IRS Releases Updated Corporate Bond Yield Curve and Pension Segment Rates for June 2025

The IRS has issued Notice 2025-35, which provides updated corporate bond yield curves, spot segment rates, 24 month average segment rates, and 30 year Treasury rates for use in pension funding calculations and minimum present value computations. These numbers directly affect plan sponsors, actuaries, and corporate finance teams responsible for determining funding targets, lump sum values, and current liability under both single employer and multiemployer plan rules.

This update uses May 2025 bond market data, and it applies to plan years beginning in June 2025, unless the plan elects to use the monthly corporate bond yield curve for valuation.

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1. Monthly Corporate Bond Yield Curve for May 2025

Notice 2025-35 includes the full May 2025 monthly corporate bond yield curve, which provides spot rates from 0.5 year to 100 years of maturity. You can see the full table on page 4, which shows short term yields in the mid 4 percent range and long term yields exceeding 6.3 percent. For example:

• 0.5 year maturity, 4.51 percent

• 20 year maturity, 6.06 percent

• 40 year maturity, 6.24 percent

• 100 year maturity, 6.42 percent

These monthly yields are used by plans electing the monthly yield curve under §430(h)(2)(D).

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2. Spot Segment Rates for May 2025

The IRS published the three spot segment rates used for §417(e)(3) minimum present value calculations such as lump sum distributions. The May 2025 spot rates are:

• First segment, 4.50 percent

• Second segment, 5.57 percent

• Third segment, 6.23 percent

These interest rates apply directly when calculating minimum present values for accelerated distributions, annuity conversions, and other payments requiring §417(e) compliance.

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3. 24 Month Average Segment Rates for June 2025

For plan sponsors not electing the monthly yield curve, liabilities must be calculated using 24 month average corporate bond segment rates under §430(h)(2). For June 2025, the unadjusted 24 month averages are:

• First segment, 4.94 percent

• Second segment, 5.35 percent

• Third segment, 5.58 percent

Because §430(h)(2)(C)(iv) requires these averages to remain within 95 to 105 percent of the 25 year historical averages, the IRS provides adjusted segment rates as well:

Adjusted 24 month average rates for plan years beginning in 2024

• 4.94 percent, 5.35 percent, 5.59 percent

Adjusted 24 month average rates for plan years beginning in 2025

• 4.94 percent, 5.31 percent, 5.58 percent

These adjusted rates are typically the primary inputs for determining the funding target and target normal cost for single employer plans.

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4. Updated 30 Year Treasury Rates for Multiemployer Plans

For multiemployer plans, §431 uses the weighted average 30 year Treasury rate to determine the full funding limitation and other current liability measures. For May 2025, Notice 2025-35 lists:

• 30 year Treasury rate, 4.91 percent

• Weighted average for plan years beginning in June 2025, 4.07 percent

• Permissible range, 3.66 percent to 4.27 percent

These values apply directly to multiemployer funding calculations and can also affect amortization schedules and credit balance rules.

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How Margen Helps Pension Professionals Apply IRS Rate Updates

Understanding which rates apply for which plan year, valuation date, or payment calculation can be difficult, especially when juggling multiple elections, adjusted averages, and compliance thresholds. Margen simplifies this process by answering questions like:

• "Which adjusted segment rates apply to our plan year beginning June 2025?"

• "Should we use the monthly yield curve or the 24 month average for our liability projection?"

• "How do these May 2025 minimum present value rates change our lump sum factors?"

• "Which 30 year Treasury rate applies to our multiemployer plan's full funding limitation?"

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 2025-35.