n-18-82.pdf

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Part III --- Administrative, Miscellaneous, and Procedural
Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Notice 2018-82

This notice provides guidance on the corporate bond monthly yield curve, the
corresponding spot segment rates used under § 417(e)(3), and the 24-month average segment
rates under § 430(h)(2) of the Internal Revenue Code. In addition, this notice provides guidance
as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for
plan years beginning before 2008 and the 30-year Treasury weighted average rate under
§ 431(c)(6)(E)(ii)(I).

YIELD CURVE AND SEGMENT RATES

Section 430 specifies the minimum funding requirements that apply to single-employer
plans (except for CSEC plans under § 414(y)) pursuant to § 412. Section 430(h)(2) specifies
the interest rates that must be used to determine a plan’s target normal cost and funding target.
Under this provision, present value is generally determined using three 24-month average
interest rates (“segment rates”), each of which applies to cash flows during specified periods. To
the extent provided under § 430(h)(2)(C)(iv), these segment rates are adjusted by the applicable
percentage of the 25-year average segment rates for the period ending September 30 of the
year preceding the calendar year in which the plan year begins.
1
However, an election may be
made under § 430(h)(2)(D)(ii) to use the monthly yield curve in place of the segment rates.

Notice 2007-81, 2007-44 I.R.B. 899, provides guidelines for determining the monthly
corporate bond yield curve, and the 24-month average corporate bond segment rates used to
compute the target normal cost and the funding target. Consistent with the methodology
specified in Notice 2007-81, the monthly corporate bond yield curve derived from September
2018 data is in Table 2018-9 at the end of this notice. The spot first, second, and third segment
rates for the month of September 2018 are, respectively, 3.21, 4.26, and 4.55.

The 24-month average segment rates determined under § 430(h)(2)(C)(i) through (iii)
must be adjusted pursuant to § 430(h)(2)(C)(iv) to be within the applicable minimum and
maximum percentages of the corresponding 25-year average segment rates. For plan years
beginning before 2021, the applicable minimum percentage is 90% and the applicable
maximum percentage is 110%. The 25-year average segment rates for plan years beginning in
2017, 2018, and 2019 were published in Notice 2016-54, 2016-40 I.R.B. 429, Notice 2017-50,
2017-41 I.R.B. 280, and Notice 2018-73, 2018-40 I.R.B. 526, respectively.

1
Pursuant to § 433(h)(3)(A), the 3
rd
segment rate determined under § 430(h)(2)(C) is used to determine the
current liability of a CSEC plan (which is used to calculate the minimum amount of the full funding limitation
under § 433(c)(7)(C)).

24-MONTH AVERAGE CORPORATE BOND SEGMENT RATES

The three 24-month average corporate bond segment rates applicable for October 2018
without adjustment for the 25-year average segment rate limits are as follows:

Based on § 430(h)(2)(C)(iv), the 24-month averages applicable for September 2018
adjusted to be within the applicable minimum and maximum percentages of the corresponding 25-

Based on § 430(h)(2)(C)(iv), the 24-month averages applicable for October 2018,
adjusted to be within the applicable minimum and maximum percentages of the corresponding
25-year average segment rates, are as follows:

30-YEAR TREASURY SECURITIES INTEREST RATES

Section 431 specifies the minimum funding requirements that apply to multiemployer
plans pursuant to § 412. Section 431(c)(6)(B) specifies a minimum amount for the full-funding
limitation described in § 431(c)(6)(A), based on the plan’s current liability. Section
431(c)(6)(E)(ii)(I) provides that the interest rate used to calculate current liability for this purpose
must be no more than 5 percent above and no more than 10 percent below the weighted
average of the rates of interest on 30-year Treasury securities during the four-year period
ending on the last day before the beginning of the plan year. Notice 88-73, 1988-2 C.B. 383,
provides guidelines for determining the weighted average interest rate. The rate of interest on
30-year Treasury securities for September 2018 is 3.15 percent. The Service determined this
rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing
in August 2048. For plan years beginning in October 2018, the weighted average of the rates of
interest on 30-year Treasury securities and the permissible range of rates used to calculate
current liability are as follows:

24-Month Average Segment Rates Without 25-Year Average Adjustment

Applicable Month First Segment Second Segment Third Segment
October 2018 2.35 3.85 4.47
Adjusted 24-Month Average Segment Rates
For Plan Years First Second Third
Beginning In Applicable Month Segment Segment Segment
2017 October 2018 4.16 5.72 6.48
2018 October 2018 3.92 5.52 6.29
2019 October 2018 3.74 5.35 6.11

Treasury Weighted Average Rates

For Plan Years 30-Year Treasury Permissible Range
Beginning In Weighted Average 90% to 105%
October 2018 2.88 2.59 to 3.02

MINIMUM PRESENT VALUE SEGMENT RATES

In general, the applicable interest rates under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month average. Notice 2007-81 provides guidelines for
determining the minimum present value segment rates. Pursuant to that notice, the minimum
present value segment rates determined for September 2018 are as follows:

DRAFTING INFORMATION

The principal author of this notice is Tom Morgan of the Office of the Associate Chief
Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS
participated in the development of this guidance. For further information regarding this notice,
contact Mr. Morgan at 202-317-6700 or Paul Stern at 202-317-8702 (not toll-free calls).

