HIGHLIGHTS OF THIS ISSUE EMPLOYEE PLANS The IRS Mission Introduction Part III Notice 2022-32 Definition of Terms Abbreviations Numerical Finding List1 Numerical Finding List Finding List of Current Actions on Previously Published Items1 How to get the Internal Revenue Bulletin INTERNAL REVENUE BULLETIN We Welcome Comments About the Internal Revenue Bulletin Internal Revenue Bulletin: 2022-32 August 8, 2022 HIGHLIGHTS OF THIS ISSUE These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations. EMPLOYEE PLANS Notice 2022-32, page 137. This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for July 2022 used under § 417(e)(3)(D), the 24-month average segment rates applicable for July 2022, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv). The IRS Mission Provide America’s taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all. Introduction The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation, court decisions, and other items of general interest. It is published weekly. It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application of the tax laws, including all rulings that supersede, revoke, modify, or amend any of those previously published in the Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of internal practices and procedures that affect the rights and duties of taxpayers are published. Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts stated in the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices, identifying details and information of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory requirements. Rulings and procedures reported in the Bulletin do not have the force and effect of Treasury Department Regulations, but they may be used as precedents. Unpublished rulings will not be relied on, used, or cited as precedents by Service personnel in the disposition of other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations, court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are cautioned against reaching the same conclusions in other cases unless the facts and circumstances are substantially the same. The Bulletin is divided into four parts as follows: Part I.—1986 Code. This part includes rulings and decisions based on provisions of the Internal Revenue Code of 1986. Part II.—Treaties and Tax Legislation. This part is divided into two subparts as follows: Subpart A, Tax Conventions and Other Related Items, and Subpart B, Legislation and Related Committee Reports. Part III.—Administrative, Procedural, and Miscellaneous. To the extent practicable, pertinent cross references to these subjects are contained in the other Parts and Subparts. Also included in this part are Bank Secrecy Act Administrative Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the Treasury’s Office of the Assistant Secretary (Enforcement). Part IV.—Items of General Interest. This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements. The last Bulletin for each month includes a cumulative index for the matters published during the preceding months. These monthly indexes are cumulated on a semiannual basis, and are published in the last Bulletin of each semiannual period. Part III Weighted Average Interest Rates Update Notice 2022-32 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). YIELD CURVE AND SEGMENT RATES Section 430 specifies the minimum funding requirements that apply to single-employer plans (except for CSEC plans under § 414(y)) 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.1 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. Consistent with the methodology specified in Notice 2007-81, the monthly corporate bond yield curve derived from June 2022 data is in Table 2022-6 at the end of this notice. The spot first, second, and third segment rates for the month of June 2022 are, respectively, 3.64, 4.80, and 4.78. 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) to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates. The 25-year average segment rates for plan years beginning in 2021 and 2022 were published in Notice 2020-72, 2020-40 I.R.B. 789, and Notice 2021-54, 2021-41 I.R.B. 457, respectively. 