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Retirement-Related Benefits
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Retirement-Related Benefits RETIREMENT-RELATED BENEFITS
Description of Plans
IBM sponsors the following retirement-related plans/benefits:
PlanEligibilityFundingBenefit CalculationOther
U.S. Defined Benefit (DB) Pension Plans
IBM Personal Pension Plan (Qualified PPP) which includes the Retirement Benefit Account (“RBA”) as of January 1, 2024
U.S. regular, full-time and part-time employees hired prior to January 1, 2005

RBA - U.S. regular, full-time, and part time employees with at least one year of service on or after January 1, 2024

Any company contributions, required or voluntary, are to an irrevocable trust fund, held for the sole benefit of participants and beneficiaries
Vary based on the participant:

Based on average earnings, years of service, and age

Cash balance formula based on percentage of employees’ annual salary, as well as an interest crediting rate (includes RBA as of January 1, 2024)


Excluding RBA, benefit accruals ceased December 31, 2007

Certain defined benefit pension obligations and related plan assets were transferred in 2022 and 2024, as described under “IBM Retirement Plan Changes,” below
Excess Personal Pension Plan (“Excess PPP”)
U.S. regular, full-time and part-time employees hired prior to January 1, 2005
Unfunded, provides benefits in excess of IRS limitations for qualified plans
Benefit accruals ceased December 31, 2007
Supplemental Executive Retention Plan (“Retention Plan”)
Eligible U.S. executivesUnfunded
Based on average earnings, years of service and age
U.S. Defined Contribution (DC) Plans
401(k) Plan (1)
U.S. regular, full-time and part-time employees
All plan participant contributions are made in cash and invested in accordance with participants’ investment elections
Employees can save up to 80% of eligible pay, subject to the Internal Revenue Code (IRC) annual contribution limit
All amounts in the plan are 100% vested
Excess Savings Plan (1)
U.S. employees whose eligible compensation is expected to exceed IRS compensation limit for qualified plans
Unfunded, non-qualified amounts deferred are record-keeping (notional) accounts and are not held in trust for the participants, but may be invested in accordance with participants’ investment elections (under the 401(k) Plan options)
Company matches contributions on eligible compensation deferred and on compensation earned in excess of the IRC pay limit
Amounts deferred into the Plan, including company contributions, are recorded as liabilities
U.S. Nonpension Postretirement Benefit Plan
Nonpension Postretirement Plan (IBM Benefits Plan for Retired Employees)
Medical and dental benefits for eligible U.S. retirees and eligible dependents, as well as life insurance for eligible U.S. retirees
Company contributes to irrevocable trust fund, held for the sole benefit of participants and beneficiaries
Varies based on plan design formulas and eligibility requirementsSince January 1, 2004, new hires are not eligible for these benefits
Non-U.S. PlansDB or DCEligible regular employees in certain non-U.S. subsidiaries or branchesCompany deposits funds under various fiduciary-type arrangements, purchases annuities under group contracts or provides reserves for these plansBased either on years of service and the employee’s compensation (generally during a fixed number of years immediately before retirement) or on annual credits
In certain countries, benefit accruals have ceased and/or have been closed to new hires as of various dates

Certain defined benefit pension obligations and related plan assets were transferred in 2024, as described under “IBM Retirement Plan Changes,” below
Nonpension Postretirement PlanMedical and dental benefits for eligible non-U.S. retirees and eligible dependents, as well as life insurance for certain eligible non-U.S. retireesPrimarily unfunded except for a few select countries where the company contributes to irrevocable trust funds held for the sole benefit of participants and beneficiariesVaries based on plan design formulas and eligibility requirements by countryMost non-U.S. retirees are covered by local government sponsored and administered programs
(1)Effective January 1, 2024, the 401(k) Plus Plan was renamed to the 401(k) Plan and the Excess 401(k) Plus Plan was renamed to the Excess Savings Plan. Refer to the section below entitled “IBM Retirement Plan Changes,” for additional information.
Plan Financial Information
Summary of Financial Information
The following table presents a summary of the total retirement-related benefits net periodic (income)/cost recorded in the Consolidated Income Statement.
($ in millions)
U.S. PlansNon-U.S. PlansTotal
For the year ended December 31:202420232022202420232022202420232022
Total defined benefit pension plans (income)/cost (1)
$3,265 $(329)$5,857 $652 $359 $836 $3,918 $30 $6,693 
Total defined contribution plans cost (2)
$57 $615 $555 $383 $376 $369 $440 $991 $924 
Nonpension postretirement benefit plans cost$79 $92 $85 $41 $36 $30 $120 $128 $115 
Total retirement-related benefits net periodic cost (1)
$3,402 $378 $6,497 $1,077 $771 $1,235 $4,478 $1,149 $7,732 
(1)In 2024, U.S. and Non-U.S. Plans include the impact of pension settlement charges of $2.7 billion and $0.4 billion, respectively, and the increase in total defined benefit pension plans (income)/cost due to the RBA that was effective January 1, 2024. In 2022, U.S. Plans includes the impact of a pension settlement charge of $5.9 billion. Refer to the section below entitled “IBM Retirement Plan Changes,” for additional information.
(2)Decrease in 2024 U.S. Plans total defined contributions plans cost is due to the introduction of the RBA that was effective January 1, 2024. Refer to the section below entitled “IBM Retirement Plan Changes,” for additional information.

