IRS revises actuarial tables to account for most recent mortality data

The IRS issued final regulations 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 (T.D. 9974) were necessary because Sec. 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 regulations will affect persons valuing inter vivos and testamentary transfers of interests in property dependent on one or more measuring lives.

Sec. 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 Sec. 1274(d)(1) for the month in which the valuation date falls.

The final regulations provide a revised mortality table, referred to as Table 2010CM, which is based on data compiled from the 2010 Census. The regulations also provide actuarial formulas to allow taxpayers to compute the appropriate actuarial factors based on Table 2010CM for transfers for which the valuation date is on or after the applicability date of the final regulations of June 1, 2023. However, for the convenience of taxpayers, the IRS has computed actuarial factors that can be found on irs.gov and publications that are referenced in these regulations.

The regulations also made conforming amendments to various sections of the existing regulations to provide the references to these revised actuarial factors.

The regulations apply in the case of annuities, interests for life or terms of years, and remainder or reversionary interests valued as of a date on or after June 1, 2023.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.