IRS Makes Annuity Mortality Table Update With a Smile

The agency received just eight comments on the draft, but it responded to the commenters’ requests by providing flexibility in connection with retroactive use of the new mortality tables and in connection with calculation precision.

Originally, the IRS was going to let taxpayers choose whether to use the new valuation tables during a transition period lasting from Jan. 1, 2021, to June 1, 2023.

Some commenters said the transition period ought to start in May 2019, because the mortality tables based on the 2000 census have been in use since 2009.

“The Treasury Department and the IRS have concluded that the issue of fairness to taxpayers in this circumstance outweighs the foreseeable administrative burdens on the IRS,” officials said in the introduction to the new final regulations.

Because of concerns about fairness, the IRS will let taxpayers choose whether to use the old mortality tables or the new tables for transactions occurring between May 1, 2019, and June 2, 2023, officials said.

Several commenters noted that, in the draft regulations, the IRS showed factors and calculation results featuring numbers with digits ranging from three to six places past the decimal point.

IRS officials reported that they used decimal place practices that have been in force since at least 1951. “There are technical reasons for the particular number of decimals used for several of these factors,” officials added.

The IRS decided to stick with the traditional decimal practices, but officials indicated that taxpayers can use more decimal places than the IRS uses, if using more decimal places is more convenient or produces better results, as long as the taxpayer applies the more precise calculation method in a consistent way.

The IRS listed Mayer Samuels as the contact person for the new final regulations.

IRS headquarters. (Photo: Allison Bell/ALM)