The following table presents a summary of the total PBO for defined benefit pension plans, APBO for nonpension postretirement benefit plans, fair value of plan assets and the associated funded status recorded in the Consolidated Balance Sheet.
($ in millions)
Benefit ObligationsFair Value of Plan Assets
Funded Status (1)
At December 31:2024 20232024 202320242023
U.S. Plans
Overfunded plans
Qualified PPP (2)
$12,941 $19,854 $17,591 $24,437 $4,651 $4,584 
Underfunded plans
Nonqualified defined benefit pension plans (3)
1,278 1,382 — — (1,278)(1,382)
Nonpension postretirement benefit plan2,257 2,233 6 10 (2,251)(2,224)
Total underfunded U.S. plans$3,535 $3,615 $6 $10 $(3,529)$(3,605)
Non-U.S. Plans
Overfunded plans
Qualified defined benefit pension plans (4) (5)
$13,568 $16,515 $16,410 $19,438 $2,842 $2,923 
Nonpension postretirement benefit plans— — — — — — 
Total overfunded non-U.S. plans$13,568 $16,515 $16,410 $19,438 $2,842 $2,923 
Underfunded plans
Qualified defined benefit pension plans (4)
$10,482 $11,946 $8,795 $9,621 $(1,688)$(2,325)
Nonqualified defined benefit pension plans (4)
4,440 5,018 — — (4,440)(5,018)
Nonpension postretirement benefit plans507 586 14 23 (493)(564)
Total underfunded non-U.S. plans$15,429 $17,550 $8,809 $9,643 $(6,620)$(7,907)
Total overfunded plans$26,509 $36,369 $34,001 $43,875 $7,492 $7,506 
Total underfunded plans$18,964 $21,165 $8,815 $9,653 $(10,149)$(11,512)
(1)Funded status is recognized in the Consolidated Balance Sheet as follows: Asset amounts as prepaid pension assets; (Liability) amounts as compensation and benefits (current liability) and retirement and nonpension postretirement benefit obligations (noncurrent liability).
(2)Year-to-year reduction in Benefit Obligations and Fair Value of Plan Assets includes the transfer of approximately $6 billion of pension benefit obligations and assets to Prudential Insurance Company of America. Refer to the section below entitled “IBM Retirement Plan Changes,” for additional information.
(3)Excess PPP and Retention Plan.
(4)Non-U.S. qualified plans represent plans funded outside of the U.S. Non-U.S. nonqualified plans are unfunded.
(5)Year-to-year reduction in Benefit Obligations and Fair Value of Plan Assets includes the transfer of $1.2 billion of pension benefit obligations and assets to RBC Life Insurance Company and Brookfield Annuity Company. Refer to the section below entitled “IBM Retirement Plan Changes,” for additional information.
At December 31, 2024, the company’s qualified defined benefit pension plans worldwide were 116 percent funded compared to the benefit obligations, with the Qualified PPP 136 percent funded.
Defined Benefit Pension and Nonpension Postretirement Benefit Plan Financial Information
The following tables through page 113 represent financial information for the company’s retirement-related benefit plans, excluding defined contribution plans. The defined benefit pension plans under U.S. Plans consist of the Qualified PPP, the Excess PPP and the Retention Plan. The defined benefit pension plans and the nonpension postretirement benefit plans under non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries. The nonpension postretirement benefit plan under U.S. Plan consists of only the U.S. Nonpension Postretirement Benefit Plan.
The following tables present the components of net periodic (income)/cost of the retirement-related benefit plans recognized in the Consolidated Income Statement, excluding defined contribution plans.
($ in millions)
Defined Benefit Pension Plans
U.S. PlansNon-U.S. Plans
For the year ended December 31:202420232022202420232022
Service cost (1)
$394 $— $— $170 $177 $237 
Interest cost (2)
911 1,090 1,129 1,077 1,170 493 
Expected return on plan assets (2)
(1,253)(1,529)(1,729)(1,546)(1,440)(1,016)
Amortization of prior service costs/(credits) (2)
— 0 8 22 20 14 
Recognized actuarial losses (2)
452 109 527 516 400 1,031 
Curtailments and settlements (2) (3)
2,761 — 5,923 398 7 47 
Multi-employer plans— — — 13 13 15 
Other costs/(credits) (2)
— — — 3 13 15 
Total net periodic (income)/cost (3)
$3,265 $(329)$5,857 $652 $359 $836 
($ in millions)
Nonpension Postretirement Benefit Plans
U.S. PlanNon-U.S. Plans
For the year ended December 31:202420232022202420232022
Service cost$2 $4 $5 $2 $2 $3 
Interest cost (2)
106 117 85 41 39 24 
Expected return on plan assets (2)
— — — (1)(2)(2)
Amortization of prior service costs/(credits) (2)
(29)(29)(10)0 0 0 
Recognized actuarial losses (2)
— — 5 (1)(1)4 
Curtailments and settlements (2)
— — — 0 (2)0 
Other costs/(credits) (2)
— — — 0 0 0 
Total net periodic cost$79 $92 $85 $41 $36 $30 
(1)Increase in U.S. Plans Service Cost in 2024 is due to the RBA that was effective January 1, 2024. Refer to the section below entitled “IBM Retirement Plan Changes,” for additional information.
(2)These components of net periodic pension costs are included in other (income) and expense in the Consolidated Income Statement.
(3)In 2024, U.S. and Non-U.S. Plans include the impact of pension settlement charges of $2.7 billion and $0.4 billion, respectively. In 2022, U.S. Plans includes the impact of a pension settlement charge of $5.9 billion. Refer to the section below entitled “IBM Retirement Plan Changes,” for additional information.
IBM Retirement Plan Changes
In September 2022, the Qualified PPP irrevocably transferred to The Prudential Insurance Company of America and Metropolitan Life Insurance Company approximately $16 billion of the Qualified PPP’s defined benefit pension obligations and related plan assets, thereby reducing the company’s pension obligations and assets by the same amount.
