PRIORITY ALERT: 2027 Retirement Security Plan Single Cash Payment Interest Rates Released
The IRS has released the September 2026 interest rates used for calculating Retirement Security (RS) Plan single cash payments for both traditional and cash balance benefits with 2027 distribution dates.
NRECA has now calculated the factors used to calculate RS Plan benefits in 2027 for single cash payments for traditional formula benefits, and annuity payments for cash balance formula benefits. Those updated factors have now been loaded to the RS Plan system and will be used for benefit estimates for distribution event dates in 2027. Participants requesting distribution option forms for 2027 event dates will also receive benefit estimates utilizing these new factors.
The factors (rates) used for calculating single cash payment amounts depend on when an employee earned benefits under the RS Plan:
- GATT rate (based on 30-year Treasury rate) generally applies to benefits earned before 2008.
- Pension Protection Act (PPA) rates apply to benefits earned after 2007. PPA uses three rates representing distinct segments (short-term, medium-term and long-term) to account for the different time frames that annuity payments would have been made.
Each interest rate, in combination with other factors—pay, benefit service and age—can have a significant effect on the amount of a single cash payment.
| Rate | 2027 | 2026 |
| GATT | 5.37% | 4.74% |
| PPA Segment 1 (payment in first five years) | 5.06% | 4.06% |
| PPA Segment 2 (payment in next 15 years) | 5.99% | 5.12% |
| PPA Segment 3 (payment out further than 20 years) | 6.72% | 5.93% |
For co-ops using the RS Plan’s traditional formula:
The overall increase in IRS interest rates, and the corresponding impact on the single cash payment conversion factor for 2027, will generally produce lower single cash payment amounts for 2027 versus those that would result from using the 2026 single cash payment factor.
- For example, a participant retiring at age 62 and electing a single cash payment under an age 62 non-cost-of-living adjustment (COLA) traditional formula plan may see their payment decrease by approximately 7% due to the increase in interest rates, all other factors (such as salary or service) being equal.
- The estimated decrease is even greater at younger ages because the earlier the benefit commencement age, the longer the period over which interest rates affect the single cash payment. For example, the decrease is approximately 11% for a participant retiring at age 55 under the same assumptions.
For co-ops using the RS Plan’s cash balance formula:
Single cash payments are based on the account balance earned under the cash balance formula. For participants who wish to take their RS Plan benefit as an annuity, the account balance is converted to the various monthly benefit options using similar factors as used under the traditional formula—essentially the opposite type of benefit conversion to what’s done to determine the traditional-formula single cash payment amount. Due to the overall increase in the interest rates, the conversion factor will generally be lower in 2027, producing higher annuity amounts than would result from using the 2026 conversion factors.
Resources for participants
You can share this educational flier with participants. It outlines the effect interest rates have on single cash payments. Participants who need assistance with retirement distribution questions can contact the Personal Investment & Retirement Consulting (PIRC) team at pirc@nreca.coop, or 866.673.2299, option 6, between 7 a.m. and 7 p.m. Central time.