Minimum Present Value Segment Rates

Month First Segment Second Segment Third Segment
September 2018 3.21 4.26 4.55

Table 2018-9

Monthly Yield Curve for September 2018
Derived from September 2018 Data

Maturity Yield

Maturity Yield

Maturity Yield

Maturity Yield

Maturity Yield
0.5 2.61

20.5
4.53

40.5
4.55

60.5
4.57

80.5
4.57
1.0 2.83

21.0
4.53

41.0
4.55

61.0
4.57

81.0
4.57
1.5 3.02

21.5
4.53

41.5
4.55

61.5
4.57

81.5
4.57
2.0 3.17

22.0
4.53

42.0
4.56

62.0
4.57

82.0
4.57
2.5 3.27

22.5
4.53

42.5
4.56

62.5
4.57

82.5
4.57
3.0 3.33

23.0
4.53

43.0
4.56

63.0
4.57

83.0
4.58
3.5 3.38

23.5
4.53

43.5
4.56

63.5
4.57

83.5
4.58
4.0 3.43

24.0
4.53

44.0
4.56

64.0
4.57

84.0
4.58
4.5 3.48

24.5
4.53

44.5
4.56

64.5
4.57

84.5
4.58
5.0 3.53

25.0
4.53

45.0
4.56

65.0
4.57

85.0
4.58
5.5 3.59

25.5
4.53

45.5
4.56

65.5
4.57

85.5
4.58
6.0 3.66

26.0
4.53

46.0
4.56

66.0
4.57

86.0
4.58
6.5 3.73

26.5
4.53

46.5
4.56

66.5
4.57

86.5
4.58
7.0 3.80

27.0
4.53

47.0
4.56

67.0
4.57

87.0
4.58
7.5 3.87

27.5
4.53

47.5
4.56

67.5
4.57

87.5
4.58
8.0 3.94

28.0
4.54

48.0
4.56

68.0
4.57

88.0
4.58
8.5 4.00

28.5
4.54

48.5
4.56

68.5
4.57

88.5
4.58
9.0 4.07

29.0
4.54

49.0
4.56

69.0
4.57

89.0
4.58
9.5 4.13

29.5
4.54

49.5
4.56

69.5
4.57

89.5
4.58
10.0 4.18

30.0
4.54

50.0
4.56

70.0
4.57

90.0
4.58
10.5 4.23

30.5
4.54

50.5
4.56

70.5
4.57

90.5
4.58
11.0 4.28

31.0
4.54

51.0
4.56

71.0
4.57

91.0
4.58
11.5 4.32

31.5
4.54

51.5
4.56

71.5
4.57

91.5
4.58
12.0 4.35

32.0
4.54

52.0
4.56

72.0
4.57

92.0
4.58
12.5 4.38

32.5
4.54

52.5
4.56

72.5
4.57

92.5
4.58
13.0 4.41

33.0
4.54

53.0
4.56

73.0
4.57

93.0
4.58
13.5 4.43

33.5
4.54

53.5
4.56

73.5
4.57

93.5
4.58
14.0 4.45

34.0
4.55

54.0
4.56

74.0
4.57

94.0
4.58
14.5 4.47

34.5
4.55

54.5
4.56

74.5
4.57

94.5
4.58
15.0 4.48

35.0
4.55

55.0
4.56

75.0
4.57

95.0
4.58
15.5 4.49

35.5
4.55

55.5
4.56

75.5
4.57

95.5
4.58
16.0 4.50

36.0
4.55

56.0
4.57

76.0
4.57

96.0
4.58
16.5 4.51

36.5
4.55

56.5
4.57

76.5
4.57

96.5
4.58
17.0 4.51

37.0
4.55

57.0
4.57

77.0
4.57

97.0
4.58
17.5 4.52

37.5
4.55

57.5
4.57

77.5
4.57

97.5
4.58
18.0 4.52

38.0
4.55

58.0
4.57

78.0
4.57

98.0
4.58
18.5 4.52

38.5
4.55

58.5
4.57

78.5
4.57

98.5
4.58
19.0 4.53

39.0
4.55

59.0
4.57

79.0
4.57

99.0
4.58
19.5 4.53

39.5 4.55

59.5 4.57

79.5 4.57

99.5 4.58
20.0 4.53

40.0
4.55

60.0
4.57

80.0
4.57

100.0
4.58