Upon issuance of the group annuity contracts, the Qualified PPP’s benefit obligations and administration for approximately 100,000 of the company’s retirees and beneficiaries were transferred to The Prudential Insurance Company of America and Metropolitan Life Insurance Company. Under the group annuity contracts, The Prudential Insurance Company of America and Metropolitan Life Insurance Company have made an irrevocable commitment, and are solely responsible, to pay 50 percent of the pension benefits of the company's retirees and beneficiaries due on and after January 1, 2023. The transaction resulted in no changes to the amount of benefits payable to the company’s retirees and beneficiaries. The company recognized a one-time, non-cash, pre-tax pension settlement charge of $5.9 billion ($4.4 billion net of tax) in the third quarter of 2022 primarily related to the accelerated recognition of actuarial losses included within AOCI in the Consolidated Statement of Equity.
In September 2022, the company amended its U.S. Nonpension Postretirement Plan to transition coverage for Medicare-eligible participants to a new IBM-sponsored group Medicare Advantage program administered by UnitedHealthcare, as of January 1, 2023. The changes were intended to provide an enhanced member experience, better value and more comprehensive benefits to IBM participants. This change resulted in a decrease in nonpension postretirement benefit obligations and a corresponding decrease in AOCI in 2022.
Effective January 1, 2024, IBM changed how it provides certain retirement-related benefits in the U.S. IBM is providing a new benefit to most U.S. employees under its existing Qualified PPP called the Retirement Benefit Account (RBA). This is in place of any IBM contributions to the U.S. employees’ 401(k) Plus accounts. IBM U.S. regular full-time and part-time employees with at least one year of service will participate in the RBA. Each eligible employee’s RBA will be credited monthly with an amount equal to five percent of their eligible pay with no employee contribution required. Under the RBA, eligible employees will earn six percent interest through 2026 and starting in 2027, will earn interest equal to the 10-year U.S. Treasury Yield, subject to a three percent minimum per year through 2033. Eligible employees also received a salary increase effective January 1, 2024 for the difference between the IBM 401(k) Plus contribution percent they were previously entitled to receive and the five percent RBA pay credit. Since the RBA is a component of the Qualified PPP, it is funded by the trust for the Qualified PPP along with all other benefits in the Qualified PPP. At December 31, 2024, the Qualified PPP was 136 percent funded with assets exceeding liabilities by $4.7 billion.
As a result of this change, inactive pension plan participants no longer represent substantially all of the participants in the Qualified PPP. As required by U.S. GAAP, as of January 1, 2024, the amortization period of unrecognized actuarial losses changed from the average remaining life expectancy of inactive plan participants to the average remaining service period of active plan participants. Amortization expense for the year ended December 31, 2024 was approximately $0.5 billion, primarily driven by the change in amortization period. There was no impact to funded status, retiree benefit payments or funding requirements of the Qualified PPP due to the change in amortization period.
In September 2024, the Qualified PPP irrevocably transferred to The Prudential Insurance Company of America approximately $6 billion of the Qualified PPP’s defined benefit pension obligations and related plan assets, thereby reducing the company’s pension obligations and assets by the same amount. After the transaction, the Qualified PPP remained in an overfunded position.
Upon issuance of the group annuity contract, the Qualified PPP’s benefit obligations and administration for approximately 32,000 of the company’s Plan participants and beneficiaries were transferred to The Prudential Insurance Company of America. Under the group annuity contract, The Prudential Insurance Company of America has made an irrevocable commitment, and will be solely responsible, to pay the benefits payable to the participants and beneficiaries. The transaction resulted in no changes to the amount of benefits payable to the Plan participants and beneficiaries. The company recognized a one-time, non-cash, pre-tax pension settlement charge of $2.7 billion ($2.0 billion net of tax) in the third quarter of 2024 primarily related to the accelerated recognition of actuarial losses included within AOCI in the Consolidated Statement of Equity. As a result of this transaction, the company was required to remeasure the benefit obligation and plan assets of the Qualified PPP. The remeasurement reflected the use of the discount rate and actual return on plan assets as of August 31, 2024, applying the practical expedient to remeasure plan assets and obligations as of the nearest calendar month-end date.
In October 2024, IBM Canada Ltd. (“IBMC”) purchased two separate nonparticipating single premium group annuity contracts from RBC Life Insurance Company and Brookfield Annuity Company that transferred approximately $1.2 billion of the IBMC IBM Retirement Plan defined benefit pension obligations to them for approximately 6,000 Plan participants and beneficiaries. It was funded directly by the assets of the IBMC IBM Retirement Plan and required no cash contribution from IBM. There were no changes to the amount of benefits payable to the Plan participants and beneficiaries. As a result of the transaction, the company recognized a one time, non-cash, pre-tax, pension settlement charge of $0.4 billion in the fourth quarter of 2024.
The pension transfers described above have reduced the risk profile of the company’s worldwide retirement-related plans by eliminating the potential for the company to make future cash contributions to fund these portions of pension obligations while at the same time increasing the funded status of the respective plans.
The following table presents the changes in benefit obligations and plan assets of the company’s retirement-related benefit plans, excluding DC plans.
($ in millions)
