Does Deere & Company offer a pension lump sum, or is it annuity-only?

It depends on which plan you are in. Salaried and non-union employees covered by Deere's qualified defined-benefit pension plan generally have access to a lump-sum option at retirement or separation, calculated using IRS §417(e) minimum present value segment rates. UAW-represented hourly employees' pension plans are designed around a monthly annuity; lump-sum availability for active union pension benefits is governed by the specific collective bargaining agreement and plan documents — review your Summary Plan Description (SPD) or contact the Deere Benefits Center. Small-balance mandatory cashout rules (§411(a)(11)) require the plan to offer a lump sum if your accrued benefit is below the plan's threshold (generally $7,000 or less under SECURE 2.0). If you are a deferred vested employee who left Deere before retirement, your right to a lump sum or annuity depends on the plan rules in effect at the time you vested — consult your most recent pension statement or contact Deere's pension administrator.

How did the 2021 UAW-Deere contract affect pension benefits?

The 2021 UAW-Deere contract — ratified in November 2021 after a 35-day strike — included significant pension improvements for UAW-represented hourly employees. A key outcome was the restoration of the traditional defined-benefit pension for 'New Wage' employees who had been hired under an alternative benefit structure (the 'New Wage' tier introduced in previous contracts) and who were not receiving the same traditional pension formula as employees hired before January 1, 1997. The 2021 agreement brought these workers back into the traditional unit-benefit pension structure and improved pension multipliers for current employees and retirees. If you were hired during a 'New Wage' period at a John Deere manufacturing facility, your benefit structure may have changed materially between 2015 and 2021 — verify your current frozen benefit amount with the UAW-Deere Benefits Office.

Is my John Deere pension protected by PBGC?

Yes — as of late 2026, Deere & Company has not executed a pension risk transfer (PRT) for its primary U.S. defined-benefit pension plans. PBGC federal insurance coverage remains fully intact. This distinguishes Deere from major employers such as IBM (~$22 billion transferred to Prudential and MetLife, PBGC ended), AT&T ($8.05 billion to Athene), Verizon (~$13.4 billion to Prudential), and RTX ($2.5 billion to Prudential). For Deere participants, the 2026 PBGC guarantee cap is $7,789.77 per month at age 65 (straight-life). Benefits below that cap are federally insured in the event of a plan termination. Benefits above the cap have no federal backstop — a relevant consideration for long-tenured employees with large accrued benefits who are weighing the annuity against the full present-value certainty of a lump sum.

I left Deere before retirement. What are my pension options?

Deere employees who leave before reaching retirement eligibility generally retain a 'deferred vested' benefit if they had at least five years of vesting service (or three years if vested before certain plan amendments). As a deferred vested participant, you typically have two choices when you reach the plan's normal retirement age: (1) begin receiving your frozen monthly annuity benefit — the amount you had earned as of your termination date, with no further accruals — or (2) if the plan offers a lump-sum option, elect a lump sum calculated using §417(e) segment rates at the time of distribution. For UAW participants, the plan's CBA terms govern the deferred vested benefit; for salaried participants, the plan SPD controls. Because the lump-sum present value changes with interest rates, the timing of when you elect to begin benefits can materially affect the dollar amount — a higher-rate environment reduces the lump sum relative to the annuity's implied value.

What is the lump-sum vs. annuity break-even age for a Deere pension?

Break-even age depends on three inputs: the lump-sum amount, the annuity payment amount, and the investment return assumption on the lump sum. As a rough framework: if the lump sum is $600,000 and the annuity pays $4,000/month ($48,000/year), at a 5% annual return assumption the annuity becomes more valuable at approximately age 82–84 — meaning you need to live past that age for the annuity to have paid out more than what the invested lump sum would have produced. At 7% returns, break-even pushes to age 86–90. At 3% returns, the annuity wins earlier — around age 78–80. The break-even age is sensitive to the return assumption, the J&S survivor adjustment (if you elect joint-and-survivor benefits, the monthly payment drops but the guarantee extends to a second life), and your actual tax bracket on annuity income vs. IRA distributions. Use our pension break-even calculator for a personalized estimate based on your specific numbers.

How do IRS §417(e) segment rates affect my Deere lump sum?

