United Airlines Pension Lump Sum Calculator

United Airlines Pension: What You Need to Know

Plan status: PBGC administered

PBGC took over United's four pre-bankruptcy pension plans in 2005. The Pilots Fixed Benefit Income Plan terminated December 30, 2004 (14,237 participants), the Ground Employees' Retirement Plan terminated March 11, 2005 (36,370 participants), and the Flight Attendant plan (28,367 participants) and the Management, Administrative and Public Contact plan (43,509 participants) both terminated June 30, 2005. United still sponsors two defined benefit plans today, one for certain pilots and one for certain U.S. non-pilot employees. Pilot accruals and management and administrative accruals under those plans are frozen, and accruals continue for certain other non-pilot employees.

Buyouts and annuity transfers

Participants in the four terminated plans are paid by PBGC, subject to PBGC's guarantee limits for the year each plan terminated. United's FY2025 10-K doesn't report a lump sum window or insurer transfer for its current plans.

Understanding your lump sum offer

A plan doesn't have to offer a lump sum. If it does, IRC 417(e) sets the least it can pay: the present value of your annuity using the IRS segment rates and mortality table. A cash balance plan usually quotes your account balance instead.

Comparing an offer to the 417(e) number tells you whether the plan is paying at least the legal minimum. It doesn't tell you whether the lump sum is a good deal for you. That depends on your health, your other income, your spouse, and what you'd do with the money. If an offer comes in well below this calculator, ask the plan which month of rates and which start age it used.

The November 2025 segment rates are 4.07% for payments under 5 years away, 5.15% for 5 to 20 years, and 6.01% beyond 20. Many calendar-year plans use them for 2026. Your election packet lists the rates your plan actually used.

Tax considerations

The lump sum is taxable in the year you receive it unless you roll it directly to a traditional IRA or your new employer's 401(k). A direct rollover (plan to IRA) is not a taxable event. Taking the cash is. If you take cash, the plan is required to withhold 20% for federal taxes, and you'll owe the remaining taxes when you file.

A $400,000 lump sum taken as cash has $80,000 withheld, but the whole $400,000 is ordinary income that year. The withholding may not cover the bill. A direct rollover defers the tax until you take money out.

When the lump sum makes sense

For United Airlines retirees specifically, the lump sum can make sense when: you have serious health concerns and don't expect to reach the break-even age, you have other guaranteed income sources (Social Security, spouse's pension) that cover your baseline expenses, or you're comfortable managing a large portfolio for the rest of your life.

The annuity is typically the right answer for people who don't have other guaranteed income, whose spouse is younger and may outlive them significantly, or who simply don't want to manage a large portfolio in retirement. The guaranteed payment doesn't fluctuate with markets. It shows up every month regardless of what the S&P did.

Sources

• PBGC: United Air Lines Pilots Fixed Benefit Income Plan (case 19962700)
• PBGC: United Airlines Ground Employees' Retirement Plan (case 19922400)
• PBGC: United Air Lines Flight Attendant plan (case 19962800)
• PBGC: United Airlines Management, Administrative and Public Contact plan (case 19912600)
• United Airlines FY2025 10-K (current plans)