IRS Revises Actuarial Tables

August 11, 2011

The IRS issued final regulations Thursday relating to the use of actuarial tables for valuing annuities, interests for life or a term of years, or remainder or reversionary interests. The regulations ( TD 9540 ) were necessary because IRC § 7520(c)(3) directs the IRS to update the actuarial tables to take into account the most recent mortality data available, no less often than once every 10 years.

 

The final regulations adopt without substantive change proposed and temporary regulations (TD 9448 and REG-107845-08) issued in May 2009 to reflect changes in mortality data based on the 2000 U.S. Census.

 

IRC § 7520(a) provides that the value of any annuity, any interest for life or a term of years, or any remainder or reversionary interest is determined under tables prescribed by the IRS and by using an interest rate based on the federal midterm rate in effect under section 1274(d)(1) for the month in which the valuation date falls.

 

Revised tables are contained in a number of regulation sections. They include Table 2000CM, contained in Treas. Reg. § 20.2031-7. It is the underlying mortality table used in determining the present value of annuities, life estates, remainders and reversions.

 

The final regulations are effective and applicable Aug. 10, 2011.

 

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