n-19-21.pdf

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

Notice 2019-21

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 February 2019
data is in Table 2019-2 at the end of this notice. The spot first, second, and third segment rates
for the month of February 2019 are, respectively, 3.01, 4.11, and 4.41.

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
2018 and 2019 were published in 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 March 2019
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 March 2019, 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 February 2019 is 3.02 percent. The Service determined this rate
as the average of the daily determinations of yield on the 30-year Treasury bond maturing in
November 2048 determined each day through February 6, 2019 and the yield on the 30-year
Treasury bond maturing in February 2049 determined each day for the balance of the month.
For plan years beginning in March 2019, 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
March 2019 2.65 3.95 4.48

Adjusted 24-Month Average Segment Rates
For Plan Years First Second Third
Beginning In Applicable Month Segment Segment Segment
2018 March 2019 3.92 5.52 6.29
2019 March 2019 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%
March 2019 2.93 2.64 to 3.08

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 February 2019 are as follows:

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).

Minimum Present Value Segment Rates

Month First Segment Second Segment Third Segment
February 2019 3.01 4.11 4.41

Table 2019-2

Monthly Yield Curve for February 2019
Derived from February 2019 Data

Maturit
y Yield

Maturit
y Yield

Maturit
y Yield

Maturit
y Yield

Maturit
y Yield
0.5
2.72

20.5
4.43

40.5
4.41

60.5
4.41

80.5
4.41
1.0
2.84

21.0
4.43

41.0
4.41

61.0
4.41

81.0
4.41
1.5
2.94

21.5
4.42

41.5
4.41

61.5
4.41

81.5
4.41
2.0
3.00

22.0
4.42

42.0
4.41

62.0
4.41

82.0
4.41
2.5
3.04

22.5
4.42

42.5
4.41

62.5
4.41

82.5
4.41
3.0
3.06

23.0
4.42

43.0
4.41

63.0
4.41

83.0
4.41
3.5
3.07

23.5
4.41

43.5
4.41

63.5
4.41

83.5
4.41
4.0
3.09

24.0
4.41

44.0
4.41

64.0
4.41

84.0
4.41
4.5
3.13

24.5
4.41

44.5
4.41

64.5
4.41

84.5
4.41
5.0
3.18

25.0
4.41

45.0
4.41

65.0
4.41

85.0
4.41
5.5
3.24

25.5
4.41

45.5
4.41

65.5
4.41

85.5
4.41
6.0
3.32

26.0
4.41

46.0
4.41

66.0
4.41

86.0
4.41
6.5
3.40

26.5
4.41

46.5
4.41

66.5
4.41

86.5
4.41
7.0
3.49

27.0
4.40

47.0
4.41

67.0
4.41

87.0
4.41
7.5
3.59

27.5
4.40

47.5
4.41

67.5
4.41

87.5
4.41
8.0
3.68

28.0
4.40

48.0
4.41

68.0
4.41

88.0
4.41
8.5
3.77

28.5
4.40

48.5
4.41

68.5
4.41

88.5
4.41
9.0
3.85

29.0
4.40

49.0
4.41

69.0
4.41

89.0
4.41
9.5
3.93

29.5
4.40

49.5
4.41

69.5
4.41

89.5
4.41
10.0
4.01

30.0
4.40

50.0
4.41

70.0
4.41

90.0
4.41
10.5
4.07

30.5
4.40

50.5
4.41

70.5
4.41

90.5
4.41
11.0
4.13

31.0
4.40

51.0
4.41

71.0
4.41

91.0
4.41
11.5
4.19

31.5
4.40

51.5
4.41

71.5
4.41

91.5
4.41
12.0
4.24

32.0
4.40

52.0
4.41

72.0
4.41

92.0
4.41
12.5
4.28

32.5
4.40

52.5
4.41

72.5
4.41

92.5
4.41
13.0
4.31

33.0
4.40

53.0
4.41

73.0
4.41

93.0
4.41
13.5
4.34

33.5
4.40

53.5
4.41

73.5
4.41

93.5
4.41
14.0
4.36

34.0
4.40

54.0
4.41

74.0
4.41

94.0
4.41
14.5
4.38

34.5
4.40

54.5
4.41

74.5
4.41

94.5
4.41
15.0
4.40

35.0
4.40

55.0
4.41

75.0
4.41

95.0
4.41
15.5
4.41

35.5
4.40

55.5
4.41

75.5
4.41

95.5
4.41
16.0
4.42

36.0
4.40

56.0
4.41

76.0
4.41

96.0
4.41
16.5
4.42

36.5
4.40

56.5
4.41

76.5
4.41

96.5
4.41
17.0
4.43

37.0
4.40

57.0
4.41

77.0
4.41

97.0
4.41
17.5
4.43

37.5
4.40

57.5
4.41

77.5
4.41

97.5
4.41
18.0
4.43

38.0
4.41

58.0
4.41

78.0
4.41

98.0
4.41
18.5
4.43

38.5
4.41

58.5
4.41

78.5
4.41

98.5
4.41
19.0
4.43

39.0
4.41

59.0
4.41

79.0
4.41

99.0
4.41
19.5
4.43

39.5
4.41

59.5
4.41

79.5
4.41

99.5
4.41
20.0
4.43

40.0
4.41

60.0
4.41

80.0
4.41

100.0
4.41