24-MONTH AVERAGE CORPORATE BOND SEGMENT RATES The three 24-month average corporate bond segment rates applicable for July 2022 without adjustment for the 25-year average segment rate limits are as follows: 24-Month Average Segment Rates Without 25-Year Average Adjustment Applicable Month First Segment Second Segment Third Segment July 2022 1.14 2.89 3.44 25-YEAR AVERAGE SEGMENT RATES Section 9706(a) of the American Rescue Plan Act of 2021, Pub. L. 117-2 (the ARP), which was enacted on March 11, 2021, changed the 25-year average segment rates and the applicable minimum and maximum percentages used under § 430(h)(2)(C)(iv) of the Code to adjust the 24-month average segment rates.2 Prior to this change, the applicable minimum and maximum percentages were 85% and 115% for a plan year beginning in 2021, and 80% and 120% for a plan year beginning in 2022, respectively. After this change, the applicable minimum and maximum percentages are 95% and 105% for a plan year beginning in 2021 or 2022. In addition, pursuant to this change, any 25-year average segment rate that is less than 5% is deemed to be 5%.3 Pursuant to § 9706(c)(1) of the ARP, these changes apply with respect to plan years beginning on or after January 1, 2020. However, § 9706(c)(2) of the ARP provides that a plan sponsor may elect not to have these changes apply to any plan year beginning before January 1, 2022.4 The adjusted 24-month average segment rates set forth in the chart below reflect § 430(h)(2)(C)(iv) of the Code as amended by § 9706(a) of the ARP. These adjusted 24-month average segment rates apply only for plan years for which an election under § 9706(c)(2) of the ARP is not in effect. For a plan year for which such an election does not apply, the 24-month averages applicable for July 2022, adjusted to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates in accordance with § 430(h)(2)(C)(iv) of the Code, are as follows: Adjusted 24-Month Average Segment Rates For Plan Years Beginning In Applicable Month First Segment Second Segment Third Segment 2021 July 2022 4.75 5.36 6.11 2022 July 2022 4.75 5.18 5.92 The adjusted 24-month average segment rates set forth in the chart below do not reflect the changes to § 430(h)(2)(C)(iv) of the Code made by § 9706(a) of the ARP. These adjusted 24-month average segment rates apply only for plan years for which an election under § 9706(c)(2) of the ARP is in effect. For a plan year for which such an election applies, the 24-month averages applicable for July 2022, adjusted to be within the applicable minimum and maximum percentages of the corresponding 25-year average segment rates in accordance with § 430(h)(2)(C)(iv) of the Code, are as follows: Pre-ARP Adjusted 24-Month Average Segment Rates For Plan Years Beginning In Applicable Month First Segment Second Segment Third Segment 2021 July 2022 3.32 4.79 5.47 30-YEAR TREASURY SECURITIES INTEREST RATES Section 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 § 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 June 2022 is 3.24 percent. The Service determined this rate as the average of the daily determinations of yield on the 30-year Treasury bond maturing in May 2052 determined each day from June 1, 2022 to June 30, 2022. For plan years beginning in July 2022, the weighted average of the rates of interest on 30-year Treasury securities and the permissible range of rates used to calculate current liability are as follows: Treasury Weighted Average Rates For Plan Years Beginning In 30-Year Treasury Weighted Average Permissible Range 90% to 105% July 2022 2.16 1.94 to 2.27 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 June 2022 are as follows: Minimum Present Value Segment Rates Month First Segment Second Segment Third Segment June 2022 3.64 4.80 4.78 DRAFTING INFORMATION The principal author of this notice is Tom Morgan of the Office of Associate Chief Counsel (Employee Benefits, Exempt Organizations, and Employment Taxes). However, other personnel from the IRS participated in the development of this guidance. For further information regarding this notice, contact Mr. Morgan at 202-317-6700 or Osmundo Bernabe at 626-927-1344 (not toll-free calls). Table 2022-6 Monthly Yield Curve for June 2022 Derived from June 2022 Data Maturity Yield Maturity Yield Maturity Yield Maturity Yield Maturity Yield 0.5 2.57 20.5 4.93 40.5 4.76 60.5 4.71 80.5 4.69 1.0 2.99 21.0 4.92 41.0 4.76 61.0 4.71 81.0 4.69 1.5 3.35 21.5 4.91 41.5 4.76 61.5 4.71 81.5 4.69 2.0 3.62 22.0 4.90 42.0 4.76 62.0 4.71 82.0 4.69 2.5 3.80 22.5 4.89 42.5 4.75 62.5 4.71 82.5 4.69 3.0 3.90 23.0 4.88 43.0 4.75 63.0 4.71 83.0 4.69 3.5 3.97 23.5 4.87 43.5 4.75 63.5 4.71 83.5 4.69 4.0 4.03 24.0 4.87 44.0 4.75 64.0 4.71 84.0 4.69 4.5 4.08 24.5 4.86 44.5 4.75 64.5 4.71 84.5 4.69 5.0 4.13 25.0 4.85 45.0 4.75 65.0 4.71 85.0 4.69 