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Benefits October 15, 2004
Congress Working on Ending TSP Open Season
October 15, 2004 (PLANSPONSOR.com) - Both houses of
Congress are attempting to pass bills that would abolish the
'open season' for Thrift Savings Plan (TPS), and instead
allow enrollment and changes to plan contribution levels at
any time.
Reported by Kip McDaniel
The US House of Representatives and Senate bills regarding the federal government’s version of the 401(k), however, differ in one way that alters the costs by up to $1 billion over 10 years, the Congressional Budget Office reported. It is in conference committee in an attempt to iron out the differences between the two bills according to The Stars and Stripes.
The House version differs from that of the Senate in that employers would begin adding matching contributions immediately for the civilian employees enrolled in the Federal Employees Retirement System (FERS).Federal agencies match employee contributions dollar-for-dollar up to 3% of total salary, and fifty-cents to the dollar from 3% to 5%. FERS employees can contribute up to 15% of their salary with a $14,000 cap.
The Senate version would cost much less than the House version. Where the House version would total almost $1 billion over 10 years, the Senate version’s price tag would only reach $30 million over the same period. In order to get the bill passed before the November dissolution of Congress, both houses are working on the Senate bill in committee, according to Stars and Stripes.
Lawmakers have expressed that they might accept the Senate’s version in order to end the ‘open season’, which only allows participants to change their contribution levels or enroll twice a year. A system that would allow enrollment and other changes at any time throughout the year will most likely be adopted if the bill passes.
TSP spokesman Tom Trabucco believes that the plan to end open season would be a positive change: “They give people more freedom. For instance, the open season that allows them to elect to contribute or adjust their contributions happens twice a year. Often, employees may get a step increase or a pay increase. If this is the case, they often have to wait until the next open season to raise contribution levels.”
The Federal Retirement Thrift Investment Board, with its 401(k)-style TSP, is the world’s largest defined contribution plan. The board’s executive director is Gary Amelio, (See Taking the Bull by the Horns: Plan Sponsor of the Year .