July 2025 Pension Plan Interest Rates, What Employers and Plan Administrators Need to Know

The IRS has released its updated corporate bond yield curve and pension segment rates for July 2025, providing essential data for sponsors of single employer and multiemployer defined benefit plans. These updates, published in Notice 2025-39, shape how plans calculate funding targets, minimum contributions, lump sum payouts, and full funding limitations.

The sections below walk through the key rate changes and why they matter for real world plan decisions.

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Monthly Corporate Bond Yield Curve for June 2025

For plans electing to use the full monthly yield curve instead of 24 month averages, the IRS has published the June 2025 corporate bond yield curve, covering maturities from 0.5 to 100 years. The curve is detailed in Table 2025-6 on page 4 of the notice, and shows yields rising steadily across maturities, starting around the mid 4 percent range for short term maturities and crossing above 6 percent for long term maturities.

The monthly spot segment rates for June 2025 are:

• First segment, 4.43 percent

• Second segment, 5.46 percent

• Third segment, 6.13 percent

These rates apply to present value calculations for lump sum distributions under section 417(e)(3).

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Updated 24 Month Average Corporate Bond Segment Rates

The IRS also released updated 24 month average segment rates for July 2025, both before and after applying the 25 year average adjustment corridor. The unadjusted 24 month average rates are:

• First segment, 4.90 percent

• Second segment, 5.36 percent

• Third segment, 5.62 percent

After applying the 95 to 105 percent corridor required under section 430(h)(2)(C)(iv), adjusted segment rates differ slightly by plan year:

• For plan years beginning in 2024, the adjusted rates are 4.90 percent, 5.36 percent, 5.62 percent.

• For plan years beginning in 2025, the adjusted second segment is limited downward to 5.31 percent, while the first and third segments remain unchanged.

These adjusted rates affect minimum funding calculations, including target normal cost and funding targets.

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Updated 30 Year Treasury Rates for Multiemployer Plans

Section 431 requires multiemployer plans to use a 30 year Treasury rate within a permissible range. For plan years beginning July 2025, the IRS determined:

• 30 year Treasury weighted average, 4.12 percent

• Permissible range, 3.71 to 4.33 percent

This rate is based on the June 2025 average yield of the Treasury bond maturing in May 2055. These values are essential for determining the full funding limitation.

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Minimum Present Value Segment Rates for June 2025

For calculating lump sum distributions, minimum present value segment rates under 417(e)(3) for June 2025 are:

• First segment, 4.43 percent

• Second segment, 5.46 percent

• Third segment, 6.13 percent

These mirror the spot segment rates described earlier and apply to plan distributions requiring minimum lump sum assumptions.

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How Margen Helps Pension Administrators and Employers

Pension interest rate rules affect funding obligations, lump sum valuations, de risking strategies, PBGC premiums, and long term plan management. Margen helps administrators and actuaries apply these complex IRS updates by answering questions like:

• "Which segment rate set applies to a plan with a July 2025 plan year and a 2026 valuation date?"

• "How would using the monthly yield curve instead of 24 month averages change our funding target?"

• "What lump sum interest rates apply for distributions scheduled in Q3 2025?"

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 2025-39.