Lower Rates, Higher Lump Sum? What Fed Moves Mean for AT&T Employees

The Federal Reserve Signals Potential Rate Cuts—AT&T Employees Could See Big Pension Implications.

Michael Lee

By Farther

the farther outlook

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Lower Rates, Higher Lump Sum? What Fed Moves Mean for AT&T Employees

While Wall Street watches the Fed’s rate cuts for their impact on the economy, AT&T employees should pay attention for a different reason: the November IRS segment rates determine your pension lump sum for the entire following year.

Unlike companies that use monthly or quarterly lookback periods, AT&T uses an annual lookback. That means the IRS rates published in November lock in your lump sum for all retirements in the next calendar year. When rates fall, lump sums increase; when rates rise, lump sums decrease. Understanding this can help you plan retirement timing and maximize your benefits.

Where Rates Stand

According to the IRS Minimum Present Value Segment Rates, the November 2024 rates (currently governing 2025 retirements) were:

Segment 1: 4.66%
Segment 2: 5.25%
Segment 3: 5.57%

Through 2025, rates have been drifting lower following the Fed’s cuts, suggesting the possibility of smaller discount rates by November.

Example: Lump Sum Impact if Rates Move by November

Assume an AT&T employee age 60 is eligible for a $3,000/month pension starting in 2026.

*For illustrative purposes only. Actual pension values depend on age, service, and AT&T’s plan formula. Employees should consult a financial advisor who is familiar with the AT&T pension plan before making retirement decisions.

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Key Takeaway

For AT&T employees, the Fed’s rate moves aren’t just financial headlines—they could add or subtract tens of thousands of dollars from your pension lump sum. With the November lookback rule, one month of rates sets the tone for the entire year.

Whether you are retiring now or in the near future, it is imperative for AT&T employees to learn how interest rates affect their pension payout. The Focus Team advisors specialize in AT&T pension plans and can help you determine the optimal time to retire to maximize your benefits and overall retirement income. Schedule a complimentary call today.

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Michael Lee

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Principal, Wealth Advisor & Focus Team Lead

With over 10 years of experience as an advisor, Michael brings a laser-focused approach to holistic wealth management. His first foray into retirement planning was when his mother retired from Kaiser Permanente Walnut Creek. As a first generation American, Michael had the duty of translating for his family – and he felt, firsthand, the stress and anxiety that large financial decisions can cause for the majority of retirees. Michael provides fiduciary advice to soon-to-be retirees of large corporations. And he makes it his number one priority to chop down complex financial concepts – including pensions, 401K/TSA, Social Security, and taxes – into easy-to-understand bites for his clients. Michael’s expertise enables him to add a strong layer of financial advice to a company’s HR team – with a particularly strong understanding of the retirement programs offered by PG&E, AT&T, Kaiser Permanente, Chevron, Northrop Grumman, Boeing, and Raytheon. Born and raised in Oakland, CA, Michael is an active member of the dog rescue community – having fostered many dogs through rescue organizations including Chows Plus and Love Second Chances. You can find him exploring around town with his latest rescue, Chow Chow Maple.

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