When Deere calculates a lump-sum offer for salaried plan participants, it must use IRS minimum present value segment rates under IRC §417(e)(3). Three rate bands apply: Segment 1 discounts the first five years of projected annuity payments, Segment 2 discounts years 6–20, and Segment 3 discounts payments beyond 20 years. Higher rates produce smaller lump sums; lower rates produce larger lump sums. The IRS publishes rates monthly; most corporate pension plans use a 'look-back month' (often November) to lock in rates for the following year. The November 2025 IRS rates were approximately 4.07% / 5.15% / 6.01% — materially higher than the near-zero rate environment of 2020–2021. For a given monthly annuity benefit, today's rates produce a lump sum that is typically $200,000–$400,000 smaller than it would have been at 2021 rates. Your Deere plan's SPD specifies the exact look-back month — verify before timing your retirement around rate movements.

Deere & Company Pension Lump Sum vs. Annuity: A 2026 Guide for John Deere Employees

Q: Does the John Deere Savings Plan Rule of 55 survive an IRA rollover?

No. Under IRC §72(t)(2)(A)(v), employees who separate from Deere & Company in or after the calendar year they turn 55 are entitled to penalty-free withdrawals from the John Deere Savings Plan (the 401(k)) without waiting until age 59½. This exception applies only to qualified plan distributions — it does not follow assets into an IRA. If you roll the Savings Plan balance to an IRA after separation, any withdrawal from the IRA before age 59½ faces the standard 10% early distribution penalty, unless you qualify for another exception (such as a §72(t) SEPP arrangement, which locks you into a 5-year payment schedule). The pension lump sum rolling to an IRA is a separate transaction and does not affect the Savings Plan's Rule-of-55 status, as long as the Savings Plan balance remains in the plan itself. Employees separating at age 55–59½ should carefully evaluate whether they need penalty-free Savings Plan access before initiating any IRA rollover.

Deere & Company operates one of the largest remaining traditional defined-benefit pension programs among major U.S. manufacturers — covering both UAW-represented hourly employees under collectively bargained plans and salaried employees under the company's qualified pension plan. Unlike IBM, AT&T, Verizon, and RTX, Deere has not transferred U.S. pension liabilities to an insurance company; PBGC federal coverage remains fully intact. The 2021 UAW-Deere contract — ratified after a 35-day strike — included meaningful pension improvements that changed the benefit structure for thousands of hourly workers. For salaried participants approaching retirement, the lump-sum vs. annuity decision turns on IRS §417(e) segment rates, survival of the John Deere Savings Plan Rule-of-55 exception, and the same multi-variable sequencing problem that applies to any large defined-benefit rollover.

Who this guide is for: Current and former Deere & Company employees with accrued benefits under a Deere-sponsored defined-benefit pension plan — whether you are in the UAW hourly plan, the salaried plan, or a deferred vested participant who left Deere before retirement. Also relevant for employees approaching age 55 or 59½ with significant John Deere Savings Plan balances alongside their pension. Note: plan terms differ between union and non-union employees, and between employees hired at different times. Your Summary Plan Description (SPD) and most recent pension benefit statement are the controlling documents for your specific situation.

Two pension structures: UAW hourly and salaried

Deere & Company operates separate pension arrangements for its two major employee groups. Understanding which plan you are in is the starting point for any lump-sum vs. annuity analysis.

UAW hourly employees

UAW-represented workers at John Deere manufacturing facilities — including plants in Moline, Waterloo, East Moline, and other Midwest locations — participate in pension plans negotiated through collective bargaining. These plans use a unit benefit formula: a fixed dollar amount per month, multiplied by years of credited service. The resulting monthly annuity is the foundation of retirement income for most UAW Deere retirees.

UAW pension plans are traditionally structured around lifetime monthly annuity payments, not lump sums. Whether a lump-sum option is available for active UAW pension benefits depends on the specific terms of the applicable collective bargaining agreement and plan document. Mandatory small-balance cashouts apply — under SECURE 2.0, plans may (and often must) distribute benefits with a present value below $7,000 as an immediate lump sum — but for participants with significant accrued benefits, the annuity is typically the primary payout form.

