Looked at the yield curve lately?

[Effen]

You guys/gals look at the yield curve lately? short term 6.5%+, mid term 8%+, longterm 7.25%. With the market tanking and the 430 segment rates lagging behind (5.09, 6.16, 6.58) it would make using the full unaveraged yield curve very tempting. Could save lots of $$ in contributions... but you would be stuck with it for a period. Then again, you could get burnt on the other end as well.

Am I thinking correctly?

430(h)(2)(D) CORPORATE BOND YIELD CURVE. --For purposes of this paragraph --

430(h)(2)(D)(ii) ELECTION TO USE YIELD CURVE. --Solely for purposes of determining the minimum required contribution under this section, the plan sponsor may, in lieu of the segment rates determined under subparagraph ©, elect to use interest rates under the corporate bond yield curve. For purposes of the preceding sentence such curve shall be determined without regard to the 24-month averaging described in clause (i). Such election, once made, may be revoked only with the consent of the Secretary.

[Guest Grant]

You guys/gals look at the yield curve lately? short term 6.5%+, mid term 8%+, longterm 7.25%. With the market tanking and the 430 segment rates lagging behind (5.09, 6.16, 6.58) it would make using the full unaveraged yield curve very tempting. Could save lots of $$ in contributions... but you would be stuck with it for a period. Then again, you could get burnt on the other end as well.

Am I thinking correctly?

430(h)(2)(D) CORPORATE BOND YIELD CURVE. --For purposes of this paragraph --

430(h)(2)(D)(ii) ELECTION TO USE YIELD CURVE. --Solely for purposes of determining the minimum required contribution under this section, the plan sponsor may, in lieu of the segment rates determined under subparagraph ©, elect to use interest rates under the corporate bond yield curve. For purposes of the preceding sentence such curve shall be determined without regard to the 24-month averaging described in clause (i). Such election, once made, may be revoked only with the consent of the Secretary.

effen, yes you are. It appears we can always elect the yield curve any time, but can't revoke without Hank Paulson's Ok. He does deem a bit pre-occupied at the moment.

[Guest embeem]

I am not sure the proposed regulation language allows you to change to the full yield curve at any time without Commissioner consent. See Proposed Regulation 1.430(h)(2)-1(e)(1), the last sentence of which states "Any election in this paragraph (e) is part of the plan's funding method and, accordingly, may only be adopted or changed with the consent of the Commissioner". The statutory language appears to be more generous - it only calls for Commissioner consent only to revoke an election once made.