Defined Benefit Pension PlansNonpension Postretirement Benefit Plans
U.S. PlansNon-U.S. PlansU.S. PlanNon-U.S. Plans
2024 2023202420232024202320242023
Change in benefit obligation
Benefit obligation at January 1$21,235 $21,493 $33,479 $31,261 $2,233 $2,369 $586 $531 
Service cost (1)
394 — 170 177 2 4 2 2 
Interest cost911 1,090 1,077 1,170 106 117 41 39 
Plan participants' contributions— — 17 17 33 38 — — 
Acquisitions/divestitures, net— — 7 (20)— — — — 
Actuarial losses/(gains)(589)486 (1,076)2,077 116 (19)0 35 
Benefits paid from trust(1,432)(1,424)(1,635)(1,629)(233)(274)(4)(7)
Direct benefit payments(122)(122)(422)(396)(2)(3)(32)(31)
Foreign exchange impact— — (1,850)1,021 — — (85)22 
Amendments/curtailments/settlements/other (2)
(6,178)(288)(1,277)(198)— — (1)(4)
Benefit obligation at December 31$14,219 $21,235 $28,490 $33,479 $2,257 $2,233 $507 $586 
Change in plan assets
Fair value of plan assets at January 1$24,437 $25,094 $29,059 $28,371 $10 $10 $23 $29 
Actual return on plan assets764 1,055 499 1,391 — — 1 3 
Employer contributions— — 67 57 194 233 — — 
Acquisitions/divestitures, net— — 4 (24)— — — — 
Plan participants' contributions— — 17 17 33 38 — — 
Benefits paid from trust(1,432)(1,424)(1,635)(1,629)(233)(274)(4)(7)
Foreign exchange impact— — (1,530)1,058 — — (5)3 
Amendments/curtailments/settlements/other (2)
(6,178)(288)(1,277)(181)2 2 0 (6)
Fair value of plan assets at December 31$17,591 $24,437 $25,205 $29,059 $6 $10 $14 $23 
Funded status at December 31$3,373 $3,202 $(3,286)$(4,420)$(2,251)$(2,224)$(493)$(564)
Accumulated benefit obligation (3)
$14,219 $21,235 $28,187 $33,128 N/AN/AN/AN/A
(1)Increase in U.S. Plans Service Cost in 2024 is due to the RBA that was effective January 1, 2024. Refer to the section above entitled “IBM Retirement Plan Changes,” for additional information.
(2)In 2024, the amount related to U.S. Defined Benefit Pension Plans primarily represents the transfer of Qualified PPP pension obligations and related plan assets to The Prudential Insurance Company of America pursuant to a group annuity contract and the amount related to Non-U.S. Defined Benefit Pension Plans primarily represents the transfer of IBMC IBM Retirement Plan pension obligations and related plan assets to RBC Life Insurance Company and Brookfield Annuity Company pursuant to group annuity contracts.
(3) Represents the benefit obligation assuming no future participant compensation increases.
N/A–Not applicable
The following table presents the net funded status recognized in the Consolidated Balance Sheet.
($ in millions)
Defined Benefit Pension PlansNonpension Postretirement Benefit Plans
U.S. PlansNon-U.S. PlansU.S. PlanNon-U.S. Plans
At December 31:20242023202420232024202320242023
Prepaid pension assets$4,651 $4,584 $2,842 $2,923 $0 $0 $0 $0 
Current liabilities—compensation and benefits(117)(119)(362)(366)(218)(202)(20)(17)
Noncurrent liabilities—retirement and nonpension postretirement benefit obligations(1,160)(1,262)(5,766)(6,977)(2,033)(2,022)(473)(547)
Funded status—net$3,373 $3,202 $(3,286)$(4,420)$(2,251)$(2,224)$(493)$(564)
The following table presents the pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in OCI and the changes in the pre-tax net loss, prior service costs/(credits) and transition (assets)/liabilities recognized in AOCI for the retirement-related benefit plans.
($ in millions)
Defined Benefit Pension PlansNonpension Postretirement Benefit Plans
U.S. PlansNon-U.S. PlansU.S. PlanNon-U.S. Plans
2024 2023202420232024202320242023
Net loss at January 1$9,467 $8,617 $12,937 $11,219 $73 $94 $123 $86 
Current period loss/(gain)(101)959 (73)2,125 115 (20)0 34 
Curtailments and settlements (1)
(2,761)— (398)(7)— — 0 2 
Amortization of net loss included in net periodic (income)/cost (2)
(452)(109)(516)(400)— — 1 1 
Net loss at December 31$6,153 $9,467 $11,950 $12,937 $188 $73 $125 $123 
Prior service costs/(credits) at January 1$0 $0 $309 $330 $(350)$(379)$(1)$0 
Current period prior service costs/(credits)— — 56 (1)— — 0 (1)
Curtailments, settlements and other— — — — — — — — 
Amortization of prior service (costs)/credits included in net periodic (income)/cost0 0 (22)(20)29 29 0 0 
Prior service costs/(credits) at December 31$0 $0 $342 $309 $(321)$(350)$(1)$(1)
Transition (assets)/liabilities at January 1$— $— $0 $0 $— $— $0 $0 
Transition (assets)/liabilities at December 31$— $— $0 $0 $— $— $0 $0 
Total loss recognized in accumulated other comprehensive income/(loss) (3)
$6,153 $9,467 $12,293 $13,245 $(133)$(276)$124 $122 
(1)In 2024, the amount related to U.S. Defined Benefit Pension Plans includes the impact of a pension settlement charge of $2.7 billion, and the amount related to Non-U.S. Defined Benefit Pension Plans includes the impact of a pension settlement charge of $0.4 billion. Refer to the section above entitled “IBM Retirement Plan Changes,” for additional information.
(2)Increase in U.S. Plans Amortization of net loss included in net periodic (income)/cost in 2024 is due to the RBA that was effective January 1, 2024. Refer to the section above entitled “IBM Retirement Plan Changes,” for additional information.
(3)Refer to note R, “Equity Activity,” for the total change in AOCI, and the Consolidated Statement of Comprehensive Income for the components of net periodic (income)/cost, including the related tax effects, recognized in OCI for the retirement-related benefit plans.
Assumptions Used to Determine Plan Financial Information
Underlying both the measurement of benefit obligations and net periodic (income)/cost are actuarial valuations. These valuations use participant-specific information such as salary, age and years of service, as well as certain assumptions, the most significant of which include estimates of discount rates, expected return on plan assets, rate of compensation increases, interest crediting rates and mortality rates. The company evaluates these assumptions, at a minimum, annually, and makes changes as necessary.

