TVARS announces the following 2025 information of interest to employees and retirees.

Cost-of-living adjustment (COLA) for 2025

For 2025, the COLA for eligible retirees and beneficiaries will be 2.77%.

The TVARS Rules and Regulations (TVARS Rules) provide that eligible retirement benefits (pension and supplemental benefits) will receive a COLA benefit based on a formula using the Consumer Price Index – All Urban Consumers (CPI-U). This index, maintained by the U.S. Labor Department, measures the price changes in a broad group of various goods and services purchased by consumers.

The COLA is calculated as the percentage change in the average CPI-U for the period of November 2022 – October 2023 to the period November 2023 – October 2024 (3.02%) minus 0.25%. Eligible retirees and beneficiaries will see the increase in checks beginning January 31, 2025.

Interest Crediting Rates for 2025

Cash balance (pension) accounts receive interest credits on a monthly basis and Fixed Fund (annuity) accounts receive interest credits on a daily basis. The annual interest crediting rates are set for each calendar year according to formulas in the TVARS Rules.

For employees with cash balance accounts who were hired prior to January 1, 1996, the interest rate for 2025 will be 6.02%.

For employees with cash balance accounts who were hired prior to January 1, 1996, the calculation is equal to the change in the 12-month average CPI-U plus 3% (but not less than 6% nor greater than 10%).

For employees with cash balance accounts who were hired on or after January 1, 1996, and for Fixed Fund accounts, the calculation is equal to the change in the 12-month average CPI-U plus 2% (with a floor of 4.75% and a ceiling of 6.25% based on a formula in the TVARS Rules).

IRS contribution limits for 2025 During 2025, employees will be able to contribute up to $23,500 to the 401(k) Plan on a pre-tax and/or Roth basis. Employees who are age 50 or older at any time during 2025 may make additional “catch-up” contributions to the 401(k) Plan of up to $7,500 over the $23,500 limit on a pre-tax and/or Roth basis.

The overall contribution limit to the 401(k) Plan and the TVARS Fixed and Variable Funds for 2025 will be $70,000. This overall limit includes the following contributions:

*NOTE: Any “catch-up” contributions made by employees age 50 or older to the 401(k) Plan do not count toward the overall contribution limit of $70,000.

For questions or additional information, please email tvars@tva.gov or call the TVA Retirement System at 800-824-3870.