Notice 2019-40

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 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 Segment Rates Without 25-Year Average Adjustment Applicable Month First Segment Second Segment Third Segment June 2019 2.74 3.96 4.44

13Pursuant 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. 2019–27 59 July 1, 2019

Based on § 430(h)(2)(C)(iv), the 24-month averages applicable for September 2018 adjusted to be within the applicable minimum and maximum per

centages of the corresponding 25-Based on § 430(h)(2)(C)(iv), the 24-month averages applicable for June 2019, 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

Beginning In Applicable Month First Segment Second Segment Third Segment

2018 June 2019 3.92 5.52 6.29

2019 June 2019 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 May 2019 is 2.82 percent. The Service determined this rate as the average of the daily determinations of

yield on the 30-year Treasury bond maturing in February 2049 determined each day through May 8, 2019 and the yield on the 30-year Treasury bond maturing in May 2049 determined each day for the balance of the month. For plan years beginning in June 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:

Permissible Range

90% to 105%

Treasury Weighted Average Rates For Plan Years 30-Year Treasury

Beginning In

30-Year Treasury Weighted Average

June 2019 2.94 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 pres

ent value segment rates. Pursuant to that notice, the minimum present value segment rates determined for May 2019 are as follows:

Minimum Present Value Segment Rates Month First Segment Second Segment Third Segment May 2019 2.72 3.76 4.33

DRAFTING INFORMATION

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

ciate 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 202-3178702 (not toll-free calls).

July 1, 2019 60 Bulletin No. 2019–27

Table 2019-5 Monthly Yield Curve for May 2019

Derived from May 2019 Data Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield 0.5 2.60 20.5 4.18 40.5 4.35 60.5 4.41 80.5 4.44 1.0 2.63 21.0 4.18 41.0 4.35 61.0 4.41 81.0 4.45 1.5 2.66 21.5 4.19 41.5 4.35 61.5 4.41 81.5 4.45 2.0 2.68 22.0 4.20 42.0 4.36 62.0 4.42 82.0 4.45 2.5 2.70 22.5 4.20 42.5 4.36 62.5 4.42 82.5 4.45 3.0 2.72 23.0 4.21 43.0 4.36 63.0 4.42 83.0 4.45 3.5 2.74 23.5 4.22 43.5 4.36 63.5 4.42 83.5 4.45 4.0 2.78 24.0 4.22 44.0 4.36 64.0 4.42 84.0 4.45 4.5 2.82 24.5 4.23 44.5 4.37 64.5 4.42 84.5 4.45 5.0 2.87 25.0 4.23 45.0 4.37 65.0 4.42 85.0 4.45 5.5 2.94 25.5 4.24 45.5 4.37 65.5 4.42 85.5 4.45 6.0 3.01 26.0 4.24 46.0 4.37 66.0 4.42 86.0 4.45 6.5 3.08 26.5 4.25 46.5 4.37 66.5 4.42 86.5 4.45 7.0 3.16 27.0 4.26 47.0 4.38 67.0 4.43 87.0 4.45 7.5 3.24 27.5 4.26 47.5 4.38 67.5 4.43 87.5 4.45 8.0 3.32 28.0 4.26 48.0 4.38 68.0 4.43 88.0 4.45 8.5 3.40 28.5 4.27 48.5 4.38 68.5 4.43 88.5 4.45 9.0 3.47 29.0 4.27 49.0 4.38 69.0 4.43 89.0 4.45 9.5 3.54 29.5 4.28 49.5 4.38 69.5 4.43 89.5 4.45 10.0 3.61 30.0 4.28 50.0 4.39 70.0 4.43 90.0 4.45 10.5 3.67 30.5 4.29 50.5 4.39 70.5 4.43 90.5 4.46 11.0 3.73 31.0 4.29 51.0 4.39 71.0 4.43 91.0 4.46 11.5 3.78 31.5 4.30 51.5 4.39 71.5 4.43 91.5 4.46 12.0 3.83 32.0 4.30 52.0 4.39 72.0 4.43 92.0 4.46 12.5 3.87 32.5 4.30 52.5 4.39 72.5 4.43 92.5 4.46 13.0 3.91 33.0 4.31 53.0 4.39 73.0 4.43 93.0 4.46 13.5 3.94 33.5 4.31 53.5 4.40 73.5 4.44 93.5 4.46 14.0 3.97 34.0 4.31 54.0 4.40 74.0 4.44 94.0 4.46 14.5 4.00 34.5 4.32 54.5 4.40 74.5 4.44 94.5 4.46 15.0 4.03 35.0 4.32 55.0 4.40 75.0 4.44 95.0 4.46 15.5 4.05 35.5 4.32 55.5 4.40 75.5 4.44 95.5 4.46 16.0 4.07 36.0 4.33 56.0 4.40 76.0 4.44 96.0 4.46 16.5 4.08 36.5 4.33 56.5 4.40 76.5 4.44 96.5 4.46 17.0 4.10 37.0 4.33 57.0 4.40 77.0 4.44 97.0 4.46 17.5 4.11 37.5 4.33 57.5 4.41 77.5 4.44 97.5 4.46 18.0 4.13 38.0 4.34 58.0 4.41 78.0 4.44 98.0 4.46 18.5 4.14 38.5 4.34 58.5 4.41 78.5 4.44 98.5 4.46 19.0 4.15 39.0 4.34 59.0 4.41 79.0 4.44 99.0 4.46 19.5 4.16 39.5 4.34 59.5 4.41 79.5 4.44 99.5 4.46 20.0 4.17 40.0 4.35 60.0 4.41 80.0 4.44 100.0 4.46

Bulletin No. 2019–27 61 July 1, 2019