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Understanding Segment Rates: "Am I working for free?"

Watch Our Webinar!

Understanding Segment Rates: "Am I working for free?"

With interest rates on the rise, many Chevron employees are asking themselves “Am I working for free?”.

If retirement is on the horizon for you, choosing the right month to commence benefits could be trickier than it seems.

We break down how segment rates work, how they affect your lump-sum payment and why the timing of your retirement is so important.

Our Chevron financial planners have over 20 years of experience helping Chevron employees navigate their retirement and get the most out of their benefits package.

Segment Rate Update - September 2024 Numbers

IRS Rates

Click the button above to view a rolling 1 year chart of the IRS Minimum Present Value Segment Rates and the 3 month average used for the CRP.

The IRS has posted updated Min Present Value Segment Rates for the month of September 2024. They are as follows:

First Segment
4.17

Second Segment
4.76

Third Segment
5.25

First Segment
Decrease of 0.33

Second Segment
Decrease of 0.20

Third Segment
Decrease of 0.15

The IRS publishes a table of Minimum Present Value Segment Rates here: https://www.irs.gov/Retirement-Plans/Minimum-Present-Value-Segment-Rates

IRS Segment Rates

Source: https://www.irs.gov/Retirement-Plans/Recent-Interest-Rate-Notices

Chevron Rates

Based on the 3-month average that the CRP uses (June, July, August) the Segment Rates for December 2024 retirement are:

First Segment
4.530

Second Segment
4.990

Third Segment
5.413

First Segment
Decrease of 0.307

Second Segment
Decrease of 0.173

Third Segment
Decrease of 0.090

The newly published IRS rates will be factored into the 3-month average used for the CRP lump sum calculation for Chevron employees who wish to take the CRP lump sum in December 2024.

Chevron Retirement Plan (CRP) Rates

The following table demonstrates the hypothetical* impact of recent IRS segment rate updates to the lump sum value for a 65-year-old Chevron employee with an estimated single-life annuity payment of $7,500 month:

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If a Chevron employee is debating November or December as their benefit commencement date, based solely on the lump sum value of the CRP, December would be the better of the 2 months. The approximate increase in the CRP value for a December retirement in this hypothetical scenario would be about +1.55%

While your CRP Lump Sum or your pension is not only based on interest rates, looking at recent rates over time can give you an idea of how your lump sum will be affected, and help you when you are choosing the best retirement date. Remember that interest rates have an inverse relationship with a lump sum pension, so as interest rates increase, lump sum pension value decreases.

*Due to the individual nature of the actual CRP lump sum calculation, you would need to run the estimator to determine the true impact to your value.

Note: Guidance for Standard Deduction, Earned Income Credit, and Reduced Refunds can be found on the IRS website.

If you would like to speak with a Financial Advisor in San Ramon, CA or Houston, TX about how segment rates can affect your unique situation, please fill out the form below and a team member will be in touch shortly.

Past Segment Rates

To view past Segment Rates, use the dropdown menu below.

This is for illustrative purposes only. Any discussion of lump sum values is not a recommendation to forego the annuity option available. Only an individual analysis can provide that information.

Any reference to CRP is to the Chevron Retirement Plan (hired before 1-1-2008). Company retirement plans are subject to change. For specific plan information consult your human resource department or your plan document.

Insight Wealth Strategies, LLC is not affiliated with Chevron.

IWS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to this web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.