The following tables present the assumptions used to measure the net periodic (income)/cost and the year-end benefit obligations for retirement-related benefit plans.
Defined Benefit Pension Plans
U.S. PlansNon-U.S. Plans
202420232022202420232022
Weighted-average assumptions used to measure net periodic (income)/cost for the year ended December 31
Discount rate (1) (2) (3)
5.00 %5.30 %3.30 %3.37 %3.80 %1.26 %
Expected long-term returns on plan assets (1) (2) (3)
5.08 %5.50 %4.33 %4.89 %4.44 %2.97 %
Rate of compensation increase (4)
5.00 %N/A N/A 4.18 %4.00 %3.02 %
Interest crediting rate (1) (3)
3.80 %4.40 %2.07 %0.28 %0.34 %0.26 %
Weighted-average assumptions used to measure benefit obligations at December 31
Discount rate5.50 %5.00 %5.30 %3.61 %3.36 %3.80 %
Rate of compensation increase4.00 %5.00 %N/A 4.04 %4.18 %4.00 %
Interest crediting rate4.30 %3.80 %4.40 %0.32 %0.28 %0.34 %
(1)The Qualified PPP discount rate, expected long-term return on plan assets and interest crediting rate of 5.00 percent, 5.00 percent, and 3.80 percent, respectively, for the period January 1, 2024 through August 31, 2024, changed to 5.00 percent, 5.25 percent and 3.80 percent, respectively, for the period September 1, 2024 through December 31, 2024 due to remeasurement of the plan as a result of the changes described in the section above entitled “IBM Retirement Plan Changes.”
(2)The Non-U.S. Plan discount rate and expected long-term return on plan assets of 4.60 percent, and 5.50 percent, respectively, for the period January 1, 2024 through October 29, 2024, changed to 4.70 percent and 4.50 percent respectively, for the period October 30, 2024 through December 31, 2024 due to remeasurement of the IBMC IBM Retirement Plan as a result of the changes described in the section above entitled “IBM Retirement Plan Changes.”
(3)The Qualified PPP discount rate, expected long-term return on plan assets and interest crediting rate of 2.60 percent, 4.00 percent and 1.10 percent, respectively, for the period January 1, 2022 through August 31, 2022, changed to 4.70 percent, 5.00 percent and 4.00 percent, respectively, for the period September 1, 2022 through December 31, 2022 due to remeasurement of the plan as a result of the changes described in the section above entitled “IBM Retirement Plan Changes.”
(4)The rate of compensation increase in 2024 is due to the RBA that was effective January 1, 2024. Refer to the section above entitled “IBM Retirement Plan Changes,” for additional information.
N/A–Not applicable
Nonpension Postretirement Benefit Plans
U.S. PlanNon-U.S. Plans
202420232022202420232022
Weighted-average assumptions used to measure net periodic cost for the year ended December 31
Discount rate (1)
5.00 %5.30 %3.05 %7.66 %7.25 %5.35 %
Expected long-term returns on plan assetsN/A N/A N/A 8.12 %8.05 %6.64 %
Interest crediting rate (1)
3.80 %4.40 %2.16 %N/A N/A N/A 
Weighted-average assumptions used to measure benefit obligations at December 31
Discount rate5.30 %5.00 %5.30 %8.21 %7.66 %7.25 %
Interest crediting rate4.30 %3.80 %4.40 %N/A N/A N/A 
(1)The U.S. Nonpension Postretirement Plan discount rate and interest crediting rate of 2.30 percent and 1.10 percent, respectively, for the period January 1, 2022 through July 31, 2022, changed to 4.10 percent and 3.65 percent, respectively, for the period August 1, 2022 through December 31, 2022 due to remeasurement of the plan as a result of the changes described in the section above entitled “IBM Retirement Plan Changes.”
N/A–Not applicable
ItemDescription of Assumptions
Discount Rate
Changes in discount rate assumptions impact net periodic (income)/cost and the PBO.

