Treasury Security Rate Set for Computing Current Plan Liability for July 2016 (Notice 2016-46)

CCH Tax Day Report

For pension plan years beginning in July 2016, the IRS has released the 30-year Treasury bond weighted average interest rate, the unadjusted segment rates, the adjusted rates and the minimum present value segment rates.

For purposes of Code Sec. 431, the three 24-month average corporate bond segment rates applicable for July 2016 without adjustment for the 25-year average segment rate limits are as follows: 1.51 for the first segment rate, 3.86 for the second, and 4.86 for the third.

The July 2016 adjusted segment rates for plan years beginning in 2015 are 4.72 for the first segment, 6.11 for the second segment, and 6.81 for the third segment. For plan years beginning in 2016, they are 4.43 for the first segment, 5.91 for the second, and 6.65 for the third.

For plan years beginning in July 2016, the 30-year Treasury weighted average securities rate is 3.03, with a permissible range of 2.72 to 3.18 under Code Sec. 431(c)(6)(E)(ii)(l).

The rate of interest on 30-year Treasury securities for June 2016 is 2.45 percent.

The minimum present value segment rates under Code Sec. 417(e)(3)(D) for June 2016 are 1.44 for the first segment rate, 3.46 for the second, and 4.48 for the third.

Notice 2016-46, 2016FED ¶46,373

Other References:

Code Sec. 401

CCH Reference – 2016FED ¶17,730.40

Code Sec. 417

Code Sec. 430

CCH Reference – 2016FED ¶20,161.30

Tax Research Consultant

CCH Reference – TRC RETIRE: 30,556

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