Updated Yield Curves and Segment Rates for DB Plans
The IRS has issued Notice 2021-27, which contains updated guidance on factors used in certain defined benefit (DB) pension plan minimum funding and present value calculations. Updates include the corporate bond monthly yield curve, the corresponding spot segment rates used under Internal Revenue Code Section (IRC Sec.) 417(e)(3), and the 24-month average segment rates under IRC Sec. 430(h)(2). IRC Sec. 417 contains definitions and special rules for minimum survivor annuity requirements in DB plans. IRC Sec. 430 addresses minimum funding standards for single-employer DB plans.
In addition, it contains 24-month average segment rates for January 2020 through April 2021, determined under IRC Sec. 430(h)(2)(C)(iv) reflecting the modifications made by Section 9706(a) of the American Rescue Plan Act of 2021.
Notice 2021-27 also provides interest rate information for 30-year Treasury securities under IRC Sec. 417(e)(3)(A)(ii)(II), as well as the 30-year Treasury weighted average rate under IRC Sec. 431(c)(6)(E)(ii)(I). IRC Sec. 431 addresses minimum funding standards for multiemployer plans.