PRIORITY ALERT: 2024 RS Plan Single Cash Payment Interest Rates Issued

The Internal Revenue Service has issued the interest rates used to calculate Retirement Security (RS) Plan single cash payments in 2024.

Different rates are used depending on when an employee earned benefits within the RS Plan. The GATT rate (30-year Treasury rate) generally applies to benefits earned before 2008. The Pension Protection Act (PPA) rates generally apply to benefits earned after 2007. PPA employs three rate segments in order to apply an interest rate to each annuity period that would be considered consistent with the period from retirement to the time a particular annuity payment would have been made.

As a reminder, PBGC interest rates no longer apply in the determination of RS Plan single cash payments.

Each interest rate is used in combination with a different mortality table, which can have a significant effect on the amount of the benefit as a single cash payment.

What does this mean for RS Plan participants considering retirement?
Generally, the value of a single cash payment decreases when interest rates increase. Due to the continued increase in interest rates, the single cash payment factor for a particular age generally will be lower using the 2024 rates than using the 2023 rates. A number of other factors affect a single cash payment, including pay, benefit service and age.

As a reminder, benefits administrators have the ability to model and view most RS Plan benefit estimates on the Employee Benefits website. Simply go to Co-op Retirement > RS Plan Estimates. Please note: RS Plan estimates ordered through the Employee Benefits website as of December 15 will reflect the new rates.

Considering benefit payment options
An educational flier, “The Answers You Need: Weighing Your RS Plan Distribution Options,” is available for you to share with employees. This flier discusses various benefit options in the RS Plan, including a broad selection of annuity choices, and describes how a single cash payment is calculated and how fluctuations in interest rates can affect the value of a single cash payment. The flier also reminds employees to review their overall financial readiness before making final decisions about retiring. Members of NRECA’s Personal Investment & Retirement Consulting team are also available for one-on-one conversations by calling 866.673.2299, option 6, or by email at pirc@nreca.coop.

If you have questions, contact the Member Contact Center at 866.673.2299 or contactcenter@nreca.coop.