IRS Releases Updated Corporate Bond Yield Curve and Pension Segment Rates for 2025: What Plan Sponsors Need to Know

The IRS has released Notice 2025-29, providing the latest updates on corporate bond yield curves, minimum present value segment rates, and 24-month average segment rates used for pension funding requirements. These interest rates are central to calculating minimum funding obligations, lump-sum distributions, and current liability for both single-employer and multiemployer plans.

For actuaries, plan administrators, and corporate finance teams, these updates determine everything from lump-sum payout values, to PBGC premiums, to balance-sheet pension liabilities.

The sections below highlight what changed, what stayed the same, and how to put the new numbers from Notice 2025-29 to work.

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1. Updated Corporate Bond Yield Curve for April 2025

The IRS published the monthly corporate bond yield curve based on April 2025 data.

On page 4 of the notice, the Table 2025-4 shows yields from 0.5 years through 100 years, with short-term rates in the mid-4% range and long-term rates stabilizing above 6%. For example:

• 0.5-year maturity: 4.52%

• 20-year maturity: 5.93%

• 40-year maturity: 6.08%

• 100-year maturity: 6.25%

These yields are the raw inputs used to calculate spot segment rates and to value cash flows under the monthly yield curve election allowed by §430(h)(2)(D).

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2. April 2025 Spot Segment Rates

The IRS specifies the three spot rates used to value benefit liabilities under the minimum present value rules of §417(e)(3):

• First segment: 4.51%

• Second segment: 5.49%

• Third segment: 6.07%

These rates apply to:

• Lump-sum distributions

• Certain accelerated payments

• Required minimum present value calculations

(See page 3 of the notice.)

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3. 24-Month Average Segment Rates for May 2025

Plans using the standard funding method calculate liabilities using 24-month average corporate bond rates.

Unadjusted 24-Month Averages (May 2025):

• First segment: 4.95%

• Second segment: 5.33%

• Third segment: 5.55%

Adjusted Rates Under 25-Year Corridor Rules

Because the Code requires these averages to remain within 95% to 105% of long-term historical averages, the IRS provides "adjusted" segment rates for plan years beginning in 2024 and 2025.

For plan years beginning in 2025, the adjusted segment rates are:

• First segment: 4.95%

• Second segment: 5.31%

• Third segment: 5.55%

(See page 2 of the notice.)

These adjusted rates are typically the ones plans actually use unless the monthly yield curve is elected.

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4. Updated 30-Year Treasury Rate for Multiemployer Plans

For multiemployer plans, minimum funding requirements under §431 depend partly on the weighted average 30-year Treasury rate.

The notice lists the April 2025 30-year Treasury rate:

• 4.71%

For plan years beginning in May 2025, the IRS provides the required range:

• Weighted average: 4.02%

• Permitted range: 3.62% to 4.22%

(See page 2 of the notice.)

These values determine the full-funding limitation and other minimum funding rules.

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5. Minimum Present Value Segment Rates for Lump-Sums

Under §417(e)(3), plans must use minimum present value segment rates, which are not averaged over 24 months.

For April 2025, the IRS provides:

• First segment: 4.51%

• Second segment: 5.49%

• Third segment: 6.07%

These are the same as the spot rates listed earlier, and they directly impact:

• Single-sum cash-outs

• Certain annuity conversions

• Distribution timing strategies

(See page 3 of the notice.)

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How Margen Helps Pension Professionals Apply IRS Rate Updates

Interest rate changes affect nearly every aspect of retirement plan administration.

Margen helps actuaries, HR teams, and plan administrators apply these IRS rules correctly by answering questions like:

• "Which 24-month average segment rates apply for our plan year beginning July 2025?"

• "Should we elect the monthly yield curve instead of segment rates for 2026 valuations?"

• "How will the April 2025 minimum present value rates impact our lump-sum payout factors?"

• "What is our funding target change if first-segment rates rise 50 basis points next quarter?"

Margen automatically checks your inputs against the latest IRS notices, revenue rulings, and statutory rules, ensuring your calculations are accurate, compliant, and always up to date.

For full details, see IRS Notice 2025-29.