For the U.S. and certain non-U.S. countries, a portfolio of high-quality corporate bonds is used to construct a yield curve. Cash flows from the company’s expected benefit obligation payments are matched to the yield curve to derive the discount rates.

In other non-U.S. countries where the markets for high-quality long-term bonds are not as well developed, a portfolio of long-term government bonds is used as a base, and a credit spread is added to simulate corporate bond yields at these maturities in the jurisdiction of each plan. This is the benchmark for developing the respective discount rates.
Expected Long-Term Returns on Plan Assets
Represents the expected long-term returns on plan assets based on the calculated market-related value of plan assets and considers long-term expectations for future returns and the investment policies and strategies discussed on page 116. These rates of return are developed and tested for reasonableness against historical returns by the company.

The use of expected returns may result in pension income that is greater or less than the actual return of those plan assets in a given year. Over time, however, the expected long-term returns are designed to approximate the actual long-term returns, and therefore result in a pattern of income or loss recognition that more closely matches the pattern of the services provided by the employees.

The difference between actual and expected returns is recognized as a component of net loss or gain in AOCI, which is amortized as a component of net periodic (income)/cost over the service lives or life expectancy of the plan participants, depending on the plan, provided such amounts exceed certain thresholds provided by accounting standards. The market-related value of plan assets recognizes changes in the fair value of plan assets systematically over a five-year period in the expected return on plan assets line in net periodic (income)/cost.

The projected long-term rate of return on plan assets for 2025 is 5.50 percent for U.S. and 4.86 percent for non-U.S. DB Plans.
Rate of Compensation Increases and Mortality Assumptions
Compensation rate increases are determined based on the company’s long-term plans for such increases.

Mortality assumptions are based on life expectancy and death rates for different types of participants and are periodically updated based on actual experience.
Interest Crediting Rate
Benefits for participants in Cash Balance Plans are calculated using a cash balance formula. An assumption underlying this formula is an interest crediting rate, which impacts both net periodic (income)/cost and the PBO. This provides the basis for projecting the expected interest rate that plan participants will earn on the benefits that they are expected to receive in the following year.
Healthcare Cost Trend Rate
For nonpension postretirement benefit plans, the company determines healthcare cost trend rates based on medical cost inflation expectations in each market and IBM’s plan characteristics. The healthcare cost trend rate is an important consideration when setting future expectations for plan costs or benefit obligations, taking into account the terms of the plan which limit the company’s future obligations to the participants.

