Part III --- Administrative, Miscellaneous, and Procedural Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates
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Internal Revenue Bulletin › IRB 2015 › Notice › Notice 2015-5
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Part III --- Administrative, Miscellaneous, and Procedural
Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates
Notice 2015-5
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). The rates
in this notice reflect the application of § 430(h)(2)(C)(iv), which was added by the Moving Ahead for
Progress in the 21st Century Act, Public Law 112-141 (MAP-21) and amended by section 2003 of
the Highway and Transportation Funding Act of 2014, Public Law 113-159 (HATFA).
YIELD CURVE AND SEGMENT RATES
Generally, except for certain plans under sections 104 and 105 of the Pension Protection
Act of 2006 and CSEC plans under § 414(y), § 430 of the Code specifies the minimum funding
requirements that apply to single-employer plans 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. 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
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. 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. In accordance with the methodology
specified in Notice 2007-81, the monthly corporate bond yield curve derived from December 2014
data is in Table I at the end of this notice. The spot first, second, and third segment rates for the
month of December 2014 are, respectively, 1.48, 3.77, and 4.79.
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) by the applicable percentage of the corresponding 25-
year average segment rates. Section 2003(a) of HATFA amended the applicable percentages
under § 430(h)(2)(C)(iv). This change generally applies to plan years beginning on or after January
1, 2013. However, pursuant to section 2003(e)(2) of HATFA, a plan sponsor can elect not to have
the amendments made to the applicable percentages by section 2003 of HATFA apply to any plan
year beginning in 2013. These elections can be made either for all purposes or, alternatively, for
purposes of determining the adjusted funding target attainment percentage under § 436. The 25-
year average segment rates for plan years beginning in 2012, 2013, 2014 and 2015 were published
in Notice 2012-55, 2012-36 I.R.B. 332, Notice 2013-11, 2013-11 I.R.B. 610, Notice 2013-58, 2013-
40 I.R.B. 294, and Notice 2014-50, 2014-40 I.R.B. 590, respectively
for all purposes or, alternatively, for
purposes of determining the adjusted funding target attainment percentage under § 436. The 25-
year average segment rates for plan years beginning in 2012, 2013, 2014 and 2015 were published
in Notice 2012-55, 2012-36 I.R.B. 332, Notice 2013-11, 2013-11 I.R.B. 610, Notice 2013-58, 2013-
40 I.R.B. 294, and Notice 2014-50, 2014-40 I.R.B. 590, respectively.
For plan years beginning in years 2012 through 2017, pursuant to the changes made by
HATFA, the applicable minimum percentage is 90% and the applicable maximum percentage is
110%. These applicable percentages are referred to as HATFA applicable percentages. As
described in the preceding paragraph, a special election is available for any plan year beginning in
2013 under which this change made by HATFA can be disregarded for all purposes or for limited
purposes. To the extent such an election is made, the applicable minimum percentage for a plan
year beginning in 2013 is 85% and the applicable maximum percentage for that plan year is 115%.
These applicable percentages are referred to as MAP-21 applicable percentages.
The three 24-month average corporate bond segment rates applicable for January 2015
without adjustment for the 25-year average segment rate limits are as follows:
Applicable
Month
First
Segment
Second
Segment
Third
Segment
January 2015
1.22
4.11
5.20
Based on § 430(h)(2)(C)(iv) as amended by section 2003 of HATFA, the 24-month averages
applicable for January 2015 adjusted for the HATFA applicable percentages of the corresponding
25-year average segment rates, are as follows:
For Plan
Years
Beginning In
Adjusted 24-Month Average Segment
Rates, Based on the HATFA
Applicable Percentage of 25-Year
Average Rates
Applicable Month
First
Second
Third
Segment
Segment
Segment
2013
January
2015
5.23
6.51
7.16
2014
January
2015
4.99
6.32
6.99
2015
January
2015
4.72
6.11
6.81
Based on § 430(h)(2)(C)(iv) as in effect prior
For Plan
Years
Beginning In
Adjusted 24-Month Average Segment
Rates, Based on the HATFA
Applicable Percentage of 25-Year
Average Rates
Applicable Month
First
Second
Third
Segment
Segment
Segment
2013
January
2015
5.23
6.51
7.16
2014
January
2015
4.99
6.32
6.99
2015
January
2015
4.72
6.11
6.81
Based on § 430(h)(2)(C)(iv) as in effect prior to amendment by section 2003 of HATFA, the
three 24-month averages applicable for January 2015 adjusted for the MAP-21 applicable
percentages of the corresponding 25-year average segment rates, for plan years beginning in 2013,
are as follows:
For Plan
Years
Beginning In
Adjusted 24-Month Average Segment
Rates, Based on MAP-21 Applicable
Percentage of 25-Year Average Rates
Applicable
First
Second
Third
Month
Segment
Segment
Segment
2013
January
2015
4.94
6.15
6.76
30-YEAR TREASURY SECURITIES INTEREST RATES
Generally for plan years beginning after 2007, § 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 section 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 December 2014 is 2.83 percent. The Service has determined this
rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing in
November 2044. The following rates were determined for plan years beginning in the month shown
below
83, provides guidelines for determining the weighted average interest rate. The rate of interest on
30-year Treasury securities for December 2014 is 2.83 percent. The Service has determined this
rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing in
November 2044. The following rates were determined for plan years beginning in the month shown
below.
For Plan Years
Beginning in
30-Year
Treasury
Weighted
Average
Permissible Range
Month
Year
90%
to
105%
January
2015
3.35
3.01
3.51
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 December 2014 are as follows:
First
Segment
Second
Segment
Third
Segment
1.48
3.77
4.79
DRAFTING INFORMATION
The principal author of this notice is Tony Montanaro of the Employee Plans, Tax Exempt
and Government Entities Division. Mr. Montanaro may be e-mailed at
RetirementPlanQuestions@irs.gov.
