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Esta página no ha sido traducida. Por favor vaya a la página principal del sitio de español de PBGC para ver información disponible en español.

# Historical ERISA 4022 Lump Sum Interest Rates

August 22, 2023

## ERISA 4022 Lump Sum Interest Rates

PBGC's benefit payment regulation (CFR Part 4022) provides that when PBGC trustees a plan, if the value of a participant's benefit is less than the amount specified in section 203(e)(1) of ERISA (commonly called the mandatory cash out threshold), PBGC will offer the participant the option of receiving a lump sum instead of a monthly annuity.

Prior to 2021, PBGC used an immediate and deferred interest rate structure for this purpose. Starting in 2021, PBGC uses IRS 417(e)(3) interest rates for this purpose, and, as a result, no longer publishes the legacy immediate and deferred rates.

Individuals seeking information about the interest rates that their plans use to determine lump sums should contact their plan directly as PBGC does not have access to that information.

## Immediate and Deferred ERISA 4022 Rates from 1993 - 2020

The pre-2021 interest rates (i.e., the “legacy 4022 rates”) are provided for historical purposes. Click on the applicable link below to see the table for that year. For information about how to use the legacy immediate and deferred rates, see example below.

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The following examples illustrate how the immediate and deferred interest rate structure was used to determine the present value of an annuity under ERISA 4022 prior to 2021.

*Example 1* - Assume the participant is age 40 on the valuation date and the normal retirement age is 65. The 25‐year period between the valuation date and normal retirement date is called the "deferral period."  The deferral period is divided into three time periods.  Assuming that n1 and n2 are 7 and 8 years, respectively, those time periods are:
                              - The 7-year period from age 58 to age 65.
                              - The 8-year period from age 50 to age 58.
                              - The rest of the deferral period (i.e., from age 40 to age 50).

Anticipated future benefits are discounted as follows:
                              - From each payment's assumed payment date to age 65, using the rate shown in the column labelled "Immediate."
                              - The 7-year period from age 65 to age 58, using the rate shown in the "i 1 " column
                              - From age 58 to age 50, using the rate shown in the "i 2 " column.
                              - From age 50 to age 40, using the rate shown in the "i 3 " column.

*Example 2* - Assume the participant is in pay-status (i.e., is receiving monthly benefits) on the valuation date.

All anticipated future benefits are discounted from each payment's assumed payment date to the measurement date using the rate shown in column labelled "Immediate."