TVARS announces the following 2026 information of interest to employees and retirees.
Cost-of-living adjustment (COLA) for 2026
For 2026, the COLA for eligible retirees and beneficiaries will be 2.5%.
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 2023 – October 2024 to the period November 2024 – October 2025 (2.75%) minus 0.25%. Eligible retirees and beneficiaries will see an increase in checks beginning January 31, 2026.
Interest Crediting Rates for 2026
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 2026 will be 6%.
- For employees with cash balance accounts who were hired on or after January 1, 1996, the interest rate for 2026 will be 4.75%.
- For Fixed Fund accounts, the interest rate for 2026 will be 4.75%.
IRS contribution limits for 2026
During 2026, employees will be able to contribute up to $24,500 to the 401(k) Plan on a pre-tax and/or Roth basis. Employees who are age 50 or older at any time during 2026 may make additional “catch-up” contributions to the 401(k) Plan of up to $8,000 over the $24,500 limit on a pre-tax and/or Roth basis.
Super Catch-up
For the first time, employees who are ages 60-63 in 2026 may make additional “catch-up” contributions to the 401(k) Plan of up to $11,250, increasing the catch-up limit by $3,250 for employees in this group.
Mandatory Roth Catch-up
Recent federal legislation, the SECURE 2.0 Act, includes a new requirement that employees who are age 50 or older and earn more than a certain wage threshold must make any catch-up contributions to the 401(k) Plan on a Roth basis. The wage threshold used to determine whether an employee’s catch-up contributions for 2026 must be designated as Roth contributions is $150,000 based on the employee’s 2025 Social Security wages (Box 3 of 2025 Form W-2).
Overall Limit
The overall contribution limit to the 401(k) Plan and the TVARS Fixed and Variable Funds for 2026 will be $72,000. This overall limit includes the following contributions:
- Employee pre-tax, Roth, and after-tax contributions to the 401(k) Plan;
- TVA’s matching and non-elective (automatic) contributions to the 401(k) Plan;
- Employee after-tax contributions to the Fixed and Variable Funds (only available for contributions by employees hired before January 1, 1996).
*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 $72,000.
For questions or additional information, please email [email protected] or call the TVA Retirement System at 800-824-3870.