Reference Data
IRS 417(e) Segment Rates
The three interest rates published monthly by the IRS that determine how pension plans calculate lump sum present values under Section 417(e). Higher rates mean lower lump sums.
2026 vs. 2025: Segment 2 is up 0.23 percentage points
Segment 2 is up 0.23 percentage points from last year, which means lump sums are lower than they were 12 months ago. Lump sums are lower in 2026 than they were in 2025.
November Rates by Plan Year
Most pension plans use the November rate set for the following calendar year. These are the rates pension actuaries use to calculate maximum lump sum values under IRS Section 417(e). Source: IRS Revenue Rulings.
| Plan Year | Rate Set (November) | Segment 1 (Yrs 1-5) | Segment 2 (Yrs 6-20) | Segment 3 (Yr 21+) | Lump Sum Impact |
|---|---|---|---|---|---|
| 2026Current | November 2025 | 5.03% | 5.35% | 5.57% | Lower than prior year |
| 2025 | November 2024 | 4.78% | 5.12% | 5.31% | Higher than prior year |
| 2024 | November 2023 | 5.19% | 5.51% | 5.71% | Lower than prior year |
| 2023 | November 2022 | 4.54% | 4.91% | 5.10% | Lower than prior year |
| 2022 | November 2021 | 1.18% | 2.29% | 3.01% | Lower than prior year |
| 2021 | November 2020 | 0.45% | 1.47% | 2.31% | Higher than prior year |
| 2020 | November 2019 | 2.04% | 3.09% | 3.68% | Higher than prior year |
| 2019 | November 2018 | 3.43% | 4.46% | 4.88% | Lower than prior year |
| 2018 | November 2017 | 2.20% | 3.57% | 4.24% | Higher than prior year |
| 2017 | November 2016 | 1.79% | 3.80% | 4.71% | Higher than prior year |
| 2016 | November 2015 | 1.76% | 4.15% | 5.13% | Lower than prior year |
| 2015 | November 2014 | 1.40% | 3.88% | 4.96% | Higher than prior year |
| 2014 | November 2013 | 1.19% | 4.53% | 5.66% | Lower than prior year |
| 2013 | November 2012 | 0.97% | 3.50% | 4.60% | Higher than prior year |
| 2012 | November 2011 | 2.20% | 4.18% | 4.81% | Baseline |
Source: IRS Revenue Rulings. November rates shown because they are the most common lookback month. Plans using August or October lookback will have different applicable rates.
What Each Segment Covers
Years 1 through 5
Derived from corporate bond yields with maturities under 5 years. The shortest-duration segment, so it responds quickly to short-term Fed policy changes.
5.03%, 2026
Years 6 through 20
Derived from intermediate-term corporate bond yields. The most influential segment for most retirees because the bulk of expected payments fall in this window.
5.35%, 2026
Year 21 and beyond
Derived from long-duration corporate bond yields. Applies to retirees with very long expected payment streams. Tends to move less than Segments 1 and 2.
5.57%, 2026
Which Lookback Month Does Your Plan Use?
The IRS publishes new segment rates every month, but pension plans lock in a specific month for the calendar year. The choice of lookback month is specified in your Summary Plan Description.
November is the most common lookback month for large corporate plans. Plans using the November rates apply them to lump sum calculations for the entire following calendar year.
Some plans use August or October instead. If your plan uses October 2025 rates rather than November 2025 rates, your lump sum will be slightly different from what this calculator shows. Request your plan document or ask your HR benefits administrator which month your plan uses.
| Lookback Month | Typical Plan Types | Applies to Plan Year |
|---|---|---|
| NovemberMost common | Most large corporate plans (Boeing, GM, AT&T, Ford) | Following calendar year |
| October | Some mid-size corporate plans | Following calendar year |
| August | Some state and municipal plans | Following calendar year |
How Much Do Rates Change the Lump Sum?
The difference between a low-rate environment and a high-rate environment is substantial. A $3,000 per month pension for a 62-year-old with a 25-year life expectancy illustrates the impact:
| Plan Year | Segment 2 Rate | Approx. Lump Sum Value | vs. 2021 |
|---|---|---|---|
| 2021 | 1.47% | $670,000 | Baseline (historic high) |
| 2022 | 2.29% | $610,000 | -$60,000 |
| 2023 | 4.91% | $480,000 | -$190,000 |
| 2024 | 5.51% | $455,000 | -$215,000 |
| 2025 | 5.12% | $465,000 | -$205,000 |
| 2026Current | 5.35% | $455,000 | -$215,000 |
Example: $3,000/month pension, age 62, 25-year life expectancy. Approximate values for illustration. Use the calculator for precise results.
Calculate your specific lump sum
Enter your pension details and see the exact present value using 2026 segment rates.