n-21-27.pdf

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

Notice 2021-27

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).

In addition to providing these rates for current periods, this notice provides 24-month
average segment rates for earlier periods for plan years beginning in 2020 and 2021,
determined under § 430(h)(2)(C)(iv) of the Code reflecting the modifications made by § 9706(a)
of the American Rescue Plan Act of 2021, Pub. L. No. 117-2 (ARP), which was enacted on
March 11, 2021.

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 March 2021
data is in Table 2021-3 at the end of this notice. The spot first, second, and third segment rates
for the month of March 2021 are, respectively, 0.69, 2.92, and 3.69.

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.

The 25-year average segment rates for plan years beginning in 2020 and 2021 were
published Notice 2019-51, 2019-41 I.R.B. 866, and Notice 2020-72, 2020-40 I.R.B. 789,
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)).

2

24-MONTH AVERAGE CORPORATE BOND SEGMENT RATES

The three 24-month average corporate bond segment rates applicable for March 2021
without adjustment for the 25-year average segment rate limits are as follows:

AMERICAN RESCUE PLAN ACT

25-YEAR AVERAGE SEGMENT RATES

Section 9706(a) of ARP changes the 25-year average segment rates and the applicable
minimum and maximum percentages used under § 430(h)(3)(C)(iv) of the Code to adjust the
24-month average segment rates. Prior to this change, the applicable minimum and maximum
percentages were 90% and 110% for a plan year beginning in 2020, and 85% and 115% for a
plan year beginning in 2021, respectively. After this change, the applicable minimum and
maximum percentages are 95% and 105% for a plan year beginning in 2020 or 2021. In
addition, pursuant to this change, any 25-year average segment rate that is less than 5% is
deemed to be 5%.
2

Pursuant to § 9706(c)(1) of ARP, these changes apply with respect to plan years
beginning on or after January 1, 2020. However, § 9706(c)(2) of ARP provides that a plan
sponsor may elect not to have these changes apply to any plan year beginning before January
1, 2022.
3

The adjusted 24-month average segment rates reflecting § 430(h)(2)(C)(iv) of the Code
as amended by § 9706(a) of ARP for January 2020 through March 2021, applicable for plan
years beginning in 2020 and 2021, are set forth in the Appendix.

The adjusted 24-month average segment rates set forth in the chart below reflect
§ 430(h)(2)(C)(iv) of the Code as amended by § 9706(a) of ARP. These adjusted 24-month
average segment rates apply only for plan years for which an election under § 9706(c)(2) of
ARP is not in effect. For a plan year for which such an election does not apply, the 24-month
averages applicable for April 2021, adjusted to be within the applicable minimum and maximum
percentages of the corresponding 25-year average segment rates in accordance with
§ 430(h)(2)(C)(iv) of the Code, are as follows:

2
Pursuant to this change, the 25-year averages of the first segment rate for 2020 and 2021 are increased
to 5.00% because those 25-year averages as originally published are below 5.00%.
3
This election may be made either for all purposes for which the amendments under § 9706 of ARP apply
or solely for purposes of determining the adjusted funding target attainment percentage under § 436 of
the Code for the plan year.
24-Month Average Segment Rates Without 25-Year Average Adjustment

Applicable Month First Segment Second Segment Third Segment
April 2021 1.45 2.85 3.52
Adjusted 24-Month Average Segment Rates
For Plan Years First Second Third
Beginning In Applicable Month Segment Segment Segment
2020 April 2021 4.75 5.50 6.27
2021 April 2021 4.75 5.36 6.11

3

The adjusted 24-month average segment rates set forth in the chart below do not reflect
the changes to § 430(h)(2)(C)(iv) of the Code made by § 9706(a) of ARP. These adjusted 24-
month average segment rates apply only for plan years for which an election under § 9706(c)(2)
of ARP is in effect. For a plan year for which such an election applies, the 24-month averages
applicable for April 2021, adjusted to be within the applicable minimum and maximum
percentages of the corresponding 25-year average segment rates in accordance with
§ 430(h)(2)(C)(iv) of the Code, 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 March 2021 is 2.34 percent. The Service determined this rate as
the average of the daily determinations of yield on the 30-year Treasury bond maturing in
February 2051. For plan years beginning in April 2021, 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:

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 March 2021 are as follows:

2019 are as follows:

Pre-ARP Adjusted 24-Month Average Segment Rates
For Plan Years First Second Third
Beginning In Applicable Month Segment Segment Segment
2020 April 2021 3.64 5.21 5.94
2021 April 2021 3.32 4.79 5.47

Treasury Weighted Average Rates

For Plan Years 30-Year Treasury Permissible Range
Beginning In Weighted Average 90% to 105%
April 2021 2.24 2.02 to 2.36

Minimum Present Value Segment Rates

Month First Segment Second Segment Third Segment
March 2021 0.69 2.92 3.69

4

DRAFTING INFORMATION

The principal author of this notice is Tom Morgan of the Office of the Associate Chief
Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). 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).