5.5 4.19 25.5 4.85 45.5 4.74 65.5 4.71 85.5 4.69 6.0 4.26 26.0 4.84 46.0 4.74 66.0 4.71 86.0 4.69 6.5 4.33 26.5 4.84 46.5 4.74 66.5 4.71 86.5 4.69 7.0 4.40 27.0 4.83 47.0 4.74 67.0 4.70 87.0 4.68 7.5 4.47 27.5 4.83 47.5 4.74 67.5 4.70 87.5 4.68 8.0 4.54 28.0 4.82 48.0 4.74 68.0 4.70 88.0 4.68 8.5 4.61 28.5 4.82 48.5 4.74 68.5 4.70 88.5 4.68 9.0 4.67 29.0 4.82 49.0 4.74 69.0 4.70 89.0 4.68 9.5 4.73 29.5 4.81 49.5 4.73 69.5 4.70 89.5 4.68 10.0 4.78 30.0 4.81 50.0 4.73 70.0 4.70 90.0 4.68 10.5 4.83 30.5 4.81 50.5 4.73 70.5 4.70 90.5 4.68 11.0 4.87 31.0 4.80 51.0 4.73 71.0 4.70 91.0 4.68 11.5 4.90 31.5 4.80 51.5 4.73 71.5 4.70 91.5 4.68 12.0 4.93 32.0 4.80 52.0 4.73 72.0 4.70 92.0 4.68 12.5 4.95 32.5 4.79 52.5 4.73 72.5 4.70 92.5 4.68 13.0 4.97 33.0 4.79 53.0 4.73 73.0 4.70 93.0 4.68 13.5 4.98 33.5 4.79 53.5 4.73 73.5 4.70 93.5 4.68 14.0 4.99 34.0 4.79 54.0 4.72 74.0 4.70 94.0 4.68 14.5 5.00 34.5 4.78 54.5 4.72 74.5 4.70 94.5 4.68 15.0 5.00 35.0 4.78 55.0 4.72 75.0 4.70 95.0 4.68 15.5 5.00 35.5 4.78 55.5 4.72 75.5 4.69 95.5 4.68 16.0 5.00 36.0 4.78 56.0 4.72 76.0 4.69 96.0 4.68 16.5 4.99 36.5 4.78 56.5 4.72 76.5 4.69 96.5 4.68 17.0 4.99 37.0 4.77 57.0 4.72 77.0 4.69 97.0 4.68 17.5 4.98 37.5 4.77 57.5 4.72 77.5 4.69 97.5 4.68 18.0 4.97 38.0 4.77 58.0 4.72 78.0 4.69 98.0 4.68 18.5 4.96 38.5 4.77 58.5 4.72 78.5 4.69 98.5 4.68 19.0 4.95 39.0 4.77 59.0 4.72 79.0 4.69 99.0 4.68 19.5 4.94 39.5 4.76 59.5 4.72 79.5 4.69 99.5 4.68 20.0 4.93 40.0 4.76 60.0 4.71 80.0 4.69 100.0 4.68 1 Pursuant to § 433(h)(3)(A), the third segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount of the full funding limitation under § 433(c)(7)(C)). 2 Section 80602 of the Infrastructure Investment and Jobs Act, Pub. L. 117-58, makes further changes to the time periods for which specified applicable minimum and maximum percentages apply. 3 Pursuant to this change, the 25-year averages of the first segment rate for 2021 and 2022 are increased to 5.00% because those 25-year averages as originally published are below 5.00%. 4 This election may be made either for all purposes for which the amendments under § 9706 of the ARP apply or solely for purposes of determining the adjusted funding target attainment percentage under § 436 of the Code for the plan year. Definition of Terms Revenue rulings and revenue procedures (hereinafter referred to as “rulings”) that have an effect on previous rulings use the following defined terms to describe the effect: Amplified describes a situation where no change is being made in a prior published position, but the prior position is being extended to apply to a variation of the fact situation set forth therein. Thus, if an earlier ruling held that a principle applied to A, and the new ruling holds that the same principle also applies to B, the earlier ruling is amplified. (Compare with modified, below). Clarified is used in those instances where the language in a prior ruling is being made clear because the language has caused, or may cause, some confusion. It is not used where a position in a prior ruling is being changed. Distinguished describes a situation where a ruling mentions a previously published ruling and points out an essential difference between them. Modified is used where the substance of a previously published position is being changed. Thus, if a prior ruling held that a principle applied to A but not to B, and the new ruling holds that it applies to both A and B, the prior ruling is modified because it corrects a published position. (Compare with amplified and clarified, above). Obsoleted describes a previously published ruling that is not considered determinative with respect to future transactions. This term is most commonly used in a ruling that lists previously published rulings that are obsoleted because of changes in laws or regulations. A ruling may also be obsoleted because the substance has been included in regulations subsequently adopted. Revoked describes situations where the position in the previously published ruling is not correct and the correct position is being stated in a new ruling. Superseded describes a situation where the new ruling does nothing more than restate the substance and situation of a previously published ruling (or rulings). Thus, the term is used to republish under the 1986 Code and regulations the same position published under the 1939 Code and regulations. The term is also used when it is desired to republish in a single ruling a series of situations, names, etc., that