The Internal Revenue Service is struggling with the effects of the COVID-19 pandemic on long-range mortality forecasts.
The IRS talked about its uncertainty last week, when it posted a draft version of Mortality Tables for Determining Present Value Under Defined Benefit Pension Plans.
"The mortality rates provided in these proposed regulations would apply starting in 2023," the IRS says in the preamble, or official introduction, to the proposed regulations.
The current table, which is based on pre-pandemic data, might be appropriate, "because it is not clear to what extent the increased mortality associated with COVID-19 will continue for 2023 and later years," officials say.
But, if COVID-19 continues to increase the U.S. mortality rate, then data flowing into the mortality tables would reflect that, officials add.
Officials asked for comments about how they should handle COVID-19-related mortality spikes in future mortality tables.
What It Means
The IRS comments about COVID-19 mortality and mortality tables reflect the kind of pandemic-related mortality uncertainty now affecting anyone with an interest in how long people will live, including Social Security program managers, pension plan managers and financial planners helping clients budget for retirement.
Overly pessimistic mortality forecasts could lead to clients or plans running out of money early.
Overly optimistic forecasts could lead to unnecessarily low levels of retirement income.
