Updated October 30, 2026. Quick answer: The IRS minimum present value segment rates for October 2025, in percent, are 4.01 (first segment), 5.04 (second) and 5.83 (third), from Notice 2025-74. They are the interest rates under section 417(e)(3)(D) that set the minimum lump sum a defined benefit plan can pay. Against September 2025 (4.06, 5.12 and 5.93), the first segment is down 0.05 points, the second is down 0.08 points and the third is down 0.10 points (computed).
The October 2025 rates
| Segment | Rate for October 2025 (%) |
|---|---|
| First segment | 4.01 |
| Second segment | 5.04 |
| Third segment | 5.83 |
“The spot first, second, and third segment rates for the month of October 2025 are, respectively, 4.01, 5.04, and 5.83.” That sentence is the rate announcement for the month; the IRS table repeats the same three numbers.
The six months up to October 2025
| Month | First segment (%) | Second segment (%) | Third segment (%) |
|---|---|---|---|
| October 2025 | 4.01 | 5.04 | 5.83 |
| September 2025 | 4.06 | 5.12 | 5.93 |
| August 2025 | 4.20 | 5.29 | 6.08 |
| July 2025 | 4.38 | 5.41 | 6.13 |
| June 2025 | 4.43 | 5.46 | 6.13 |
| May 2025 | 4.50 | 5.57 | 6.23 |
How October 2025 compares
| Compared with | How long before | First segment, points | Second segment, points | Third segment, points |
|---|---|---|---|---|
| September 2025 | 1 month | down 0.05 | down 0.08 | down 0.10 |
| April 2025 | 6 months | down 0.50 | down 0.45 | down 0.24 |
| October 2024 | 12 months | down 0.41 | unchanged | up 0.37 |
Against September 2025 (4.06, 5.12 and 5.93), the first segment is down 0.05 points, the second is down 0.08 points and the third is down 0.10 points (computed from the two tables).
Against October 2024 (4.42, 5.04 and 5.46), the first segment is down 0.41 points, the second is unchanged and the third is up 0.37 points (computed from the two tables).
Which month’s rates a distribution uses
The statute defines the applicable interest rate as the adjusted first, second and third segment rates “for the month before the date of the distribution or such other time as the Secretary may by regulations prescribe”. The default is therefore the month before the distribution date, and the statute allows other times by regulation, so confirm with your plan administrator which month your plan uses before comparing an offer with this table.
What the rates are used for
The notice describes them this way: “In general, the applicable interest rates under § 417(e)(3)(D) are segment rates computed without regard to a 24-month average.” The statute sets the floor for a lump sum: “the present value shall not be less than the present value calculated by using the applicable mortality table and the applicable interest rate”. Discounting at a higher rate gives a smaller present value; that is arithmetic, not a quotation. So, other things equal, higher segment rates produce a smaller minimum lump sum, and your plan may pay more than the minimum. The mechanism is explained on how interest rates change a pension lump sum.
The notice also says the three rates are not one rate: “each of which applies to cash flows during specified periods”. Ask your plan which rates and which month it applied to your offer.
Common mistakes
- Comparing these spot rates with the 24-month average rates printed in the same notice. Section 417(e)(3)(D) uses segment rates computed without regard to a 24-month average.
- Assuming the rate for the month you receive the offer is the one that prices the lump sum. The statute’s default is the month before the distribution date.
- Using only the first segment rate. There are three rates, each applying to cash flows in specified periods.
Related: the November 2025 segment rates, all the IRS segment rates, and a pension buyout offer.
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Answer againSources
- Internal Revenue Service, Notice 2025-74, Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates: www.irs.gov
- Internal Revenue Service, Minimum present value segment rates (monthly table of the applicable interest rates under section 417(e)(3)(D)): www.irs.gov
- 26 U.S.C. 417, Definitions and special rules for purposes of minimum survivor annuity requirements (U.S. Code, 2024 edition, U.S. Government Publishing Office): www.govinfo.gov
Read from the primary documents linked above on October 30, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.