Table I
Monthly Yield Curve for December 2014
Derived from December 2014 Data
Maturity
Yield
Maturity
Yield
Maturity
Yield
Maturity
Yield
Maturity
Yield
0.5
0.33
20.5
4.44
40.5
4.83
60.5
4.97
80.5
5.04
1.0
0.65
21.0
4.46
41.0
4.84
61.0
4.97
81.0
5.04
1.5
0.94
21.5
4.48
41.5
4.84
61.5
4.97
81.5
5.04
2.0
1.22
22.0
4.49
42.0
4.85
62.0
4.97
82.0
5.04
2.5
1.46
22.5
4.51
42.5
4.85
62.5
4.98
82.5
5.04
3.0
1.67
23.0
4.52
43.0
4.86
63.0
4.98
83.0
5.04
3.5
1.87
23.5
4.54
43.5
4.86
63.5
4.98
83.5
5.04
4.0
2.05
24.0
4.55
44.0
4.87
64.0
4.98
84.0
5.04
4.5
2.22
24.5
4.57
44.5
4.87
64.5
4.98
84.5
5.05
5.0
2.38
25.0
4.58
45.0
4.87
65.0
4.99
85.0
5.
22.0
4.49
42.0
4.85
62.0
4.97
82.0
5.04
2.5
1.46
22.5
4.51
42.5
4.85
62.5
4.98
82.5
5.04
3.0
1.67
23.0
4.52
43.0
4.86
63.0
4.98
83.0
5.04
3.5
1.87
23.5
4.54
43.5
4.86
63.5
4.98
83.5
5.04
4.0
2.05
24.0
4.55
44.0
4.87
64.0
4.98
84.0
5.04
4.5
2.22
24.5
4.57
44.5
4.87
64.5
4.98
84.5
5.05
5.0
2.38
25.0
4.58
45.0
4.87
65.0
4.99
85.0
5.05
5.5
2.53
25.5
4.59
45.5
4.88
65.5
4.99
85.5
5.05
6.0
2.67
26.0
4.61
46.0
4.88
66.0
4.99
86.0
5.05
6.5
2.81
26.5
4.62
46.5
4.89
66.5
4.99
86.5
5.05
7.0
2.94
27.0
4.63
47.0
4.89
67.0
4.99
87.0
5.05
7.5
3.06
27.5
4.64
47.5
4.89
67.5
5.00
87.5
5.05
8.0
3.17
28.0
4.65
48.0
4.90
68.0
5.00
88.0
5.05
8.5
3.28
28.5
4.66
48.5
4.90
68.5
5.00
88.5
5.05
9.0
3.38
29.0
4.67
49.0
4.90
69.0
5.00
89.0
5.06
9.5
3.47
29.5
4.68
49.5
4.91
69.5
5.00
89.5
5.06
10.0
3.56
30.0
4.69
50.0
4.91
70.0
5.00
90.0
5.06
10.5
3.64
30.5
4.70
50.5
4.91
70.5
5.01
90.5
5.06
11.0
3.71
31.0
4.71
51.0
4.92
71.0
5.01
91.0
5.06
11.5
3.78
31.5
4.72
51.5
4.92
71.5
5.01
91.5
5.06
12.0
3.84
32.0
4.72
52.0
4.92
72.0
5.01
92.0
5.06
12.5
3.90
32.5
4.73
52.5
4.93
72.5
5.01
92.5
5.06
13.0
3.96
33.0
4.74
53.0
4.93
73.0
5.01
93.0
5.06
13.5
4.01
33.5
4.75
53.5
4.93
73.5
5.02
93.5
5.06
14.0
4.06
34.0
4.75
54.0
4.93
74.0
5.02
94.0
5.07
14.5
4.10
34.5
4.76
54.5
4.94
74.5
5.02
94.5
5.07
15.0
4.14
35.0
4.77
55.0
4.94
75.0
5.02
95.0
5.07
15.5
4.18
35.5
4.78
55.5
4.94
75.5
5.02
95.5
5.07
16.0
4.21
36.0
4.78
56.0
4.95
76.0
5.02
96.0
5.07
16.5
4.24
36.5
4.79
56.5
4.95
76.5
5.02
96.5
5.07
17.0
4.27
37.0
4.79
57.0
4.95
77.0
5.03
97.0
5.07
17.5
4.30
37.5
4.80
57.5
4.95
77.5
5.03
97.5
5.07
18.0
4.33
38.0
4.81
58.0
4.96
78.0
5.03
98.0
5.07
18.5
4.35
38.5
4.81
58.5
4.96
78.5
5.03
98.5
5.07
19.0
4.38
39.0
4.82
59.0
4.9
5.07
16.0
4.21
36.0
4.78
56.0
4.95
76.0
5.02
96.0
5.07
16.5
4.24
36.5
4.79
56.5
4.95
76.5
5.02
96.5
5.07
17.0
4.27
37.0
4.79
57.0
4.95
77.0
5.03
97.0
5.07
17.5
4.30
37.5
4.80
57.5
4.95
77.5
5.03
97.5
5.07
18.0
4.33
38.0
4.81
58.0
4.96
78.0
5.03
98.0
5.07
18.5
4.35
38.5
4.81
58.5
4.96
78.5
5.03
98.5
5.07
19.0
4.38
39.0
4.82
59.0
4.96
79.0
5.03
99.0
5.07
19.5
4.40
39.5
4.82
59.5
4.96
79.5
5.03
99.5
5.07
20.0
4.42
40.0
4.83
60.0
4.97
80.0
5.03
100.0
5.08
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