5

Table 2021-3

Monthly Yield Curve for March 2021
Derived from March 2021 Data

Maturity Yield

Maturity Yield

Maturity Yield

Maturity Yield

Maturity Yield
0.5
0.20

20.5
3.52

40.5
3.71

60.5
3.78

80.5
3.82
1.0
0.26

21.0
3.53

41.0
3.71

61.0
3.78

81.0
3.82
1.5
0.34

21.5
3.54

41.5
3.71

61.5
3.78

81.5
3.82
2.0
0.44

22.0
3.54

42.0
3.72

62.0
3.78

82.0
3.82
2.5
0.56

22.5
3.55

42.5
3.72

62.5
3.78

82.5
3.82
3.0
0.70

23.0
3.56

43.0
3.72

63.0
3.79

83.0
3.82
3.5
0.85

23.5
3.56

43.5
3.72

63.5
3.79

83.5
3.82
4.0
1.01

24.0
3.57

44.0
3.73

64.0
3.79

84.0
3.82
4.5
1.17

24.5
3.58

44.5
3.73

64.5
3.79

84.5
3.82
5.0
1.33

25.0
3.58

45.0
3.73

65.0
3.79

85.0
3.82
5.5
1.50

25.5
3.59

45.5
3.73

65.5
3.79

85.5
3.82
6.0
1.66

26.0
3.59

46.0
3.73

66.0
3.79

86.0
3.82
6.5
1.82

26.5
3.60

46.5
3.74

66.5
3.79

86.5
3.82
7.0
1.98

27.0
3.60

47.0
3.74

67.0
3.79

87.0
3.82
7.5
2.12

27.5
3.61

47.5
3.74

67.5
3.79

87.5
3.82
8.0
2.26

28.0
3.61

48.0
3.74

68.0
3.80

88.0
3.82
8.5
2.40

28.5
3.62

48.5
3.74

68.5
3.80

88.5
3.83
9.0
2.52

29.0
3.62

49.0
3.75

69.0
3.80

89.0
3.83
9.5
2.63

29.5
3.63

49.5
3.75

69.5
3.80

89.5
3.83
10.0
2.74

30.0
3.63

50.0
3.75

70.0
3.80

90.0
3.83
10.5
2.83

30.5
3.64

50.5
3.75

70.5
3.80

90.5
3.83
11.0
2.92

31.0
3.64

51.0
3.75

71.0
3.80

91.0
3.83
11.5
3.00

31.5
3.65

51.5
3.75

71.5
3.80

91.5
3.83
12.0
3.07

32.0
3.65

52.0
3.76

72.0
3.80

92.0
3.83
12.5
3.13

32.5
3.66

52.5
3.76

72.5
3.80

92.5
3.83
13.0
3.18

33.0
3.66

53.0
3.76

73.0
3.80

93.0
3.83
13.5
3.23

33.5
3.66

53.5
3.76

73.5
3.81

93.5
3.83
14.0
3.28

34.0
3.67

54.0
3.76

74.0
3.81

94.0
3.83
14.5
3.31

34.5
3.67

54.5
3.76

74.5
3.81

94.5
3.83
15.0
3.34

35.0
3.68

55.0
3.77

75.0
3.81

95.0
3.83
15.5
3.37

35.5
3.68

55.5
3.77

75.5
3.81

95.5
3.83
16.0
3.40

36.0
3.68

56.0
3.77

76.0
3.81

96.0
3.83
16.5
3.42

36.5
3.69

56.5
3.77

76.5
3.81

96.5
3.83
17.0
3.44

37.0
3.69

57.0
3.77

77.0
3.81

97.0
3.83
17.5
3.45

37.5
3.69

57.5
3.77

77.5
3.81

97.5
3.83
18.0
3.47

38.0
3.69

58.0
3.77

78.0
3.81

98.0
3.83
18.5
3.48

38.5
3.70

58.5
3.77

78.5
3.81

98.5
3.84
19.0
3.49

39.0
3.70

59.0
3.78

79.0
3.81

99.0
3.84
19.5
3.50

39.5
3.70

59.5
3.78

79.5
3.81

99.5
3.84
20.0
3.51

40.0
3.71

60.0
3.78

80.0
3.81

100.0
3.84

6

Appendix

Adjusted 24-Month Average Segment Rates Reflecting ARP for Plan Years Beginning in 2020

First Segment Second Segment Third Segment
January 2020 4.75 5.50 6.27
February 2020 4.75 5.50 6.27
March 2020 4.75 5.50 6.27
April 2020 4.75 5.50 6.27
May 2020 4.75 5.50 6.27
June 2020 4.75 5.50 6.27
July 2020 4.75 5.50 6.27
August 2020 4.75 5.50 6.27
September 2020 4.75 5.50 6.27
October 2020 4.75 5.50 6.27
November 2020 4.75 5.50 6.27
December 2020 4.75 5.50 6.27
January 2021 4.75 5.50 6.27
February 2021 4.75 5.50 6.27
March 2021 4.75 5.50 6.27

Adjusted 24-Month Average Segment Rates Reflecting ARP for Plan Years Beginning in 2021

First Segment Second Segment Third Segment
September 2020 4.75 5.36 6.11
October 2020 4.75 5.36 6.11
November 2020 4.75 5.36 6.11
December 2020 4.75 5.36 6.11
January 2021 4.75 5.36 6.11
February 2021 4.75 5.36 6.11
March 2021 4.75 5.36 6.11