality experience is being demonstrated.

.07 Alternative Demonstrations of Lack of Credible Mortality Experience. In lieu of the information described in subsections .04 through .06 of this section, lack of credible mortality experience may be demonstrated by providing alternative information if such information demonstrates to the satisfaction of the Commissioner that the number of male and/or female deaths would not exceed 1,000 during the Lack of Credible Mortality Experience Demonstration Period. For example, a year-by-year reconciliation of the participant population (such as might be shown in an actuarial valuation report) could be submitted showing that the total number of participants leaving the plan during the Lack of Credible Mortality Experience Demonstration Period is less than 1,000, as this would clearly show that the number of male and female deaths must also be less than 1,000 during that period. Similarly, if the total number of participants in the plan does not exceed 1,000 for any year during the Lack of Credible Mortality Experience Demonstration Period, the year-by-year number of participants in the plan during such period could be submitted in lieu of the information described in subsections .04 through .06 of this section, as this would indicate that it would be highly unlikely that the total number of deaths during that period would exceed 1,000.

.01 In General. The information below must be provided in tabular form for all individuals within each population for whom the use of a separate mortality table is requested, for each year of the Experience Study Period, and for the Experience Study Period in its entirety, for all ages between 18 and 100 (except as provided in subsection .03 of this section). The same Experience Study Period must be used to develop the information below as was used to demonstrate credible mortality experience in section 7.

(1) The sum of the accrued benefits (or payable benefits, in the case of individuals in pay status) of all individuals at that age at the beginning of the year, other than individuals who left the population during the year for reasons other than death;

(2) The sum of the accrued (or payable) benefits of all individuals at that age at the beginning of the year who left the population during the year for reasons other than death, adjusted to reflect exposure periods of less than one year;

(3) The sum of the accrued (or payable) benefits of all individuals at that age at the beginning of the year who died during the year;

(4) The quotient determined by dividing the sum of the accrued (or payable) benefits of all individuals at that age who died during the year by the sum of the accrued (or payable) benefits for all individuals at that age adjusted for individuals at that age who left the population for reasons other than death (i.e., the amount determined in paragraph (3), divided by the total of the amounts determined in paragraphs (1) and (2);

(5) The total number of individuals at that age at the beginning of the year;

(6) The total number of individuals at that age at the beginning of the year who left the population for reasons other than death;

(7) The total number of individuals at that age at the beginning of the year who died during the year; and

(8) The average accrued benefit of all individuals at that age at the beginning of the year.

.02 Adjustment for Exposure Periods of Less than One Year. The request must include a description of the method(s) used to adjust the accrued benefits of individuals who left for reasons other than death to reflect exposure periods of less than one year.

.03 Grouping of Ages. The information requested in subsection .01 of this section may be presented in five-year age groups. In such cases, the groups at the extreme ages may include more than five ages provided such groups either do not include ages greater than age 24 or do not include ages less than age 95. Thus, for example, an age group consisting of all ages 24 and lower would be permissible whereas an age group consisting of all ages 25 and lower would not be permissible.

.04 Unadjusted Base Tables. An Unadjusted Base Table for each population for which the use of substitute mortality tables is requested shall, for all ages or all groups of ages, consist of the quotients determined in paragraph (4) of subsection .01 of this section for the Experience Study Period in its entirety. The request must include a complete copy of each such Unadjusted Base Table.

.01 In General. Except as otherwise provided in section 12 of this revenue procedure, a Base Table for a population must be created from the Unadjusted Base Table for the population through the application of a graduation method generally used by the actuarial profession in the United States (e.g., Whittaker-Henderson Type B, Karup-King). Section 12 of this revenue procedure provides for an alternate method of constructing a Base Table through the application of a fixed percentage to the mortality rates of a Standard Mortality Table, projected to the Base Year.

.02 Information Regarding Graduation Methods. The graduation method must be identified and the parameters of the graduation method used must be specified (e.g., for Whittaker-Henderson Type B, the number of differences and the “h” value must be specified). If more than one graduation is performed, then the parameters must be specified for each such graduation.

.03 Intermediate Values. If more than one graduation is performed in the process of adjusting an Unadjusted Base Table to a Base Table, then a copy of each intermediate table so created must be provided.

.04 Rationale. The rationale for the selection of each particular graduation method used must be provided along with the rationale for the selection of the particular parameters used as part of the method.

.05 Extension to Extreme Ages. At extreme ages for which insufficient data exists, the Base Tables must be extended to blend into the applicable Standard Mortality Table, provided in subsection .06 of this section, projected to the Base Year using Projection Scale AA, as set forth in the regulations. In such cases, the method (and the rationale for the method) used for the extension must be described.

