New Record Low Federal Rates for September

The Internal Revenue Service has announced federal rates for the month of September under §§ 1274 and 7520 of the Internal Revenue Code (“IRC”) that will be the lowest rates since the IRS began publishing those rates in 1984.

  • The §7520 rate, which is used to value life estate, annuities, and remainders, will remain at 0.4%, which is the record low first set in August.
  • The federal rates under §1274, which defines the market rates of interest for purposes of intra-family loans under §7872 (among other things), will be the lowest in history. The September short-term rate of 0.14% will be lower that the 0.16% that applied in October of 2011. The mid-term rate of 0.35% will be lower than the 0.41% that applied in August. And the long-term rate of 1.00% will be lower than the 1.01% that applied in June.

For information on estate planning techniques to take advantage of these low rates, see “Low-Interest Estate Planning Strategies” (subscription required), which contains links to the Webcalculators overviews of long-term GRATs and interest-only term notes (no subscription required for those overviews) and sample calculations from Webcalculators.

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