July 24, 2000
SENATE APPROVES BILL EXPANDING THRIFT SAVINGS PLAN
Bill Enables Employees to Contribute Sooner & Add Rollover Funds
Washington - Senate Governmental Affairs Committee Chairman Fred Thompson
(R-TN) today announced that the Senate has approved HR 208, legislation to
expand participation in the Federal Employees Thrift Savings Plan (TSP) by
enabling participants to make contributions sooner and contribute
"rollover" funds from qualified savings plans.
"These changes create new incentives for federal employees to
participate in the Thrift Savings Plan, thus encouraging savings for
retirement," Chairman Thompson said. "Early participation in the
Thrift Savings Plan is critical if an employee is going to accrue adequate
savings for retirement. Further, Congress should encourage everyone, including
federal employees, to assume more responsibility for their own retirement and
this bill does exactly that."
According the Thompson, H.R. 208 permits newly hired federal employees to
begin making tax-advantaged contributions toward their own retirement earlier
than allowed under existing law. Current law requires new hires to wait until
the second TSP open season after they begin working for the government, which
for many new employees may be as long as a year. By reducing the waiting period
for participation, H.R. 208 encourages employees to begin their retirement
savings immediately.
Second, employees are allowed to contribute "rollover"
distributions from qualified trusts, such as 401(k) plans and IRAs to the TSP.
These rollover contributions are not permitted under current law. By permitting
these roll-overs, the legislation allows employees to consolidate their
retirement savings in one account for greater ease of administration.
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