Benefit Plans

TVA sponsors a qualified defined benefit pension plan ("pension plan") that covers most of its full-time employees hired before July 1, 2014, a qualified defined contribution plan ("401(k) plan") that covers most of its full-time employees, two unfunded post-retirement health care plans that provide for non-vested contributions toward the cost of eligible retirees' medical coverage, other post-employment benefits, such as workers' compensation, and the SERP. The pension plan and the 401(k) plan are administered by a separate legal entity, the TVA Retirement System ("TVARS"), which is governed by its own board of directors (the "TVARS Board").

The components of net periodic benefit cost and other amounts recognized as changes in regulatory assets for the three and nine months ended June 30, 2018 and 2017, were as follows:



Components of TVA's Benefit Plans
	For the Three Months Ended June 30												For the Nine Months Ended June 30
	Pension Benefits						Other Post-Retirement Benefits						Pension Benefits						Other Post-Retirement Benefits
	2018			2017			2018			2017			2018			2017			2018			2017
Service cost	$	13		$	15		$	4		$	5		$	40		$	45		$	11		$	14
Interest cost	118			116			5			4			355			348			14			15
Expected return on plan assets	(119		)	(114		)	—			—			(358		)	(342		)	—			—
Amortization of prior service credit	(25		)	(25		)	(5		)	(5		)	(74		)	(74		)	(16		)	(16		)
Recognized net actuarial loss	103			118			1			3			307			354			5			10
Total net periodic benefit cost as actuarially determined	90			110			5			7			270			331			14			23
Amount capitalized due to actions of regulator	(13		)	(34		)	—			—			(40		)	(102		)	—			—
Total net periodic benefit cost	$	77		$	76		$	5		$	7		$	230		$	229		$	14		$	23

As of October 1, 2016, TVARS's Rules and Regulations require TVA to contribute to the pension plan the greater of the minimum contribution calculated by TVARS's actuary or $300 million for a period of 20 years or until the plan has reached a fully funded status if sooner than 20 years. The minimum required contribution for 2018 is $300 million. TVA contributes $25 million per month to TVARS and as of June 30, 2018, had contributed $225 million. The remaining $75 million will be contributed by September 30, 2018. TVA contributed $800 million to TVARS in 2017, though the minimum required contribution was $300 million. TVA also contributed $61 million to the 401(k) plan during both the nine months ended June 30, 2018 and 2017. TVA does not separately set aside assets to fund its other post-retirement benefit plans, but rather funds such benefits on an as-paid basis. TVA provided approximately $17 million and $22 million, net of rebates and subsidies, to other post-retirement benefit plans for the nine months ended June 30, 2018 and 2017, respectively. TVA includes its cash contributions to the pension plan in the rate-making formula; accordingly, TVA recognizes pension costs as regulatory assets to the extent that the amount calculated under GAAP as pension expense differs from the amount TVA contributes to the pension plan.

On May 23, 2018, the TVARS Board approved amendments to the pension plan and 401(k) plan. TVARS presented these amendments to TVA for its review and consideration, and the amendments became effective July 8, 2018. The amendments allow TVA employees who are continuing to accrue cash balance benefits in the pension plan to voluntarily elect to switch future participation to the 401(k) plan only. TVA employees with cash balance accounts in the pension plan who have a 401(k) only benefit will have the additional option to waive the right to certain benefits under the pension plan and transfer cash balance accounts to the 401(k) plan account.

Under the plan amendments, the voluntary election options will be offered to eligible TVA employees from July 1, 2018, to August 31, 2018, with changes and transfers becoming effective on October 1, 2018. The effects of any potential curtailment gains are not reasonably estimable at this time, as the measurement is contingent upon the employees' voluntary elections. TVA does not currently anticipate it will exceed the settlement threshold, as certain employees eligible to transfer cash balance accounts would waive the right to certain supplemental benefits.