If you are trying to understand why your pension lump sum changed, or why your employer chose this particular moment to offer a buyout, segment rate history is the answer. The three IRS 417(e) segment rates move with the corporate bond market, and their swings over the past six years have produced some of the most dramatic shifts in pension lump sum values since the program was established.
The 2020 to 2021 historic low
The Federal Reserve cut rates to near zero in March 2020. Corporate bond yields followed. By November 2020, the segment rates applicable to 2021 plan years were 0.45%, 1.47%, and 2.31% for segments 1, 2, and 3 respectively. These were the lowest rates in the history of the IRS 417(e) program.
For pension holders, this was a historic window. A $3,000/month pension for a 65-year-old with a 20-year expected retirement was worth approximately $640,000 as a lump sum. Employers who offered buyout windows in 2021 were transferring maximum value to retirees. Some intentionally timed windows to use the rate environment; others used it as an opportunity to shed pension liabilities at their highest possible cost.
The 2022 rate spike
The Fed began hiking rates aggressively in March 2022. By November 2022, the segment rates applicable to 2023 plan years were 4.88%, 5.14%, and 5.00%. That same $3,000/month pension was now worth approximately $450,000. In two years, the lump sum equivalent fell by roughly $190,000. Same pension. Same person. Only the discount rate changed.
This is the single most important thing to understand about pension lump sum math: the present value is a function of interest rates, not just your benefit level. A rising rate environment mechanically shrinks lump sums even when pensions are fully funded and paying normally.
2023 to 2026 stabilization
Rates stayed elevated through 2023 and 2024 as the Fed maintained its tightening position. The November 2025 rates applicable to 2026 plan years came in at 5.03%, 5.35%, and 5.57%. Slightly higher than 2023, reflecting continued corporate bond market conditions and no dramatic Fed reversal.
There was no return to near-zero rates. The extraordinary lump sum values of 2020 to 2021 are unlikely to recur without another financial crisis on the scale of 2008 or 2020.
What this means if you are waiting
If you have been waiting for rates to fall before electing a lump sum, consider whether that expectation is realistic. Rates would need to fall several hundred basis points across all three segments to approach 2021 lump sum levels. That is a severe recession scenario, not a base case. Meanwhile, the annuity continues to provide its guaranteed monthly income regardless of rate movements.
Finding historical rates
The IRS publishes segment rates monthly in Revenue Rulings, archived at IRS.gov. Your plan's Summary Plan Description specifies whether your plan uses the November, October, or August lookback month. Use the calculator on this site with the specific rates from your plan documents for the most accurate present value. The current 2026 rates are pre-populated, and you can enter any historical rate set to see what your pension would have been worth at a different point in time.