Updated Yield Curves and Segment Rates for DB Plans

October 16, 2020 -- The IRS has posted Notice 2020-77, 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, 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).

In addition, the notice provides interest rate guidance pertaining to 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. 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. IRC Sec. 431 addresses minimum funding standards for multiemployer plans.