Part III. Administrative, Procedural, and Miscellaneous

Weighted Average Interest Rate Update

Notice 2003–30

Sections 412(b)(5)(B) and 412(l)(7)(C)(i) of the Internal Revenue Code provide that the interest rates used to calculate current liability for purposes of determining the full funding limitation under § 412(c)(7) and the required contribution under § 412(l) must be within a permissible range around the weighted average of the rates of interest on 30-year Treasury securities during the fouryear 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 and the re

Month Year

Weighted

Average

sulting permissible range of interest rates used to calculate current liability for the purpose of the full funding limitation of § 412(c)(7) of the Code.

Section 417(e)(3)(A)(ii)(II) defines the applicable interest rate, which must be used for purposes of determining the minimum present value of a participant’s benefit under § 417(e)(1) and (2), as the annual rate of interest on 30-year Treasury securities for the month before the date of distribution or such other time as the Secretary may by regulations prescribe. Section 1.417(e)– 1(d)(3) of the Income Tax Regulations provides that the applicable interest rate for a month is the annual interest rate on 30year Treasury securities as specified by the Commissioner for that month in revenue

rulings, notices or other guidance published in the Internal Revenue Bulletin.

The rate of interest on 30-year Treasury Securities for May 2003 is 4.53 percent. Pursuant to Notice 2002–26, 2002–15 I.R.B. 743, the Service has determined this rate as the monthly average of the daily determination of yield on the 30-year Treasury bond maturing in February 2031.

Section 405 of the Job Creation and Worker Assistance Act of 2002 amended § 412(l)(7)(C) of the Code to provide that for plan years beginning in 2002 and 2003 the permissible range is extended to 120 percent.

The following rates were determined for the plan years beginning in the month shown below.

90% to 120% Permissible

Range

90% to 110% Permissible

Range

June 2003 5.39 4.85 to 5.93 4.85 to 6.46

.02 FTS is optional for the taxpayer. FTS does not eliminate or replace existing dispute resolution options, including the taxpayer’s opportunity to request a hearing before Appeals or a conference with a manager. The FTS Appeals Official, serving as a neutral participant in the FTS process, will assist LMSB and the taxpayer to understand the nature of the dispute and to reach a mutually satisfactory resolution consistent with applicable law. The FTS Appeals Official also may recommend a settlement based on the FTS Appeals Official’s analysis of the issues. See Section 2.03. The taxpayer may withdraw from the FTS process at any time by notifying in writing the LMSB Team Manager and the FTS Appeals Official of the withdrawal. The FTS Appeals Official or the LMSB Team Manager also may terminate the LMSB Fast Track process, by notifying the taxpayer in writing, if either one determines that meaningful progress toward resolution of the issues has stopped. If any issues remain unresolved at the conclusion of the FTS process, the taxpayer retains all of its otherwise applicable appeal rights.

.03 Any recommended settlement by the FTS Appeals Official of an issue in FTS

Drafting Information

The principal authors of this notice are Paul Stern and Tony Montanaro of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this notice, please contact the Employee Plans’ taxpayer assistance telephone service at 1–877–829–5500 (a toll-free number), between the hours of 8:00 a.m. and 6:30 p.m. Eastern time, Monday through Friday. Mr. Stern may be reached at 1–202–283–9703. Mr. Montanaro may be reached at 1–202–283–9714. The telephone numbers in the preceding two sentences are not toll-free.

Rev. Proc. 2003–40

LMSB/Appeals Fast Track Settlement Procedure