The company’s U.S. healthcare cost trend rate assumption for 2025 is 6.47 percent and is expected to decrease to 4.50 percent over approximately 14 years.
Plan Assets
Retirement-related benefit plan assets are recognized and measured at fair value. Because of the inherent uncertainty of valuations, these fair value measurements may not necessarily reflect the amounts the company could realize in current market transactions.
Investment Policies and Strategies
The investment objectives of the Qualified PPP portfolio are designed to generate returns that will enable the plan to meet its future obligations. The precise amount for which these obligations will be settled depends on future events, including the retirement dates and life expectancy of the plan participants. The obligations are estimated using actuarial assumptions, based on the current economic environment and other pertinent factors described above. The Qualified PPP portfolio’s investment strategy balances the requirement to generate returns, using assets with higher expected returns such as equity securities, with the need to control risk in the portfolio with less volatile assets, such as fixed-income securities. Risks include, among others, inflation, volatility in equity values and changes in interest rates that could cause the plan to become underfunded, thereby increasing its dependence on contributions from the company. To mitigate any potential concentration risk, careful consideration is given to balancing the portfolio among industry sectors, companies and geographies, taking into account interest rate sensitivity, dependence on economic growth, currency and other factors that affect investment returns. In 2024, the company changed its investment, strategy, modifying asset allocation, primarily by increasing return-seeking assets and reducing debt securities. The change was designed to improve expected returns for the plan given that the plan began accruing new liabilities in the form of Retirement Benefit Accounts. The Qualified PPP portfolio’s target allocation is 11 percent equity securities, 70 percent fixed-income securities, 3 percent real estate and 16 percent other investments.
The assets are managed by professional investment firms and investment professionals who are employees of the company. They are bound by investment mandates determined by the company’s management and are measured against specific benchmarks. Among these managers, consideration is given, but not limited to, balancing security concentration, issuer concentration, investment style and reliance on particular active and passive investment strategies.
Market liquidity risks are tightly controlled, with $1,465 million of the Qualified PPP portfolio as of December 31, 2024 invested in private market assets consisting of private equities, private real estate investments and private infrastructure equity, which are less liquid than publicly traded securities and primarily measured at net asset value (NAV). In addition, the Qualified PPP portfolio had $843 million in commitments for future investments in private markets to be made over a number of years. These commitments are expected to be funded from plan assets.
Derivatives are used as an effective means to achieve investment objectives and/or as a component of the plan’s risk management strategy. The primary reasons for the use of derivatives are fixed income management, including duration, interest rate management and credit exposure, cash equitization and to manage currency strategies.
The non-U.S. Plans investment objectives are similar to those described previously, subject to local regulations. The weighted-average target allocation for the non-U.S. plans is 16 percent equity securities, 63 percent fixed-income securities, 3 percent real estate, 13 percent insurance contracts and 5 percent other investments, which is consistent with the allocation decisions made by the company’s management. In some countries, a higher percentage allocation to fixed income is required to manage solvency and funding risks. In others, the responsibility for managing the investments typically lies with a board that may include up to 50 percent of members elected by employees and retirees. This can result in slight differences compared with the strategies previously described. The percentage of non-U.S. plans investment in assets that are less liquid is consistent with the U.S. plan. The use of derivatives is also consistent with the U.S. plan and mainly for currency hedging, interest rate risk management, credit exposure and alternative investment strategies.
The company’s nonpension postretirement benefit plans are underfunded or unfunded. For some plans, the company maintains a nominal, highly liquid trust fund balance to ensure timely benefit payments.
Defined Benefit Pension Plan Assets
The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2024. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries.
($ in millions)
U.S. PlanNon-U.S. Plans
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Equity
Equity securities (1)
$655 $— $7 $661 $67 $1 $— $68 
Equity mutual funds (2)
183 — — 183 — — — — 
Fixed income
Government and related (3)
— 7,010 — 7,010 110 6,807 — 6,917 
Corporate bonds (4)
— 3,663 186 3,849 7 2,550 — 2,557 
Mortgage and asset-backed securities— 141 — 141 — 4 — 4 
Fixed income mutual funds (5)
240 — — 240 — — — — 
Insurance contracts (6)
— — — — — 3,332 — 3,332 
Cash and short-term investments (7)
670 (24)— 646 170 277 — 447 
Private equity— — — — — — — — 
Real estate— — — — — — 3 3 
Derivatives (8)
— 8 — 8 39 58 — 97 
Other mutual funds (9)
— — — — 20 — — 20 
Subtotal1,747 10,799 193 12,739 413 13,029 3 13,444 
Investments measured at net asset value using the NAV practical expedient (10)
— — — 4,852 — — — 11,807 
Other (11)
— — — 0 — — — (47)
Fair value of plan assets$1,747 $10,799 $193 $17,591 $413 $13,029 $3 $25,205 
(1)Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $1 million. Non-U.S. Plans include IBM common stock of $1 million.
(2)Invests in predominantly equity securities.
(3)Includes debt issued by national, state and local governments and agencies.
(4)The U.S. Plans include IBM corporate bonds of $4 million. Non-U.S. Plans include IBM corporate bonds of $4 million.
(5)Invests predominantly in fixed-income securities.
(6)Primarily represents insurance policy contracts (Buy-In) in certain non-U.S. plans.
(7)Includes cash, cash equivalents and short-term marketable securities.
(8)Includes interest-rate derivatives, forwards, exchange-traded and other over-the-counter derivatives.
(9)Invests in both equity and fixed-income securities.
(10)Investments measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient, including commingled funds, hedge funds, private equity and real estate partnerships.
(11)Represents net unsettled transactions, relating primarily to purchases and sales of plan assets.
The U.S. nonpension postretirement benefit plan assets of $6 million were invested primarily in cash equivalents, categorized as Level 1 in the fair value hierarchy. The non-U.S. nonpension postretirement benefit plan assets of $14 million, primarily in Brazil, and, to a lesser extent, in Mexico and South Africa, were invested primarily in government and related fixed-income securities and corporate bonds, categorized as Level 2 in the fair value hierarchy.
The following table presents the company’s defined benefit pension plans’ asset classes and their associated fair value at December 31, 2023. The U.S. Plan consists of the Qualified PPP and the non-U.S. Plans consist of all plans sponsored by the company’s subsidiaries.
($ in millions)
U.S. PlanNon-U.S. Plans
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Equity
Equity securities (1)
$631 $— $— $631 $243 $— $— $243 
Equity mutual funds (2)
155 — — 155 5 — — 5 
Fixed income
Government and related (3)
— 9,861 — 9,861 — 7,700 — 7,700 
Corporate bonds (4)
— 7,074 709 7,783 — 2,691 — 2,691 
Mortgage and asset-backed securities— 178 — 178 — 9 — 9 
Fixed income mutual funds (5)
251 — — 251 — — 75 75 
Insurance contracts (6)
— — — — — 3,774 — 3,774 
Cash and short-term investments (7)
495 119 — 614 264 315 — 579 
Private equity— — 13 13 — — — — 
Real estate— — — — — — 4 4 
Derivatives (8)
— — — — 51 258 — 309 
Other mutual funds (9)
— — — — 20 — — 20 
Subtotal1,532 17,231 722 19,485 584 14,747 78 15,409 
Investments measured at net asset value using the NAV practical expedient (10)
— — — 4,952 — — — 13,709 
Other (11)
— — — 0 — — — (59)
Fair value of plan assets$1,532 $17,231 $722 $24,437 $584 $14,747 $78 $29,059 
(1)Represents U.S. and international securities. The U.S. Plan includes IBM common stock of $1 million. Non-U.S. Plans include IBM common stock of $2 million.
(2)Invests in predominantly equity securities.
(3)Includes debt issued by national, state and local governments and agencies.
(4)The U.S. Plans include IBM corporate bonds of $16 million. Non-U.S. Plans include IBM corporate bonds of $5 million.
(5)Invests in predominantly fixed-income securities.
(6)Primarily represents insurance policy contracts (Buy-In) in certain non-U.S. plans.
(7)Includes cash, cash equivalents and short-term marketable securities.
(8)Includes interest-rate derivatives, forwards, exchange-traded and other over-the-counter derivatives.
(9)Invests in both equity and fixed-income securities.
(10)Investments measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient, including commingled funds, hedge funds, private equity and real estate partnerships.
(11)Represents net unsettled transactions, relating primarily to purchases and sales of plan assets.
The U.S. nonpension postretirement benefit plan assets of $10 million were invested in cash equivalents, categorized as Level 1 in the fair value hierarchy. The non-U.S. nonpension postretirement benefit plan assets of $23 million, primarily in Brazil, and, to a lesser extent, in Mexico and South Africa, were invested primarily in government and related fixed-income securities and corporate bonds, categorized as Level 2 in the fair value hierarchy.
