TVARS has announced the following 2022 information of interest to employees and retirees.
Cost-of-living adjustment (COLA) for 2022
For 2022, the COLA for eligible retirees and beneficiaries will be 3.5%.
The TVARS Rules and Regulations provide that eligible retirement benefits (pension and supplemental benefits) will receive a COLA based on an inflation measure, which is the Consumer Price Index – All Urban Consumers (CPI-U) – an index maintained by the U.S. Labor Department that measures the price changes in a broad group of various goods and services purchased by consumers. Under the TVARS Rules, the COLA is calculated as the percentage change in the average CPI-U for the period of November 2019 – October 2020 to the period November 2020 – October 2021 (3.75%) minus 0.25%. Eligible retirees and beneficiaries will see the increase in checks beginning January 31, 2022.
Interest Crediting Rates for 2022
Cash balance (pension) accounts receive interest credits on a monthly basis and Fixed Fund (annuity) accounts receive interest credits on a daily basis and these interest crediting rates are set for each calendar year according to the TVARS Rules.
- For employees with cash balance accounts who were hired prior to January 1, 1996, the interest rate for 2022 will be 6.75%.
- For employees with cash balance accounts who were hired on or after January 1, 1996, the interest rate for 2022 will be 5.75%.
- For Fixed Fund accounts, the interest rate for 2022 will be 5.75%.
For employees with cash balance accounts who were hired prior to January 1, 1996, the calculation is equal to the change in the CPI-U (3.75%) 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 CPI-U (3.75%) 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 2022
During 2022, employees will be able to contribute up to $20,500 to the 401(k) Plan on a pre-tax or Roth basis, which is an increase of $1,000 from 2021. Employees who are age 50 or older at any time during 2022 may make additional “catch-up” contributions to the 401(k) Plan of up to $6,500 over the $20,500 limit on a pre-tax or Roth basis, which is unchanged.
The overall contribution limit to the 401(k) Plan and the TVARS Fixed and Variable (annuity) Funds for 2021 will be $61,000, which is a $3,000 increase from 2021. This overall limit includes the following contributions: (i) employee pre-tax, Roth, and after-tax contributions to the 401(k) Plan; (ii) TVA’s matching and non-elective (automatic) contributions to the 401(k) Plan; and (iii) employee after-tax contributions to the TVARS Fixed and Variable (annuity) Funds (subject to a separate $10,000 limit) for employees hired before January 1, 1996, who are eligible to contribute to those funds. 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 $61,000.
For answers to questions or for more information, please call the TVA Retirement System at 865-632-2672, or send an email to tvars@tva.gov.