Treasury, IRS Issue Pension Protection Act Guidance
IR-2007-167, Oct. 9, 2007
WASHINGTON — The Treasury Department and the Internal Revenue Service (IRS) today issued a notice providing guidance on the methodology used to produce the corporate bond yield curve and segmented rates as part of enhanced pension funding rules for companies enacted by the Pension Protection Act of 2006 (PPA).
Under PPA, Treasury was required to produce a yield curve for investment-quality corporate debt that private pension plans must use to calculate their funding obligations and the amounts of their lump-sum payments to retirees. IRS Notice 2007-81 outlines the methodology used by Treasury in producing the yield curve.
Notice 2007-81 covers the use of the yield curve for purposes of applying the funding rules and minimum present value requirements of PPA. The Notice also provides the full yield curve and various segment rates for August 2007 and historical segment rates starting in September of 2005. In addition, each month IRS will then publish a standard notice containing updated monthly yields along with the additional rates required under the provisions of PPA.
The initial yield curve, as well as monthly updates will also be posted on the IRS’s website and on Treasury’s Economic Policy page.