For AT&T employees and retirees
Planning for AT&T employees, around a rate set every November.
In the AT&T pension programs whose plan summaries are public, the interest rate that prices a lump sum is set once a year: the IRS rate published for November, applied to benefits that begin in the following calendar year. That rule turns a benefit start date into a pricing decision. We help employees read their own program, time the election, and plan the income that follows.
The situation
A pension shaped by hire date, and a lump sum shaped by the calendar
AT&T employed about 133,030 people at the end of 2025, roughly 43% of them represented by the CWA, the IBEW, or other unions, and counted about 477,000 retirees and dependents eligible for retiree benefits. Its headquarters remains in downtown Dallas, with a move to Plano planned for 2028.
The pension you hold depends on your hire date and whether you were management or bargained. Management pension programs are closed to new entrants and generally cover people hired before January 1, 2015. Nonmanagement employees earn a flat-dollar benefit tied to job classification or a cash balance benefit with negotiated pension band credits. Most employees can take the benefit as a lump sum or as an annuity.
The lump sum is where the calendar matters. In the summary plan descriptions we could read, the rate that converts a monthly pension into a single payment is the IRS rate for November of the prior year, held for the whole calendar year in which the benefit begins. Two colleagues with identical pensions can receive different lump sums because one started in December and the other in January.
Hypothetical illustration
How a one-point rate move changes a lump sum
Hypothetical illustration, not a projection of any plan or person. Take a single-life pension of $3,000 a month, simplified to 25 years of payments and one flat rate. A lump sum is the value today of those payments, so a higher rate makes each one worth less now.
| Rate used to price the lump sum | Lump-sum value of $3,000 a month | Change versus 5% |
|---|---|---|
| 4% | About $573,000 | About 10% larger |
| 5% | About $519,000 | — |
| 6% | About $473,000 | About 9% smaller |
The direction is dependable: rates up, lump sum down. The size is not, because the IRS publishes three segment rates, for payments in the first five years, the next fifteen, and everything after, so a younger retiree has more of the benefit priced by the later segments. For November 2025 the rates were 4.07%, 5.15%, and 6.01%; the first was lower than a year earlier and the third higher, so the effect on a 2026 lump sum depends on your age.
Why it’s complex
Five AT&T-specific decisions that move real money
One November prices the whole year’s lump sums
The Legacy Management Program SPD defines its lump-sum rate as the IRC §417(e)(3) rate “determined as of the November of the prior calendar year,” applied for the calendar year in which the benefit starts. The bargained Southeast Program SPD names the same November lookback and calendar-year stability period. The benefit start date, not the last day of work, selects the rate year.
Turning savings into incomeTwo management formulas, both closed to new hires
Management employees of legacy AT&T Corp. hired before 2007 are in the Legacy Management Program: pay credits of 3% to 10% of pay by age, 4% interest, and a lump sum equal to the greater of the account or the actuarial value of the age-65 pension. Management hired from 2007 through 2014 are in the Management Cash Balance Program. Later hires generally have no pension.
How we build a planThe 401(k) match arrives in AT&T stock
AT&T’s principal 401(k) plan matches 80% of contributions on the first 6% of pay, per the 2026 proxy. The 2025 Form 11-K filings show most matching contributions in the Retirement Savings Plan, and all of them in the bargained Savings and Security Plan, are made in AT&T shares, which may be diversified at once. Left alone, that stacks company stock on a company pension and paycheck.
Equity compensation and concentrated stockThe Stock Purchase and Deferral Plan is deferred pay in shares
About 3,400 management employees may defer 6% to 30% of base pay, and part of a bonus, into deferred share units, with a 20% stock match plus a makeup match for the 401(k) match lost above federal limits. Units pay out as shares up to five years after the account starts, deferrable further. The plan is unfunded, so deferred pay is a claim on AT&T, and the distribution year sets the tax year.
Tax planningThe move to Plano is a planned date, not a finished one
AT&T said on January 5, 2026 that it will consolidate Metroplex administrative space at a 54-acre campus at 5400 Legacy Drive in Plano, targeting partial occupancy in the second half of 2028; its agreement with the city requires occupancy by December 31, 2029. For anyone weighing a commute, a relocation, or a retirement date, that is a second calendar to plan around.
The Rule of 55Sources: AT&T Legacy Management Program SPD (November 2020), Attachment 3; Southeast Program SPD (July 2014), Attachment 6; IRS minimum present value segment rates; AT&T 2026 proxy statement; AT&T 2025 Form 10-K, Note 14. Terms vary by program, hire date, and bargaining agreement; your plan documents govern.
