Updated October 30, 2026. Quick answer: The IRS minimum present value segment rates for January 2026, in percent, are 4.03 (first segment), 5.20 (second) and 6.12 (third), from Notice 2026-14. They are the interest rates under section 417(e)(3)(D) that set the minimum lump sum a defined benefit plan can pay. Against December 2025 (4.03, 5.17 and 6.11), the first segment is unchanged, the second is up 0.03 points and the third is up 0.01 points (computed).
The January 2026 rates
| Segment | Rate for January 2026 (%) |
|---|---|
| First segment | 4.03 |
| Second segment | 5.20 |
| Third segment | 6.12 |
“The spot first, second, and third segment rates for the month of January 2026 are, respectively, 4.03, 5.20, and 6.12.” That sentence is the rate announcement for the month; the IRS table repeats the same three numbers.
The six months up to January 2026
| Month | First segment (%) | Second segment (%) | Third segment (%) |
|---|---|---|---|
| January 2026 | 4.03 | 5.20 | 6.12 |
| December 2025 | 4.03 | 5.17 | 6.11 |
| November 2025 | 4.07 | 5.15 | 6.01 |
| October 2025 | 4.01 | 5.04 | 5.83 |
| September 2025 | 4.06 | 5.12 | 5.93 |
| August 2025 | 4.20 | 5.29 | 6.08 |
How January 2026 compares
| Compared with | How long before | First segment, points | Second segment, points | Third segment, points |
|---|---|---|---|---|
| December 2025 | 1 month | unchanged | up 0.03 | up 0.01 |
| July 2025 | 6 months | down 0.35 | down 0.21 | down 0.01 |
| January 2025 | 12 months | down 0.71 | down 0.35 | up 0.20 |
Against December 2025 (4.03, 5.17 and 6.11), the first segment is unchanged, the second is up 0.03 points and the third is up 0.01 points (computed from the two tables).
Against January 2025 (4.74, 5.55 and 5.92), the first segment is down 0.71 points, the second is down 0.35 points and the third is up 0.20 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 December 2025 segment rates, the February 2026 segment rates, all the IRS segment rates, and a pension buyout offer.
Find the right next step for your situation
About how much do you have invested? Pick the range that fits; your next step appears immediately below.
Talk to an advisor about your pension
For U.S. investors with $250,000 or more in investable assets. WiserAdvisor is an independent service matching you with 2 to 3 vetted advisers. Its form asks for your ZIP code and answers to a few questions; a match is not guaranteed.
Free to request, with no obligation to hire. By submitting, you consent to calls, texts and emails from WiserAdvisor and up to three advisers. Advisers pay for introductions.
Clear Money Guide may earn a referral payment for a qualifying completed form. An introduction is not a Clear Money Guide recommendation.
Opens on WiserAdvisor’s site in a new tab.
Explore advisor help with your pension decision
Considering financial advice? Request an adviser introduction with no obligation to hire.
The form is run by Kapitalwise, our advisor-matching partner. Requesting an introduction is free. Submitting the form shares your contact details with advisers, so expect calls and texts. Advisers pay for introductions. Clear Money Guide may earn a referral payment for a qualifying submitted form, whether or not you hire anyone. A match is not guaranteed.
The Kapitalwise form opens here; you stay on this page.
What happens when you press the button
It asks about nine questions: age, investable assets, location; then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
Prefer flat-fee or hourly pricing instead? Compare ranges here.
Answer againSources
- Internal Revenue Service, Notice 2026-14, 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.