SECTION 8. DRAFTING

INFORMATION

The principal author of this revenue procedure is Charles Magee of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this revenue procedure, contact Mr. Magee at (202) 317-7005 (not a tollfree number).

Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Notice 2019–03

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 30year 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 singleemployer plans (except for CSEC plans under § 414(y)) pursuant to § 412. Section 430(h)(2) specifies the interest rates that

January 14, 2019 350 Bulletin No. 2019–03

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 November 2018 data is in Table 2018–11 at the end of this notice. The spot first, second, and third segment rates for the month of November 2018 are, respectively, 3.43, 4.46, and 4.88.

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 2017, 2018, and 2019 were published in Notice 2016–54, 2016–40 I.R.B. 429, Notice 2017–50, 2017–41 I.R.B. 280, and Notice 2018–73, 2018–40 I.R.B. 526, respectively.

24-MONTH AVERAGE CORPORATE BOND SEGMENT RATES

The three 24-month average corporate bond segment rates applicable for December 2018 without adjustment for the 25year average segment rate limits are as follows:

24-Month Average Segment Rates Without 25-Year Average Adjustment

Applicable Month First Segment Second Segment Third Segment

December 2018 2.50 3.92 4.50

Based on § 430(h)(2)(C)(iv), the 24month averages applicable for December

2018, adjusted to be within the applicable minimum and maximum percentages of

the corresponding 25-year average segment rates, are as follows:

Adjusted 24-Month Average Segment Rates For Plan Years First Second Third

Beginning In Applicable Month Segment Segment Segment

2017 December 2018 4.16 5.72 6.48

2018 December 2018 3.92 5.52 6.29

2019 December 2018 3.74 5.35 6.11

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 November 2018 is 3.36 percent. The Service determined this rate as the average of the

daily determinations of yield on the 30year Treasury bond maturing in August 2048 determined each day through November 6, 2018 and the yield on the 30year Treasury bond maturing in November 2048 determined each day for the balance of the month. For plan years beginning in December 2018, 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:

Permissible Range

Treasury Weighted Average Rates For Plan Years 30-Year Treasury

Beginning In Weighted Average 90% to 105%

December 2018 2.91 2.62 to 3.06

Beginning In

30-Year Treasury Weighted Average

1Pursuant to § 433(h)(3)(A), the 3rd 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)).

Bulletin No. 2019–03 351 January 14, 2019

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 seg

ment rates determined for November 2018 are as follows:

Minimum Present Value Segment Rates Month First Segment Second Segment Third Segment

November 2018 3.43 4.46 4.88

DRAFTING INFORMATION

The principal author of this notice is Tom Morgan of the Office of the Associ

ate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS participated in the development of this guidance. For further

Table 2018–11 Monthly Yield Curve for November 2018

information regarding this notice, contact Mr. Morgan at 202-317-6700 or Paul Stern at 202-317-8702 (not toll-free calls).

Derived from November 2018 Data Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield

0.5 2.90 20.5 4.77 40.5 4.89 60.5 4.93 80.5 4.96

1.0 3.08 21.0 4.78 41.0 4.89 61.0 4.93 81.0 4.96

1.5 3.24 21.5 4.78 41.5 4.89 61.5 4.94 81.5 4.96

2.0 3.37 22.0 4.79 42.0 4.90 62.0 4.94 82.0 4.96

2.5 3.46 22.5 4.79 42.5 4.90 62.5 4.94 82.5 4.96

3.0 3.53 23.0 4.80 43.0 4.90 63.0 4.94 83.0 4.96

3.5 3.59 23.5 4.80 43.5 4.90 63.5 4.94 83.5 4.96

4.0 3.64 24.0 4.80 44.0 4.90 64.0 4.94 84.0 4.96

4.5 3.69 24.5 4.81 44.5 4.90 64.5 4.94 84.5 4.96

5.0 3.75 25.0 4.81 45.0 4.90 65.0 4.94 85.0 4.96

5.5 3.81 25.5 4.82 45.5 4.91 65.5 4.94 85.5 4.96

6.0 3.87 26.0 4.82 46.0 4.91 66.0 4.94 86.0 4.96

6.5 3.94 26.5 4.82 46.5 4.91 66.5 4.94 86.5 4.96

7.0 4.00 27.0 4.83 47.0 4.91 67.0 4.94 87.0 4.96

7.5 4.07 27.5 4.83 47.5 4.91 67.5 4.94 87.5 4.96

8.0 4.13 28.0 4.83 48.0 4.91 68.0 4.94 88.0 4.96

8.5 4.19 28.5 4.84 48.5 4.91 68.5 4.94 88.5 4.96

9.0 4.25 29.0 4.84 49.0 4.91 69.0 4.94 89.0 4.96

9.5 4.30 29.5 4.84 49.5 4.91 69.5 4.95 89.5 4.96

10.0 4.36 30.0 4.84 50.0 4.92 70.0 4.95 90.0 4.96

10.5 4.40 30.5 4.85 50.5 4.92 70.5 4.95 90.5 4.96

11.0 4.45 31.0 4.85 51.0 4.92 71.0 4.95 91.0 4.96

11.5 4.49 31.5 4.85 51.5 4.92 71.5 4.95 91.5 4.96

12.0 4.52 32.0 4.86 52.0 4.92 72.0 4.95 92.0 4.96

12.5 4.55 32.5 4.86 52.5 4.92 72.5 4.95 92.5 4.96

13.0 4.58 33.0 4.86 53.0 4.92 73.0 4.95 93.0 4.96

13.5 4.61 33.5 4.86 53.5 4.92 73.5 4.95 93.5 4.97

14.0 4.63 34.0 4.87 54.0 4.92 74.0 4.95 94.0 4.97

14.5 4.65 34.5 4.87 54.5 4.92 74.5 4.95 94.5 4.97

15.0 4.67 35.0 4.87 55.0 4.93 75.0 4.95 95.0 4.97

15.5 4.68 35.5 4.87 55.5 4.93 75.5 4.95 95.5 4.97

January 14, 2019 352 Bulletin No. 2019–03

Table 2018–11 Monthly Yield Curve for November 2018

Derived from November 2018 Data Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield

16.0 4.70 36.0 4.87 56.0 4.93 76.0 4.95 96.0 4.97

16.5 4.71 36.5 4.88 56.5 4.93 76.5 4.95 96.5 4.97

17.0 4.72 37.0 4.88 57.0 4.93 77.0 4.95 97.0 4.97

17.5 4.73 37.5 4.88 57.5 4.93 77.5 4.95 97.5 4.97

18.0 4.74 38.0 4.88 58.0 4.93 78.0 4.95 98.0 4.97

18.5 4.75 38.5 4.88 58.5 4.93 78.5 4.95 98.5 4.97

19.0 4.75 39.0 4.89 59.0 4.93 79.0 4.95 99.0 4.97

19.5 4.76 39.5 4.89 59.5 4.93 79.5 4.96 99.5 4.97

20.0 4.77 40.0 4.89 60.0 4.93 80.0 4.96 100.0 4.97

Guidance on Special Enforcement Matters Under the Centralized Partnership Audit Regime

Notice 2019–06