n-22-35.pdf

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

Notice 2022-35

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 July 2022 data
is in Table 2022-7 at the end of this notice. The spot first, second, and third segment rates for
the month of July 2022 are, respectively, 3.67, 4.67, and 4.73

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 2021 and 2022 were published in Notice
2020-72, 2020-40 I.R.B. 789, and Notice 2021-54, 2021-41 I.R.B. 457, respectively.

1
Pursuant to § 433(h)(3)(A), the third 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 August 2022
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 the American Rescue Plan Act of 2021, Pub. L. 117-2 (the ARP),
which was enacted on March 11, 2021, changed the 25-year average segment rates and the
applicable minimum and maximum percentages used under § 430(h)(2)(C)(iv) of the Code to
adjust the 24-month average segment rates.
2
Prior to this change, the applicable minimum and
maximum percentages were 85% and 115% for a plan year beginning in 2021, and 80% and
120% for a plan year beginning in 2022, respectively. After this change, the applicable minimum
and maximum percentages are 95% and 105% for a plan year beginning in 2021 or 2022. In
addition, pursuant to this change, any 25-year average segment rate that is less than 5% is
deemed to be 5%.
3

Pursuant to § 9706(c)(1) of the ARP, these changes apply with respect to plan years
beginning on or after January 1, 2020. However, § 9706(c)(2) of the ARP provides that a plan
sponsor may elect not to have these changes apply to any plan year beginning before January
1, 2022.
4

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 the ARP. These adjusted 24-month
average segment rates apply only for plan years for which an election under § 9706(c)(2) of the
ARP is not in effect. For a plan year for which such an election does not apply, the 24-month
averages applicable for August 2022, 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
Section 80602 of the Infrastructure Investment and Jobs Act, Pub. L. 117-58, makes further changes to
the time periods for which specified applicable minimum and maximum percentages apply.
3
Pursuant to this change, the 25-year averages of the first segment rate for 2021 and 2022 are increased
to 5.00% because those 25-year averages as originally published are below 5.00%.
4
This election may be made either for all purposes for which the amendments under § 9706 of the 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
August 2022 1.27 2.99 3.51
Adjusted 24-Month Average Segment Rates
For Plan Years First Second Third
Beginning In Applicable Month Segment Segment Segment
2021 August 2022 4.75 5.36 6.11
2022 August 2022 4.75 5.18 5.92

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 the ARP. These adjusted
24-month average segment rates apply only for plan years for which an election under
§ 9706(c)(2) of the ARP is in effect. For a plan year for which such an election applies, the 24-
month averages applicable for July 2022, 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 July 2022 is 3.10 percent. The Service determined this rate as
the average of the daily determinations of yield on the 30-year Treasury bond maturing in May
2052. For plan years beginning in August 2022, 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 July 2022 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
2021 August 2022 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%
August 2022 2.19 1.97 to 2.30
Minimum Present Value Segment Rates

Month First Segment Second Segment Third Segment
July 2022 3.67 4.67 4.73

4

DRAFTING INFORMATION

The principal author of this notice is Tom Morgan of the Office of 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 Osmundo Bernabe at 626-927-
1344 (not toll-free calls).

5

Table 2022-7

Monthly Yield Curve for July 2022
Derived from July 2022 Data

0.5
2.98
20.5
4.84
40.5
4.72
60.5
4.69
80.5
4.67
1.0
3.26
21.0
4.83
41.0
4.72
61.0
4.68
81.0
4.67
1.5
3.50
21.5
4.83
41.5
4.72
61.5
4.68
81.5
4.67
2.0
3.67
22.0
4.82
42.0
4.71
62.0
4.68
82.0
4.67
2.5
3.78
22.5
4.81
42.5
4.71
62.5
4.68 82.5 4.67
3.0
3.83
23.0
4.81
43.0
4.71 63.0 4.68
83.0
4.67
3.5
3.86
23.5
4.80
43.5
4.71
63.5
4.68
83.5
4.67
4.0
3.89
24.0
4.79
44.0
4.71
64.0
4.68
84.0
4.67
4.5
3.92
24.5
4.79
44.5
4.71
64.5
4.68
84.5
4.67
5.0
3.97
25.0
4.78
45.0
4.71
65.0
4.68
85.0
4.67
5.5
4.02
25.5
4.78
45.5
4.71
65.5
4.68
85.5
4.67
6.0
4.08
26.0
4.78
46.0
4.71
66.0
4.68 86.0 4.67
6.5
4.15
26.5
4.77
46.5
4.70
66.5
4.68
86.5
4.67
7.0
4.22
27.0
4.77
47.0
4.70
67.0
4.68
87.0
4.66
7.5
4.29
27.5
4.77
47.5
4.70
67.5
4.68
87.5
4.66
8.0
4.37
28.0
4.76
48.0
4.70
68.0
4.68
88.0
4.66
8.5
4.44
28.5
4.76
48.5
4.70
68.5
4.68
88.5
4.66
9.0
4.50
29.0
4.76
49.0
4.70 69.0 4.68
89.0
4.66
9.5
4.57
29.5
4.75
49.5
4.70
69.5
4.68
89.5
4.66
10.0
4.62
30.0
4.75
50.0
4.70
70.0
4.68
90.0
4.66
10.5
4.67
30.5
4.75
50.5
4.70
70.5
4.68
90.5
4.66
11.0
4.72
31.0
4.75
51.0
4.70
71.0
4.68
91.0
4.66
11.5
4.76
31.5
4.75
51.5
4.70
71.5
4.67
91.5
4.66
12.0
4.79
32.0
4.74
52.0
4.70
72.0
4.67
92.0
4.66
12.5
4.82
32.5
4.74
52.5
4.70 72.5 4.67
92.5
4.66
13.0
4.84
33.0
4.74
53.0
4.69
73.0
4.67
93.0
4.66
13.5
4.86
33.5
4.74
53.5
4.69
73.5
4.67
93.5
4.66
14.0
4.87
34.0
4.74
54.0
4.69
74.0
4.67
94.0
4.66
14.5
4.88
34.5
4.73
54.5
4.69
74.5
4.67
94.5
4.66
15.0
4.89
35.0
4.73
55.0
4.69
75.0
4.67
95.0
4.66
15.5
4.89
35.5
4.73
55.5
4.69
75.5
4.67
95.5
4.66
16.0
4.89
36.0
4.73
56.0
4.69
76.0
4.67
96.0
4.66
16.5
4.89
36.5
4.73
56.5
4.69
76.5
4.67
96.5
4.66
17.0
4.88
37.0
4.73
57.0
4.69
77.0
4.67
97.0
4.66
17.5
4.88
37.5
4.73
57.5
4.69
77.5
4.67
97.5
4.66
18.0
4.87
38.0
4.72
58.0
4.69
78.0
4.67
98.0
4.66
18.5
4.87
38.5
4.72
58.5
4.69
78.5
4.67 98.5 4.66
19.0
4.86
39.0
4.72
59.0
4.69
79.0
4.67
99.0
4.66
19.5
4.85
39.5
4.72
59.5
4.69
79.5
4.67
99.5
4.66
20.0
4.85
40.0
4.72
60.0
4.69
80.0
4.67
100.0
4.66