The Treasury and IRS issue MAP-21 segment rates

The U.S. Department of the Treasury and Internal Revenue Service issued guidance on new 25-year average segment rates and adjusted 24-month average segment rates authorized under the Moving Ahead for Progress in the 21st Century Act (MAP-21), which will guide actuaries advising single-employer defined benefit plan sponsors on their minimum funding obligations.

John Ehrhardt discussed how companies should implement the new rates to reduce their pension contributions with Bloomberg’s BNA Snapshot; here is an excerpt:

Milliman is recommending that most of its clients use the rates to calculate their minimum funding obligation for 2012 but to contribute at about the same level they did in 2011, Ehrhardt said. With that strategy, employers can avoid a “bulge” in pension underfunding after 2013 when the positive effects of the new rates begin to phrase out, he said.

To read more about IRS Notice 2012-55 containing the MAP-21 segment rates, click here.

Leave a Reply