.06 Standard Mortality Tables. For purposes of this revenue procedure, the following are the Standard Mortality Tables:

(1) The Male Base Nonannuitant Mortality Table (Year 2000) as set forth in § 1.430(h)(3)-1;

(2) The Male Base Annuitant Mortality Table (Year 2000) as set forth in § 1.430(h)(3)-1;

(3) The Female Base Nonannuitant Mortality Table (Year 2000) as set forth in § 1.430(h)(3)-1;

(4) The Female Base Annuitant Mortality Table (Year 2000) as set forth in § 1.430(h)(3)-1;

(5) The Male Base Combined Mortality Table (Year 2000) determined in accordance with subsection .07 of this section; and

(6) The Female Base Combined Mortality Table (Year 2000) determined in accordance with subsection .07 of this section.

.07 Gender-Specific Base (Year 2000) Mortality Combined Tables. For purposes of this revenue procedure, the Male Base Combined Mortality Table (Year 2000) is the table determined through application of the male Weighting Factors for Small Plans (the “Weights”) to the Male Base Nonannuitant and Annuitant Mortality Tables (Year 2000) as set forth in § 1.430(h)(3)-1. Similarly, the Female Base Combined Mortality Table (Year 2000) is the table determined through application of the female Weights to the Female Base Nonannuitant and Annuitant Mortality Tables (Year 2000) as set forth in § 1.430(h)(3)-1.

.01 General Rule. A Base Table for a population may be created by applying a fixed percentage (the “Fixed Percentage”) to the mortality rates in the Projected Applicable Standard Mortality Table only if the requirements of subsections .02 and .03 of this section are satisfied and the Service determines that the resulting Base Table sufficiently reflects the mortality experience of the applicable plan population. For this purpose the Projected Applicable Standard Mortality Table is the applicable Standard Mortality Table, projected to the Base Year using Projection Scale AA, as set forth in § 1.430(h)(3)-1. See subsection .05 of this section with regard to the possible use of other mortality tables for this purpose.

Under this section 12, the Unadjusted Base Mortality Tables must be constructed using five-year age groups. For each Base Table constructed using the alternate method described in this section, the Fixed Percentage and the mortality table to which such percentage is to be applied must be identified. In addition, for each so constructed Base Table, the ratios of the mortality rates from the Unadjusted Base Mortality Table for the population to the central age mortality rates (i.e., the mortality rates for the ages that are the midpoints of the age ranges) from the Projected Applicable Standard Mortality Table must be provided, in tabular form, for all five-year age groups for which mortality experience is available.

.02 Selection of the Fixed Percentage.

(1) If the applicable Standard Mortality Table for a population is the table provided in either paragraph (1) or paragraph (3) of subsection 11.06, then the Fixed Percentage must be within two percentage points of the arithmetic average of the ratios of the mortality rates from the Unadjusted Base Mortality Table for the population to the central age mortality rates from the Projected Applicable Standard Mortality Table of each of the five-year age groups from the 35-39 age group to the 60-64 age group, inclusive, unless the applicant can demonstrate that a different set of five-year age groups (consisting of no less than six such groups) is more appropriate for this purpose.

(2) If the applicable Standard Mortality Table for a population is the table provided in either paragraph (2) or paragraph (4) of subsection 11.06, then the Fixed Percentage must be within two percentage points of the arithmetic average of the ratios of the mortality rates from the Unadjusted Base Mortality Table for the population to the central age mortality rates from the Projected Applicable Standard Mortality Table of each of the five-year age groups from the 55-59 age group to the 80-84 age group, inclusive, unless the applicant can demonstrate that a different set of five-year age groups (consisting of no less than six such groups) is more appropriate for this purpose.

(3) If the applicable Standard Mortality Table for a population is the table provided in either paragraph (5) or paragraph (6) of subsection 11.06, then the Fixed Percentage must be within two percentage points of the arithmetic average of the ratios of the mortality rates from the Unadjusted Base Mortality Table for the population to the central age mortality rates from the Projected Applicable Standard Mortality Table of each of the five-year age groups from the 45-49 age group to the 80-84 age group, inclusive, unless the applicant can demonstrate that a different set of five-year age groups (consisting of no less than eight such groups) is more appropriate for this purpose.

.03 Consistency Requirement. The consistency requirement of this subsection .03 is satisfied only if each of the applicable ratios described in subsection .02 of this section is within 10 percentage points of the Fixed Percentage.

.04 Terminal Age. Notwithstanding subsection .01 of this section, the mortality rate for the terminal age in any Base Table created by applying a Level Percentage to a Standard Mortality Table shall be 1.000.

.05 Other Mortality Tables. The Service will consider requests for the approval of Base Tables constructed through the application of a fixed percentage to the mortality rates of other published generally accepted mortality tables (e.g., the 1983 Group Annuity Mortality Table) using standards similar to those provided in subsections .01 through .04 of this section.

