RS Plan Interest Rates Being Updated for 2025 Events

The evening of October 23, NRECA will update the interest rates used to calculate RS Plan single cash payments (also referred to as lump sums) for distribution event dates in 2025 and later years. Unlike the August mid-year rates, the IRS rates updated this month will generally produce the minimum single cash payment a participant could receive for an event date in 2025.

Notably, the new interest rates are lower than those used for 2024 payments, which means that generally single cash payments will be higher for 2025, all other factors being equal. The new rates are also lower than those used during 2024 to estimate 2025 payments—so estimates that are rerun for 2025 should also be higher, all other factors being equal.

This is a “transition” year to a new process for RS Plan interest rates
NRECA is transitioning to a new process in which final interest rates will be announced in October instead of December. This new process will be fully in effect next year, i.e., when rates are announced in 2025 for 2026 distribution event dates.

Due to IRS rules for making such a change, for 2025 event dates only, rates announced this month and those announced in December 2024 will be compared, and the most favorable rate for participants’ single cash payments will be used.

This means that 2025 benefit calculations and option forms run after October 23, 2024, and before the December rates are updated will generally show the minimum single cash payment payable to the participant. The final rate update that occurs in mid-December will be used instead only if it provides a greater single cash payment.

What the “better of” comparison means for participants
From a practical standpoint, a participant could return option forms for a 2025 event date anytime before December 31, 2024, and would automatically receive the higher single cash payment at their event date in 2025. Therefore, participants can submit option forms even before the mid-December rate update. If the December rate is more favorable, the Retirement Plan Distribution unit would inform the participant of the higher benefit but would not issue new option forms.

Note that some participant data (such as final salary) may change in the interim, affecting benefit calculations. Generally, updates such as final salary will only further increase the single cash payment, but some participants whose data is expected to change may wish to wait until December to make a final benefits decision.

Remember that interest rates used to determine single cash payments for 2024 event dates are not changing.

A fact sheet for co-ops describes the overall transition to new timing for final rates. If you have questions about the benefit estimate request process or rates updates, contact your co-op’s field representative.

Participants with questions regarding their RS Plan benefit or benefit estimates should be directed to the Personal Investment & Retirement Consulting (PIRC) team, at 866.673.2299 (option 6) or pirc@nreca.coop.