Notice 2020-11

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 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 January 2020 data is in Table 2020-1 at the end

of this notice. The spot first, second, and third segment rates for the month of January 2020 are, respectively, 1.91, 2.93, and 3.54. 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 2019 and 2020 were published in Notice 2018-73, 2018-40 I.R.B. 526, and Notice 2019-51, 2019-41 I.R.B. 866, respectively.

24-MONTH AVERAGE CORPORATE BOND SEGMENT RATES

The three 24-month average corporate bond segment rates applicable for February 2020 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

February 2020 2.75 3.80 4.26

Based on § 430(h)(2)(C)(iv), the ary 2020, adjusted to be within the appli24-month averages applicable for Febru- cable minimum and maximum percentag

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

Adjusted 24-Month Average Segment Rates For Plan Years First

Second Segment

Third Segment

Beginning In Applicable Month

First Segment

2019 February 2020 3.74 5.35 6.11

2020 February 2020 3.64 5.21 5.94

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.

Pursuant 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)). **March 9, 2020** **492** **Bulletin No. 2020–11** 383, provides guidelines for determining the weighted average interest rate. The rate of interest on 30-year Treasury securities for January 2020 is 2.22 percent. The Ser vice determined this rate as the average of the daily determinations of yield on the 30year Treasury bond maturing in November 2049. For plan years beginning in February 2020, 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** February 2020 _2.78_ _2.50 to 2.92_ **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 January 2020 are as follows: _Minimum Present Value Segment Rates_ **Month** **First Segment** **Second Segment** **Third Segment** January 2020 1.91 2.93 3.54 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 numbers). **Bulletin No. 2020–11** **493** **March 9, 2020** **Table 2020-1** Monthly Yield Curve for January 2020 Derived from January 2020 Data _Maturity_ _Yield_ _Maturity_ _Yield_ _Maturity_ _Yield_ _Maturity_ _Yield_ _Maturity_ _Yield_ 0.5 1.76 20.5 3.36 40.5 3.56 60.5 3.63 80.5 3.66 1.0 1.80 21.0 3.37 41.0 3.56 61.0 3.63 81.0 3.66 1.5 1.84 21.5 3.38 41.5 3.56 61.5 3.63 81.5 3.66 2.0 1.86 22.0 3.39 42.0 3.56 62.0 3.63 82.0 3.66 2.5 1.89 22.5 3.39 42.5 3.57 62.5 3.63 82.5 3.66 3.0 1.91 23.0 3.40 43.0 3.57 63.0 3.63 83.0 3.66 3.5 1.94 23.5 3.41 43.5 3.57 63.5 3.63 83.5 3.66 4.0 1.97 24.0 3.42 44.0 3.57 64.0 3.63 84.0 3.66 4.5 2.01 24.5 3.42 44.5 3.57 64.5 3.63 84.5 3.67 5.0 2.07 25.0 3.43 45.0 3.58 65.0 3.64 85.0 3.67 5.5 2.13 25.5 3.43 45.5 3.58 65.5 3.64 85.5 3.67 6.0 2.20 26.0 3.44 46.0 3.58 66.0 3.64 86.0 3.67 6.5 2.27 26.5 3.45 46.5 3.58 66.5 3.64 86.5 3.67 7.0 2.35 27.0 3.45 47.0 3.58 67.0 3.64 87.0 3.67 7.5 2.43 27.5 3.46 47.5 3.59 67.5 3.64 87.5 3.67 8.0 2.51 28.0 3.46 48.0 3.59 68.0 3.64 88.0 3.67 8.5 2.58 28.5 3.47 48.5 3.59 68.5 3.64 88.5 3.67 9.0 2.65 29.0 3.47 49.0 3.59 69.0 3.64 89.0 3.67 9.5 2.72 29.5 3.48 49.5 3.59 69.5 3.64 89.5 3.67 10.0 2.79 30.0 3.48 50.0 3.60 70.0 3.64 90.0 3.67 10.5 2.85 30.5 3.49 50.5 3.60 70.5 3.65 90.5 3.67 11.0 2.90 31.0 3.49 51.0 3.60 71.0 3.65 91.0 3.67 11.5 2.95 31.5 3.50 51.5 3.60 71.5 3.65 91.5 3.67 12.0 3.00 32.0 3.50 52.0 3.60 72.0 3.65 92.0 3.67 12.5 3.04 32.5 3.50 52.5 3.60 72.5 3.65 92.5 3.67 13.0 3.08 33.0 3.51 53.0 3.61 73.0 3.65 93.0 3.67 13.5 3.11 33.5 3.51 53.5 3.61 73.5 3.65 93.5 3.67 14.0 3.15 34.0 3.52 54.0 3.61 74.0 3.65 94.0 3.68 14.5 3.17 34.5 3.52 54.5 3.61 74.5 3.65 94.5 3.68 15.0 3.20 35.0 3.52 55.0 3.61 75.0 3.65 95.0 3.68 15.5 3.22 35.5 3.53 55.5 3.61 75.5 3.65 95.5 3.68 16.0 3.24 36.0 3.53 56.0 3.61 76.0 3.65 96.0 3.68 16.5 3.26 36.5 3.53 56.5 3.62 76.5 3.65 96.5 3.68 17.0 3.28 37.0 3.54 57.0 3.62 77.0 3.66 97.0 3.68 17.5 3.29 37.5 3.54 57.5 3.62 77.5 3.66 97.5 3.68 18.0 3.31 38.0 3.54 58.0 3.62 78.0 3.66 98.0 3.68 18.5 3.32 38.5 3.55 58.5 3.62 78.5 3.66 98.5 3.68 19.0 3.33 39.0 3.55 59.0 3.62 79.0 3.66 99.0 3.68 19.5 3.34 39.5 3.55 59.5 3.62 79.5 3.66 99.5 3.68 20.0 3.35 40.0 3.55 60.0 3.62 80.0 3.66 100.0 3.68 **March 9, 2020** **494** **Bulletin No. 2020–11** which is originally placed in service at a qualified facility on or after the date of the enactment of BBA, during the 12-year period beginning on the date the equipment was originally placed in service, and (ii) either (I) used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project and disposed of by the taxpayer in secure geological storage, or (II) utilized by the taxpayer in a manner described in § 45Q(f)(5). Section 45Q(d) sets forth the definition of a qualified facility as well as beginning of construction deadlines and the volume of qualified carbon oxide that must be captured. Pursuant to § 45Q(h), the Secretary of the Treasury or his delegate may prescribe such regulations and other guidance as may be necessary or appropriate to carry out § 45Q, including regulations or other guidance to determine whether a facility satisfies the beginning of construction requirements under § 45Q(d)(1) during such taxable year.