Salaried and non-union employees

Salaried and non-union Deere employees have participated in a separate qualified defined-benefit pension plan using a pay-related formula tied to years of credited service and a measure of final or average earnings. Deere closed the salaried pension plan to new participants for employees hired on or after a specified date (generally in the mid-2010s), replacing pension accruals with enhanced contributions to the John Deere Savings Plan (401(k)) for newer hires. Employees hired before the closure date continue to accrue benefits under the traditional formula — or retain their frozen accrued benefit if they are now in the closed group.

Salaried plan participants at retirement or separation generally have the option to elect either the lifetime annuity or a lump sum, calculated under IRS §417(e) rules. This is the primary lump-sum decision point this guide addresses.

Employee group	Plan type	Lump sum available?	Formula structure
UAW hourly	CBP — unit benefit	Typically no for active pension; yes for small balances	$X/month × years of credited service
Salaried / non-union (hired before closure)	Traditional DB	Yes — §417(e) present value	Pay-related formula × service
Salaried / non-union (hired after closure)	No DB pension	N/A — enhanced Savings Plan only	N/A
Deferred vested (left Deere before retirement)	Either plan above	Per plan SPD at distribution date	Frozen as of termination date

The 2021 UAW-Deere contract: what changed for hourly pension benefits

The 2021 UAW-Deere collective bargaining agreement — ratified November 17, 2021 after a 35-day strike involving approximately 10,000 UAW members — was the most consequential contract negotiation at Deere in decades. One of the central UAW demands was the restoration of a full traditional pension for workers who had been placed on an alternative "New Wage" benefit structure in prior contract cycles.

Starting in earlier contract periods, Deere had introduced a tiered wage and benefits structure. "New Wage" employees — those hired under more recent contract terms — received a different benefit package that included lower starting wages and a different pension formula than employees hired before January 1, 1997. The 2021 contract restored the traditional defined-benefit pension for these workers, collapsing the two-tier structure on the pension side and bringing New Wage employees into the same pension framework as their longer-tenured colleagues.

The 2021 contract also included improvements to the pension multiplier (dollars per month per year of service) for both current employees and existing retirees. If you retired from a Deere UAW facility before November 2021, your monthly pension may have been increased retroactively as part of the settlement — verify your current payment amount with the UAW-Deere Benefits Office or your union local.

If you were hired under a "New Wage" or tiered structure: Your pension benefit calculation before and after the 2021 contract may differ significantly. Do not rely on an older pension statement if you were in the New Wage tier — request a current frozen benefit statement from Deere's Benefits Center to confirm the formula and amount that applies to your service record.

How IRS §417(e) segment rates determine your salaried lump sum

For salaried participants electing a lump sum, Deere calculates the present value of your projected lifetime annuity payments using IRS minimum present value segment rates under IRC §417(e)(3). The mechanics are the same across all large corporate pension plans required to offer lump-sum options under ERISA.¹

Three rate bands apply:

Segment 1 — discounts the first five years of projected annuity payments (near-term cash flows)
Segment 2 — discounts payments in years 6 through 20 (intermediate)
Segment 3 — discounts payments beyond 20 years (long-dated)

The core relationship: higher segment rates → smaller lump sum; lower rates → larger lump sum. The IRS publishes new rates monthly. Most large corporate plans use a "look-back month" to fix rates for the following year's lump-sum calculations — often November. Your Deere SPD specifies the look-back month and stability period; verify before timing your retirement around rate movements.

The November 2025 segment rates (IRS Notice 2026-14) were approximately 4.07% / 5.15% / 6.01%.² These rates are materially higher than the near-zero environment of 2020–2021. For a given monthly annuity, today's elevated rates produce a lump sum that is often $200,000–$400,000 smaller than the same annuity would have produced at 2021 rates.

Hypothetical $4,000/month pension (salaried, age 62)	Estimated lump sum
At 2021 near-zero rates (~0.5% / 2.0% / 3.0%)	~$975,000
At Nov 2025 rates (4.07% / 5.15% / 6.01%)	~$620,000
Difference from rate environment alone	~$355,000

Illustrative only. Actual values depend on your plan's specific mortality table, look-back month, and actuarial assumptions. Obtain your lump-sum offer in writing from Deere's Benefits Center before making any decision.