The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2024 and 2023 for the U.S. Plan.
($ in millions)
Equity Securities
Corporate
Bonds
Private
 Equity
Total
Balance at January 1, 2024$— $709 $13 $722 
Return on assets held at end of year(2)4 — 2 
Return on assets sold during the year0 16 — 16 
Purchases, sales and settlements, net2 (545)(10)(554)
Transfers, net7 1 (2)6 
Balance at December 31, 2024$7 $186 $— $193 
($ in millions)
Corporate
Bonds
Private
 Equity
Total
Balance at January 1, 2023$721 $421 $1,142 
Return on assets held at end of year(18)(5)(23)
Return on assets sold during the year10 0 10 
Purchases, sales and settlements, net(5)(404)(409)
Transfers, net2 — 2 
Balance at December 31, 2023$709 $13 $722 
The following tables present the reconciliation of the beginning and ending balances of Level 3 assets for the years ended December 31, 2024 and 2023 for the non-U.S. Plans.
($ in millions)
Fixed Income Mutual FundsReal EstateTotal
Balance at January 1, 2024$75 $4 $78 
Return on assets held at end of year— — — 
Return on assets sold during the year5 — 5 
Purchases, sales and settlements, net(77)— (77)
Transfers, net— 0 0 
Foreign exchange impact(3)(1)(4)
Balance at December 31, 2024$— $3 $3 
($ in millions)
Fixed Income Mutual FundsReal EstateTotal
Balance at January 1, 2023$9 $145 $155 
Return on assets held at end of year1 (66)(65)
Return on assets sold during the year— 56 56 
Purchases, sales and settlements, net63 (137)(74)
Transfers, net— 0 0 
Foreign exchange impact2 5 7 
Balance at December 31, 2023$75 $4 $78 
Valuation Techniques
The following is a description of the valuation techniques used to measure plan assets at fair value. There were no changes in valuation techniques during 2024 and 2023.
Equity securities are valued at the closing price reported on the stock exchange on which the individual securities are traded. IBM common stock is valued at the closing price reported on the New York Stock Exchange. Mutual funds are typically valued based on quoted market prices. These assets are generally classified as Level 1.
The fair value of fixed-income securities is typically estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flows and are generally classified as Level 2. If available, they are valued using the closing price reported on the major market on which the individual securities are traded.
Cash includes money market accounts that are valued at their cost plus interest on a daily basis, which approximates fair value. Short-term investments represent securities with original maturities of one year or less. These assets are classified as Level 1 or Level 2.
Real estate valuations require significant judgment due to the absence of quoted market prices, the inherent lack of liquidity and the long-term nature of such assets. These assets are initially valued at cost and are reviewed periodically utilizing available and relevant market data, including appraisals, to determine if the carrying value of these assets should be adjusted. These assets are classified as Level 3.
Exchange-traded derivatives are valued at the closing price reported on the exchange on which the individual securities are traded, while forward contracts are valued using a mid-close price. Over-the-counter derivatives are typically valued using pricing models. The models require a variety of inputs, including, for example, yield curves, credit curves, measures of volatility and foreign exchange rates. These assets are classified as Level 1 or Level 2 depending on availability of quoted market prices.
Certain investments are measured at fair value using the net asset value (NAV) per share (or its equivalent) as a practical expedient. These investments, which include commingled funds, hedge funds, private equity and real estate partnerships, are typically valued using the NAV provided by the administrator of the fund and reviewed by the company. The NAV is based on the value of the underlying assets owned by the fund, minus liabilities and divided by the number of shares or units outstanding.
Contributions and Direct Benefit Payments
It is the company’s general practice to fund amounts for pensions sufficient to meet the minimum requirements set forth in applicable employee benefits laws and local tax laws. From time to time, the company contributes additional amounts as it deems appropriate.
The following table presents the contributions made to the non-U.S. DB plans, nonpension postretirement benefit plans, multi-employer plans, DC plans and direct benefit payments for 2024 and 2023. The cash contributions to the multi-employer plans represent the annual cost included in the net periodic (income)/cost recognized in the Consolidated Income Statement. The company’s participation in multi-employer plans has no material impact on the company’s financial statements.
($ in millions)
For the years ended December 31:20242023
Non-U.S. DB plans$67 $57 
Nonpension postretirement benefit plans194 233 
Multi-employer plans13 13 
DC plans (1)
440 991 
Direct benefit payments578 552 
Total$1,291 $1,847 
(1)Decrease in DC plans is primarily due to the introduction of the RBA that was effective January 1, 2024. Refer to the section above entitled “IBM Retirement Plan Changes,” for additional information.
In 2024 and 2023, $194 million and $256 million, respectively, of contributions to the non-U.S. DB plans and U.S. nonpension postretirement benefit plans were made in U.S. Treasury securities. Additionally, in 2024 and 2023, contributions of $741 million and $682 million, respectively, were made to the Active Medical Trust in U.S. Treasury securities. Contributions made with U.S. Treasury securities are considered a non-cash transaction.
Defined Benefit Pension Plans
In 2025, the company is not legally required to make any contributions to the U.S. defined benefit pension plans. However, depending on market conditions, or other factors, the company may elect to make discretionary contributions to the Qualified PPP during the year.
In 2025, the company estimates contributions to its non-U.S. defined benefit and multi-employer plans to be approximately $100 million, the largest of which will be contributed to defined benefit pension plans in Japan and India. This amount generally represents legally mandated minimum contributions.
Financial market performance in 2025 could increase the legally mandated minimum contribution in certain countries which require monthly or daily remeasurement of the funded status. The company could also elect to contribute more than the legally mandated amount based on market conditions or other factors.
Expected Benefit Payments
Defined Benefit Pension Plan Expected Payments
The following table presents the total expected benefit payments to defined benefit pension plan participants subsequent to the retirement plan changes, as described in ‘IBM Retirement Plan Changes’ section above. These payments have been estimated based on the same assumptions used to measure the plans’ PBO at December 31, 2024 and include benefits attributable to estimated future compensation increases, where applicable.
($ in millions)
Qualified
U.S. Plan
Payments		Nonqualified
U.S. Plans
Payments		Qualified
Non-U.S. Plans
Payments		Nonqualified
Non-U.S. Plans
Payments		Total Expected
Benefit
Payments
2025$1,136 $121 $1,833 $248 $3,338 
20261,178 119 1,760 224 3,282 
20271,214 116 1,749 221 3,300 
20281,202 114 1,710 217 3,243 
20291,186 111 1,705 218 3,221 
2030-20345,671 507 8,049 1,016 15,243 
The 2025 expected benefit payments to defined benefit pension plan participants not covered by the respective plan assets (underfunded plans) represent a component of compensation and benefits, within current liabilities, in the Consolidated Balance Sheet.
Nonpension Postretirement Benefit Plan Expected Payments
The following table presents the total expected benefit payments to nonpension postretirement benefit plan participants. These payments have been estimated based on the same assumptions used to measure the plans’ APBO at December 31, 2024.
($ in millions)
U.S. Plan
Payments		Qualified
Non-U.S. Plans
Payments		Nonqualified
Non-U.S. Plans
Payments		Total Expected
Benefit
Payments
2025$230 $16 $26 $272 
2026237 17 27 280 
2027249 18 27 293 
2028253 18 27 299 
2029246 19 28 293 
2030-20341,090 107 153 1,350 
The 2025 expected benefit payments to nonpension postretirement benefit plan participants not covered by the respective plan assets represent a component of compensation and benefits, within current liabilities, in the Consolidated Balance Sheet.
Other Plan Information
The following table presents information for defined benefit pension plans with accumulated benefit obligations (ABO) in excess of plan assets. For a more detailed presentation of the funded status of the company’s defined benefit pension plans, refer to the table on page 112.
($ in millions)
20242023
At December 31:Benefit
Obligation		Plan
Assets		Benefit
Obligation		Plan
Assets
Plans with PBO in excess of plan assets$16,216 $8,811 $18,345 $9,621 
Plans with ABO in excess of plan assets16,194 8,789 18,029 9,604 
Plans with plan assets in excess of PBO26,493 33,985 36,369 43,875 
The following table presents information for the nonpension postretirement benefit plan with APBO in excess of plan assets. For a more detailed presentation of the funded status of the company’s nonpension postretirement benefit plans, refer to the table on page 112.
($ in millions)
20242023
At December 31:Benefit
Obligation		Plan
Assets		Benefit
Obligation		Plan
Assets
Plans with APBO in excess of plan assets$2,764 $20 $2,820 $32 
Plans with plan assets in excess of APBO— — — —