Updated Life Expectancy Assumptions for RS Plan Lump Sum Factors

The Internal Revenue Service (IRS) recently released new mortality tables for use in determining lump sums in defined benefit plans like the Retirement Security (RS) Plan. Lump sums in defined benefit plans are calculated using federally mandated interest rates, which are released in mid-December each year, and life expectancy assumptions based on mortality tables. The IRS last updated the mortality tables it requires for lump sum calculations in 2008. NRECA will use the new tables when calculating lump sum amounts for participants retiring on and after January 1, 2018.

Under the new tables, which reflect the fact that people are living longer, lump sums for RS Plan participants could be higher than under the previous mortality tables. But no single factor is determinative and other factors, including the interest rates that will be released in December, also affect a participant’s particular lump sum amount. Generally, however, a lump sum should not decrease solely as the result of the new mortality tables.

Participants who are trying to decide whether to retire in 2017 or 2018 could benefit from getting projections for both years to determine what retirement date works best in their individual situation. NRECA has created a fact sheet for you to provide to participants who may ask questions about retirement date projections.

NRECA has been anticipating the IRS action and has been working over the course of several years to smooth the effect of any expected increase in co-op billing rates. As a result, the 2018 billing rates remain appropriate.

Questions?
Participants with questions about their retirement options may reach out to NRECA’s Personal Investment & Retirement Consulting (PIRC) team. To reach PIRC, call 866.673.2299, option 6, or email pirc@nreca.coop.

Benefits administrators with questions about the new lump sum factors should call their field representative or the Member Contact Center at 866.673.2299 or contactcenter@nreca.coop.