.06 Example. The age group rates from the Male Unadjusted Base Table (determined in accordance with section 10 of this revenue procedure), the central age rates from the Male Base Combined Mortality Table (Year 2000), projected to the Base Year, and the ratios of such rates are as follows:

In accordance with subsection .02 of this section, the Fixed Percentage to be applied to the Male Base Mortality Table (Year 2000), projected to the Base Year, must be between 92.77% and 96.77%. However, a Fixed Percentage that is less than 94.18% would fail to satisfy the requirements of subsection .03 of this section because the ratio for the 65-69 Age Group (i.e., 104.18%) would then not be within 10 percentage points of a Fixed Percentage less than 94.18%. Similarly, a Fixed Percentage that is greater than 95.89% would fail the requirements of subsection .03 because the ratio for the 75-79 Age Group (i.e., 85.89%) would then not be within 10 percentage points of a Fixed Percentage greater than 95.89%. Accordingly, under the facts in this example, if the applicant were to request the use of a Base Table constructed through the application of a percentage to the Male Base Mortality Table (Year 2000) that is a fixed integer, the applicant would be limited to a Fixed Percentage of 95%.

The following information must be provided with respect to each population for which the use of substitute mortality tables is requested:

.01 Generational Mortality Tables. Sample generational mortality tables, as of the Requested Effective Plan Year, for individuals whose years of birth are 1940, 1950, and 1960, constructed from the Base Tables using a methodology in accordance with § 1.430(h)(3)-1 (except that the projection period used to determine each particular mortality improvement factor is the number of years between the Base Year and the year for which the probability of death is determined).

.02 Funding Target Comparisons. The liability of the plan(s) for which the use of substitute mortality tables is requested as of the valuation date for a plan year ending no earlier than one year and one day before the first plan year to which the substitute mortality tables will apply (the “Comparison Year”). The liability is to be measured using generational mortality tables determined in accordance with the methodology described in subsection .01 of this section. The liability is to be provided separately for active participants, terminated vested participants, and retirees and beneficiaries in pay status, and is to be determined as follows:

(1) For Comparison Years beginning in 2007, the liability to be reported is the Current Liability determined in accordance with § 412(l) as it existed prior to PPA ’06 and, for comparison, what the Current Liability would have been if the substitute mortality table(s) had been used to determine Current Liability, holding all other assumptions constant.

(2) For Comparison Years beginning after 2007, the liability to be reported is the Funding Target, determined without regard to at-risk assumptions under § 430(i), and, for comparison, what the Funding Target would have been if the substitute mortality table(s) had been used to determine the Funding Target, holding all other assumptions constant.

.03 Annuity Factors. The following annuity factors based on generational mortality tables for individuals whose year of birth is 20 years before the Base Year, determined using interest and mortality assumptions consistent with those used under subsection .02 of this section.

(1) For all Base Tables with the exception of annuitant Base Tables, deferred to age 55 factors at quinquennial ages from 20 to 50.

(2) For all Base Tables with the exception of nonannuitant Base Tables, immediate annuity factors at quinquennial ages from 50 to 90.

.04 Graphical Displays. A comparison in the form of graphs with the X-axis representing age and the Y-axis representing the mortality rate, for each of the following pairs of mortality rates, for each population for which the use of substitute mortality tables is requested:

(1) The mortality rates from the Base Unadjusted Mortality Table and the mortality rates from the proposed Base Table; and

(2) The mortality rates from the proposed Base Table and from the applicable Standard Mortality Table (as described in subsection 11.06 of this revenue procedure), projected to the Base Year.

This revenue procedure is effective for all requests for the use of plan-specific substitute mortality tables in accordance with § 430(h)(3)(C) of the Code and § 303(h)(3)(C) of ERISA submitted on or after December 1, 2008. Requests submitted prior to December 1, 2008, may rely on this revenue procedure or Rev. Proc. 2007-37.

The collection of information contained in this revenue procedure has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. section 3507) under control number 1545-2073.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

The collection of information in this revenue procedure is in sections 3 through 13. This collection of information is required to evaluate, process and obtain approval of the request for the use of substitute mortality tables. This information will be used to make determinations under § 430(h)(3) of the Code. The likely respondents are businesses or other for-profit institutions and nonprofit institutions.

The estimated total annual reporting/recordkeeping burden is 25,400 hours.

The estimated annual burden per respondent/recordkeeper varies from 335 to 681 hours, depending on individual circumstances, with an estimated average burden of 508 hours. The estimated annual number of respondents/recordkeepers is 50.

The estimated annual frequency of responses is once every 10 years.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. section 6103.

The principal author of this revenue procedure is Carolyn E. Zimmerman of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this revenue procedure, please contact Ms. Zimmerman at retirementplanquestions@irs.gov.