For salaried participants whose pension is frozen (no further accruals), the only driver of change in the lump-sum dollar amount after the freeze date is segment rate movement. This is the frozen-plan timing asymmetry: waiting to retire does not grow your monthly benefit through additional service credit, but rate movement can either increase or decrease the lump-sum offer. In a falling-rate environment, waiting can produce a meaningfully larger lump sum; in a rising-rate environment, the opposite is true.

PBGC protection: fully intact for Deere employees

One of the most important distinctions for current and former Deere employees in 2026 is what has not happened: Deere & Company has not executed a pension risk transfer (PRT) for its primary U.S. qualified pension plans. PBGC federal insurance coverage remains fully intact.

This distinguishes Deere from many peer large manufacturers and industrial companies that have de-risked their balance sheets by purchasing group annuity contracts from insurance companies, transferring pension obligations — and ending PBGC coverage — for large groups of participants:

Employer	PRT completed	Amount	PBGC status now
IBM	2022 + 2024	~$22B	Ended; state guaranty fund only
AT&T	2023	$8.05B	Ended; state guaranty fund only
Verizon	2012 + 2024	~$13.4B	Ended; state guaranty fund only
RTX / Raytheon	2025	$2.5B	Ended; state guaranty fund only
GE	2020	$1.7B	Ended for that group
Deere & Company	None as of late 2026	—	Fully intact PBGC coverage

For Deere participants covered by PBGC, the 2026 guarantee maximum is $7,789.77 per month at age 65 (straight-life annuity).³ If Deere were to terminate the plan in financial distress, PBGC would assume the obligations and pay benefits up to that cap. Benefits above the cap have no federal backstop.

Important caveat: The absence of a PRT to date does not preclude future action. Companies with large funded pension plans often de-risk over time — IBM, AT&T, and others were considered financially stable long before executing their transfers. If Deere were to execute a PRT in the future, PBGC protection would end for participants included in the transfer. Their payments would then be backed only by the insurer's reserves and applicable state insurance guaranty fund limits (typically $250,000 per insurer per state). For participants with large benefits near or above the $7,789.77/month PBGC cap, future PRT risk is a legitimate consideration in the lump-sum vs. annuity calculus — the lump sum, once rolled to an IRA, is entirely under your control and no longer subject to insurer or plan counterparty risk.

John Deere Savings Plan: the Rule-of-55 trap you cannot undo

Many Deere employees approaching retirement hold significant balances in the John Deere Savings Plan (the company's 401(k) plan) alongside their pension benefit. The Savings Plan offers employer matching contributions and the potential for substantial balances for employees who have participated over a full career.

Under IRC §72(t)(2)(A)(v), employees who separate from Deere in or after the calendar year they turn 55 may take penalty-free withdrawals directly from the John Deere Savings Plan without waiting until age 59½. This is the "Rule of 55" — and it applies only to funds remaining inside the qualified plan.

The trap: If you roll the Savings Plan balance to an IRA after separating from Deere, the Rule-of-55 exception does not transfer to the IRA. Any distribution from that IRA before age 59½ faces the standard 10% early distribution penalty — unless you qualify for a separate exception, such as a §72(t) SEPP arrangement (which requires committing to a fixed payment schedule for at least five years or until age 59½, whichever is later). Rolling the Savings Plan to an IRA at age 55 and then taking a "just this once" withdrawal at age 57 costs 10% of the amount — permanently forfeited through an irreversible choice.

The pension lump sum rolled to a separate IRA account and the Savings Plan are governed independently. Rolling the pension lump sum to an IRA has no impact on the Savings Plan's Rule-of-55 status, as long as the Savings Plan balance remains in the plan itself and the two accounts are kept separate. The critical mistake is rolling the Savings Plan along with the pension in a single IRA transfer, or rolling the Savings Plan before you have confirmed you will not need penalty-free access to those dollars before 59½.

A practical framework for Deere employees separating between age 55 and 59½:

Do not roll the Savings Plan to an IRA before age 59½ unless you are certain you will not need penalty-free access before then.
If you need income, withdraw directly from the Savings Plan while it remains a qualified plan — Rule-of-55 distributions are penalty-free.
After 59½, roll the Savings Plan to an IRA for investment flexibility and Roth conversion access.
Consider a partial rollover strategy: roll only the portion you will not need before 59½ to an IRA now; leave the balance you may need in the plan for penalty-free access.

