AICPA Guidance on New Mortality Tables
The October 2014 release of new mortality tables by the Society of Actuaries (SOA) sent benefit plan sponsors and actuaries scrambling to assess the impact of the new information on current year-end financial statements. The American Institute of CPAs (AICPA) has recently released additional guidance, clarifying the appropriateness of adopting new mortality information when a benefit plan uses a beginning-of-year actuarial valuation or if the financial statements were not issued when SOA tables were published.
An earlier BKD article noted the adoption of the new mortality tables is at the plan sponsor’s discretion. Actuaries and accountants have an obligation to recommend assumptions that will reflect the “best estimate” of liabilities. Since the SOA tables represent the most up-to-date information available, they likely will be recommended for 2014 year-end measurement. Even if the new tables are not incorporated, plan sponsors will need to document how they considered the new data and justify that the selected mortality assumptions represent their best estimate.