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 on or after January 1, 1996, the interest rate for 2025 will be 5.02%.
- For Fixed Fund accounts, the interest rate for 2025 will be 5.02%.
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:
- 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 $70,000.
For questions or additional information, please email tvars@tva.gov or call the TVA Retirement System at 800-824-3870.