This sequencing matters more than most people realize. The optimal order — pension lump sum vs. annuity, Savings Plan timing, Roth conversion window, Social Security delay, IRMAA management — is a multi-variable problem that a fee-only advisor experienced with Deere-specific decisions can solve against your actual numbers. Get matched with a specialist who has no commission incentive to push any particular outcome.

Deferred vested participants: leaving Deere before retirement

Employees who leave Deere before reaching retirement eligibility — whether through voluntary resignation, layoff, or early departure — retain the pension benefit they had accrued as of their termination date, provided they had the required vesting service. ERISA §203 requires Deere's qualified pension plans to follow minimum vesting schedules: five-year cliff vesting or three-to-seven year graded vesting.⁴

As a deferred vested participant, your frozen benefit does not grow further — you locked in the benefit at the service and salary levels as of your termination date. But the lump-sum value of that frozen benefit continues to fluctuate with §417(e) segment rates until you actually elect a distribution. A former Deere employee who left at age 50 in 2018 and is now approaching the plan's normal retirement age faces the same rate-sensitivity analysis as a current employee at retirement: higher rates in 2026 produce a smaller lump sum than the same annuity would have generated in 2021.

For deferred vested participants, the decision timeline is driven by when you are eligible to begin receiving benefits under the plan — typically the plan's normal retirement age (often 65), with early commencement available at reduced amounts. Some plans offer unreduced early retirement at specific age-and-service thresholds; review your SPD for the applicable reduction table and any subsidized early retirement provisions that may apply to your service record.

Note: if you are a deferred vested participant and you have not updated your address or beneficiary designations with Deere's Benefits Center, do so immediately. Pension plans are required to locate former participants at retirement age, but maintaining current contact information prevents delays and complications when you are ready to begin benefits.

Post-rollover strategy: Roth conversion, IRMAA, and RMDs

If you take the salaried plan lump sum and roll it to a traditional IRA, three post-rollover dynamics drive the long-term tax cost:

Roth conversion window

Between the day you roll over and the date Required Minimum Distributions begin (age 73 for those born 1951–1959; age 75 for those born 1960 or later under SECURE 2.0), you have a window to convert traditional IRA dollars to Roth at your current marginal rate — ideally in years when other income (Social Security, RMDs, pension annuity if you kept part of your benefit as annuity) is relatively low. The 2026 standard deduction for a 65-year-old single filer is $17,000 (including the age-65 additional deduction), and the 22% bracket top for single filers is $103,350. These numbers define your efficient conversion bandwidth.⁵

The 2026 federal income tax brackets are:⁵

Bracket	Single	Married filing jointly
10%	$0 – $11,925	$0 – $23,850
12%	$11,926 – $48,475	$23,851 – $96,950
22%	$48,476 – $103,350	$96,951 – $206,700
24%	$103,351 – $197,300	$206,701 – $394,600
32%	$197,301 – $250,525	$394,601 – $501,050

IRMAA Medicare surcharges

A large pension lump-sum rollover creates significant IRA balance, which eventually generates large RMDs that push Modified Adjusted Gross Income into Medicare IRMAA surcharge territory. The 2026 Tier 1 IRMAA threshold is $109,000 (single) / $218,000 (married filing jointly), adding $67.90/month per person to Part B premiums.⁶ Higher tiers add up to $443.90/month. For a large Deere rollover, cumulative IRMAA surcharges over a 20-year retirement can reach $80,000–$150,000 or more if not managed through systematic Roth conversions before RMDs begin.

Required Minimum Distributions

Unlike the Deere annuity — which satisfies RMD requirements through its ongoing payments — a rolled IRA is subject to RMDs beginning at age 73 (born 1951–1959) or 75 (born 1960+) under SECURE 2.0.⁷ For a $700,000 IRA rollover, the first RMD using the Uniform Lifetime Table divisor of 26.5 (at age 73) is approximately $26,415 — fully taxable as ordinary income on top of any Social Security, any pension annuity, or other income you have in that year. Roth conversion in the years before RMDs begin is the primary tool to reduce the eventual RMD burden.

