n-13-32.pdf

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

Notice 2013-32

This notice provides guidance on the corporate bond monthly yield curve (and the
corresponding spot segment rates), 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, the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I), and the minimum
present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.
These rates reflect certain changes implemented by the Moving Ahead for Progress in the 21st
Century Act, Public Law 112-141 (MAP-21). MAP-21 provides that for purposes of § 430(h)(2), the
segment rates are limited by the applicable maximum percentage or the applicable minimum
percentage based on the average of segment rates over a 25 year period.

YIELD CURVE AND SEGMENT RATES

Generally, except for certain plans under sections 104 and 105 of the Pension Protection
Act of 2006, § 430 of the Code specifies the minimum funding requirements that apply to single
employer plans 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. 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. Pursuant to Notice 2007-81, the monthly
corporate bond yield curve derived from April 2013 data is in Table I at the end of this notice. The
spot first, second, and third segment rates for the month of April 2013 are, respectively, 0.93, 3.61,
and 4.88. For plan years beginning in on or after January 1, 2012, the 24-month average segment
rates determined under § 430(h)(2)(C)(iv) must be adjusted by the applicable percentage of the
corresponding 25-year average segment rates. The 25-year average segment rates for plan years
beginning in 2012 and for plan years beginning in 2013 were published in Notices 2012-55 and
2013-11, respectively. The three 24-month average corporate bond segment rates applicable for
March 2013 without adjustment, and the adjusted 24-month average segment rates taking into
account the applicable percentages of the corresponding 25-year average segment rates, are as
follows:

24-Month Average Segment Rates Not
Adjusted
Adjusted 24-Month Average
Segment Rates, Based on
Applicable Percentage of 25-
Year Average Rates
Applicable First Second Third First Second Third
For Plan
Years
Beginning
In
Month Segment Segment Segment Segment SegmentSegment
2012
May 2013 1.46 4.15 5.20 5.54 6.85 7.52

2013 May 2013 1.46 4.15 5.20 4.94 6.15 6.76

30-YEAR TREASURY SECURITIES INTEREST RATES

Generally for plan years beginning after 2007, § 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 section 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 April 2013 is 2.93 percent. The Service has determined this rate as
the average of the daily determinations of yield on the 30-year Treasury bond maturing in February
2043. The following rates were determined for plan years beginning in the month shown below.

For Plan Years
Beginning in
Permissible Range
Month Year

30-Year
Treasury
Weighted
Average
90% to 105%

May 2013 3.48 3.13 3.66

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
transitional segment rates determined for April 2013 are as follows:

First
Segment

Second
Segment

Third
Segment

0.93 3.61 4.88

DRAFTING INFORMATION

The principal author of this notice is Tony Montanaro of the Employee Plans, Tax Exempt
and Government Entities Division. Mr. Montanaro may be e-mailed at

RetirementPlanQuestions@irs.gov.

Table I

Monthly Yield Curve for April 2013
Derived from April 2013 Data

Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield
0.5 0.27 20.5 4.55 40.5 4.93 60.5 5.06 80.5 5.13
1.0 0.46 21.0 4.57 41.0 4.93 61.0 5.06 81.0 5.13
1.5 0.62 21.5 4.58 41.5 4.93 61.5 5.07 81.5 5.13
2.0 0.77 22.0 4.60 42.0 4.94 62.0 5.07 82.0 5.13
2.5 0.89 22.5 4.61 42.5 4.94 62.5 5.07 82.5 5.13
3.0 1.00 23.0 4.63 43.0 4.95 63.0 5.07 83.0 5.14
3.5 1.12 23.5 4.64 43.5 4.95 63.5 5.07 83.5 5.14
4.0 1.24 24.0 4.65 44.0 4.96 64.0 5.08 84.0 5.14
4.5 1.38 24.5 4.66 44.5 4.96 64.5 5.08 84.5 5.14
5.0 1.54 25.0 4.68 45.0 4.97 65.0 5.08 85.0 5.14
5.5 1.71 25.5 4.69 45.5 4.97 65.5 5.08 85.5 5.14
6.0 1.89 26.0 4.70 46.0 4.97 66.0 5.08 86.0 5.14
6.5 2.08 26.5 4.71 46.5 4.98 66.5 5.09 86.5 5.14
7.0 2.27 27.0 4.72 47.0 4.98 67.0 5.09 87.0 5.14
7.5 2.46 27.5 4.73 47.5 4.99 67.5 5.09 87.5 5.15
8.0 2.64 28.0 4.74 48.0 4.99 68.0 5.09 88.0 5.15
8.5 2.82 28.5 4.75 48.5 4.99 68.5 5.09 88.5 5.15
9.0 2.99 29.0 4.76 49.0 5.00 69.0 5.09 89.0 5.15
9.5 3.15 29.5 4.77 49.5 5.00 69.5 5.10 89.5 5.15
10.0 3.30 30.0 4.78 50.0 5.00 70.0 5.10 90.0 5.15
10.5 3.44 30.5 4.79 50.5 5.01 70.5 5.10 90.5 5.15
11.0 3.57 31.0 4.80 51.0 5.01 71.0 5.10 91.0 5.15
11.5 3.68 31.5 4.81 51.5 5.01 71.5 5.10 91.5 5.15
12.0 3.79 32.0 4.82 52.0 5.02 72.0 5.10 92.0 5.16
12.5 3.88 32.5 4.82 52.5 5.02 72.5 5.11 92.5 5.16
13.0 3.97 33.0 4.83 53.0 5.02 73.0 5.11 93.0 5.16
13.5 4.05 33.5 4.84 53.5 5.02 73.5 5.11 93.5 5.16
14.0 4.11 34.0 4.85 54.0 5.03 74.0 5.11 94.0 5.16
14.5 4.17 34.5 4.85 54.5 5.03 74.5 5.11 94.5 5.16
15.0 4.23 35.0 4.86 55.0 5.03 75.0 5.11 95.0 5.16
15.5 4.27 35.5 4.87 55.5 5.04 75.5 5.12 95.5 5.16
16.0 4.32 36.0 4.87 56.0 5.04 76.0 5.12 96.0 5.16
16.5 4.35 36.5 4.88 56.5 5.04 76.5 5.12 96.5 5.16
17.0 4.39 37.0 4.89 57.0 5.04 77.0 5.12 97.0 5.16
17.5 4.42 37.5 4.89 57.5 5.05 77.5 5.12 97.5 5.17
18.0 4.45 38.0 4.90 58.0 5.05 78.0 5.12 98.0 5.17
18.5 4.47 38.5 4.90 58.5 5.05 78.5 5.12 98.5 5.17
19.0 4.49 39.0 4.91 59.0 5.05 79.0 5.13 99.0 5.17
19.5 4.51 39.5 4.91 59.5 5.06 79.5 5.13 99.5 5.17
20.0 4.53 40.0 4.92 60.0 5.06 80.0 5.13 100.0 5.17