Our approach
A plan built around the rate year
We read the public plan summaries so the first meeting starts with your specifics: your program, your pension estimate, your statements, and the date you have in mind. Then we take the decisions in calendar order.
Read your program
Confirm which AT&T pension program covers you, request the estimate, and establish whether your lump sum is an account balance or a pension converted at the year’s rate.
Compare two rate years
Once the IRS publishes November rates, next year’s pricing is known. We model a start date in each year, side by side, before anything is signed.
Choose the form
Lump sum, annuity, or a partial lump sum with a residual annuity where the program allows, weighed against survivor needs, health, other income, and the 401(k) balance.
Turn it into income
Sequence withdrawals across the rollover, the 401(k), SPDP distributions, and Social Security, with Roth conversions sized to the brackets before required distributions at 73 or 75.
The work
What you’ll work through with us
- Which AT&T pension program covers you, and how its lump sum is calculated
- A side-by-side of benefit start dates across two rate years
- Lump sum versus annuity, including partial lump sums and survivor forms
- How much AT&T stock the household holds across the 401(k), SPDP, and brokerage accounts
- SPDP deferral and distribution elections, and the tax year each lands in
- Retirement-date modeling around the Rule of 55 and the Plano move
- Health coverage from retirement to Medicare, including retiree coverage where eligible
- Coordination with your CPA and estate attorney
Planning at the firm is led by Theo Halbardier, CFP®, CIMA®, CAIA®, the firm’s founder. We are fee-only: no commissions, no product sales. About Theo
Questions
Common questions from AT&T employees
Are you affiliated with or endorsed by AT&T?
No. The Financial Sciences Company is an independent, fee-only registered investment adviser, not affiliated with, endorsed by, or sponsored by AT&T, its benefit plans, the Communications Workers of America, or the International Brotherhood of Electrical Workers. We work from public filings, published plan summaries, and, with your permission, your own statements.
Which interest rates price my AT&T pension lump sum?
In the Legacy Management Program, the IRC §417(e)(3) rate determined as of November of the prior calendar year, with the IRS mortality table, for the calendar year in which your benefit starts. The bargained Southeast Program uses the same November lookback and calendar-year stability period; the East Program uses a prior-November Treasury rate. Other programs may differ, so confirm the definition in your own SPD.
If rates fall, will my lump sum go up?
It depends on how your program defines the lump sum. Where a monthly pension is converted at the year’s rate, a lower rate produces a larger lump sum. In the Legacy Management Program the lump sum is the greater of the account balance and the converted pension, so falling rates can lift it above the account, but rising rates cannot push it below. In the Bargained Cash Balance Program #2, the lump sum is the account balance; the rate does not enter.
Does it matter whether my benefit starts in December or January?
Under the SPDs we read, yes. The rate is fixed for the calendar year of the benefit commencement date, so a December start uses the rate from the November a year earlier and a January start uses the November just past. Those figures are public by early December, so both can be compared before you elect. The recordkeeper can confirm which date controls in your program.
How secure is the AT&T pension?
At December 31, 2025, AT&T reported pension obligations of about $30.6 billion against plan assets of about $28.7 billion; it contributed $1.15 billion voluntarily in 2025 and intends to add $350 million in 2026. In 2023 it transferred about $8.1 billion of obligations for certain retirees to Athene. The PBGC insures single-employer benefits up to legal limits, $7,789.77 a month at 65 on a single-life basis in 2026.
I was hired after 2014 and have no pension. What changes?
The 401(k) is the retirement plan, so the 80% match on the first 6% of pay is the first dollar to capture, and the AT&T shares it arrives in deserve a diversification rule. Leaving in or after the year you turn 55 lets withdrawals from that employer’s 401(k) skip the 10% early-withdrawal penalty, which shapes the retirement date more than any pension rule.
Reviewed by Theo Halbardier, CFP® · Updated September 2026 · Figures current for 2026
Bring your pension estimate.
The first conversation is 30 minutes. A recent pension estimate and 401(k) statement help, but no preparation is needed.
Meet with usAT&T and its logo are trademarks of AT&T Intellectual Property. The Financial Sciences Company is an independent, fee-only registered investment adviser and is not affiliated with, endorsed by, or sponsored by AT&T, the Communications Workers of America, or the International Brotherhood of Electrical Workers. Plan details summarized here come from public sources and may change; your plan documents govern.