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.
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.