were previously published over a period of time in separate rulings. If the new ruling does more than restate the substance of a prior ruling, a combination of terms is used. For example, modified and superseded describes a situation where the substance of a previously published ruling is being changed in part and is continued without change in part and it is desired to restate the valid portion of the previously published ruling in a new ruling that is self contained. In this case, the previously published ruling is first modified and then, as modified, is superseded. Supplemented is used in situations in which a list, such as a list of the names of countries, is published in a ruling and that list is expanded by adding further names in subsequent rulings. After the original ruling has been supplemented several times, a new ruling may be published that includes the list in the original ruling and the additions, and supersedes all prior rulings in the series. Suspended is used in rare situations to show that the previous published rulings will not be applied pending some future action such as the issuance of new or amended regulations, the outcome of cases in litigation, or the outcome of a Service study. Abbreviations The following abbreviations in current use and formerly used will appear in material published in the Bulletin. A—Individual. Acq.—Acquiescence. B—Individual. BE—Beneficiary. BK—Bank. B.T.A.—Board of Tax Appeals. C—Individual. C.B.—Cumulative Bulletin. CFR—Code of Federal Regulations. CI—City. COOP—Cooperative. Ct.D.—Court Decision. CY—County. D—Decedent. DC—Dummy Corporation. DE—Donee. Del. Order—Delegation Order. DISC—Domestic International Sales Corporation. DR—Donor. E—Estate. EE—Employee. E.O.—Executive Order. ER—Employer. ERISA—Employee Retirement Income Security Act. EX—Executor. F—Fiduciary. FC—Foreign Country. FICA—Federal Insurance Contributions Act. FISC—Foreign International Sales Company. FPH—Foreign Personal Holding Company. F.R.—Federal Register. FUTA—Federal Unemployment Tax Act. FX—Foreign corporation. G.C.M.—Chief Counsel’s Memorandum. GE—Grantee. GP—General Partner. GR—Grantor. IC—Insurance Company. I.R.B.—Internal Revenue Bulletin. LE—Lessee. LP—Limited Partner. LR—Lessor. M—Minor. Nonacq.—Nonacquiescence. O—Organization. P—Parent Corporation. PHC—Personal Holding Company. PO—Possession of the U.S. PR—Partner. PRS—Partnership. PTE—Prohibited Transaction Exemption. Pub. L.—Public Law. REIT—Real Estate Investment Trust. Rev. Proc.—Revenue Procedure. Rev. Rul.—Revenue Ruling. S—Subsidiary. S.P.R.—Statement of Procedural Rules. Stat.—Statutes at Large. T—Target Corporation. T.C.—Tax Court. T.D.—Treasury Decision. TFE—Transferee. TFR—Transferor. T.I.R.—Technical Information Release. TP—Taxpayer. TR—Trust. TT—Trustee. U.S.C.—United States Code. X—Corporation. Y—Corporation. Z—Corporation. Numerical Finding List1 Numerical Finding List Bulletin 2022–32 Announcements: Article Issue Link Page 2022-14 2022-31 I.R.B. 2022-31 136 2022-15 2022-31 I.R.B. 2022-31 136 Notices: Article Issue Link Page 2022-29 2022-28 I.R.B. 2022-28 66 2022-30 2022-28 I.R.B. 2022-28 70 2022-31 2022-29 I.R.B. 2022-29 85 2022-32 2022-32 I.R.B. 2022-32 137 Proposed Regulations: Article Issue Link Page REG-130975-08 2022-28 I.R.B. 2022-28 71 REG 130675-17 2022-30 I.R.B. 2022-30 104 Revenue Procedures: Article Issue Link Page 2022-25 2022-27 I.R.B. 2022-27 3 2022-28 2022-27 I.R.B. 2022-27 65 2022-26 2022-29 I.R.B. 2022-29 90 2022-32 2022-30 I.R.B. 2022-30 101 2022-30 2022-31 I.R.B. 2022-31 112 Revenue Rulings: Article Issue Link Page 2022-12 2022-27 I.R.B. 2022-27 1 2022-13 2022-30 I.R.B. 2022-30 99 2022-14 2022-31 I.R.B. 2022-31 110 1 A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2021–27 through 2021–52 is in Internal Revenue Bulletin 2021–52, dated December 27, 2021. Finding List of Current Actions on Previously Published Items1 Bulletin 2022–32 How to get the Internal Revenue Bulletin INTERNAL REVENUE BULLETIN The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue Bulletins are available at www.irs.gov/irb/. We Welcome Comments About the Internal Revenue Bulletin If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we would be pleased to hear from you. You can email us your suggestions or comments through the IRS Internet Home Page www.irs.gov) or write to the Internal Revenue Service, Publishing Division, IRB Publishing Program Desk, 1111 Constitution Ave. NW, IR-6230 Washington, DC 20224.