Lump sum vs. annuity decision framework for Deere participants

Factor	Favors lump sum	Favors annuity
Health / life expectancy	Below-average life expectancy or serious health condition	Strong family longevity; healthy at retirement
§417(e) segment rates	Rates expected to fall; lump sum likely to grow if you wait	Rates elevated; annuity implied yield attractive vs. investment return
PBGC cap exposure	Monthly benefit approaches or exceeds $7,789/mo (PRT risk; cap exposure)	Benefit well below PBGC cap; intact Deere coverage meaningful
Spousal needs	Spouse has strong independent income; survivor benefit less critical	Spouse financially dependent; J&S annuity is the cleanest solution
Other guaranteed income	Substantial Social Security + other annuity income already covers expenses	Limited guaranteed income; Deere annuity provides essential income floor
Savings Plan balance	Large Savings Plan provides separate IRA optionality after 59½	Limited outside savings; longevity insurance from annuity important
Savings Plan Rule-of-55 needs	55–59½ and need penalty-free access: keep Savings Plan in plan; pension lump sum can still roll to IRA separately	Over 59½ or no near-term access need: rollover timing less constrained
Estate and heir goals	Want to pass assets to heirs; IRA allows beneficiary inheritance	No heir concern; maximize lifetime income

Did factors land on both sides of that table? That's normal — this is a genuinely close call for most Deere employees, and the right answer depends on your specific lump-sum offer, your benefit statement, your spouse's age, your other income sources, and your real longevity assumptions. A fee-only advisor with no commission stake in the outcome can model all of it. Get matched with a Deere pension specialist →

The implied yield test

One useful analytical frame: calculate the internal rate of return (IRR) the Deere annuity implicitly offers. If the lump sum is $620,000 and the annuity pays $4,000/month ($48,000/year), the annuity's break-even vs. an invested lump sum (at various return assumptions) falls roughly at:

At 4% return assumption: lump sum and annuity are roughly equivalent at age 82–84. Live past that age and the annuity wins.
At 6% return assumption: break-even pushes to approximately age 86–89. You need strong longevity for the annuity to outperform.
At 7%+ return assumption: the lump sum likely wins on pure NPV logic for most realistic life expectancies.

The annuity's implied yield (roughly 4.5–5.5% pre-tax in the current rate environment) represents what Deere is effectively guaranteeing. If you are confident you can earn more than that net of taxes and fees in a diversified IRA — and if you have reasonable health and a typical life expectancy — the lump sum wins on NPV grounds. But the annuity provides what the IRA cannot: longevity insurance — guaranteed income regardless of how long you live, how markets perform, or whether you make suboptimal investment decisions in your 80s.

Use our pension break-even calculator and lump sum vs. annuity NPV calculator with your specific Deere numbers to model the crossover point under different return and longevity assumptions.

Sources

IRS, Minimum Present Value Requirements (IRC §417(e)) — governing framework for pension lump-sum calculations in qualified plans.
IRS, Minimum Present Value Segment Rates — monthly segment rate tables; November 2025 rates used for plans with November look-back pricing 2026 lump sums.
PBGC, Maximum Monthly Guarantee Table — 2026 PBGC guarantee cap of $7,789.77/month at age 65 (straight-life annuity).
ERISA §203 (29 U.S.C. §1053) — minimum vesting standards for qualified defined-benefit plans. Cornell LII reference.
IRS, Rev. Proc. 2025-32 — 2026 income tax brackets and standard deductions; IRS Tax Inflation Adjustments for Tax Year 2026.
CMS, Medicare Part B Costs — 2026 IRMAA Brackets.
SECURE 2.0 Act of 2022 (Div. T of P.L. 117-328), §107 — RMD age 73 for individuals born 1951–1959; 75 for those born 1960 or later. H.R. 2954.

Values verified as of September 2026. Segment rates, PBGC caps, IRMAA thresholds, and tax brackets update annually — verify current-year values at IRS.gov and PBGC.gov before making a decision. UAW plan terms are governed by the collective bargaining agreement in effect at the time of your retirement — contact your union local or the Deere Benefits Center for plan-specific information.