U.S. Senator Daniel K. Akaka (D-Hawaii) applauded Senate passage of H.R. 3340, legislation allowing federal employees and members of the uniformed services to make additional contributions to the Thrift Savings Plan (TSP), the government's primary pension savings plan. The Senate action clears the measure for the President's signature. Senator Akaka introduced S. 1822, the Senate companion bill, with Senator John Warner (R-VA). The Akaka-Warner bill was favorably reported by the Senate Governmental Affairs Committee earlier this year.
Due to changes in the Internal Revenue Code, workers age 50 or older can put an additional $1,000 this year into a pension plan. Next year, the additional contribution will increase to a maximum of $2,000. The ability to make additional contributions will continue in 2004, 2005, and 2006, until the extra contribution caps at $5,000 in addition to an individual's regular contribution.
The change in the tax code applies to both private and public tax qualified plans, including the federal Thrift Savings Plan. However, before this program can be implemented, the tax qualified plan documents must be amended. For private sector 401(k) plans, the plan sponsors can make this change. For the TSP, the plan document is the Federal Employees' Retirement System Act of 1986, a statute which can be amended only by Congress.
"This legislation amends the Federal Employees' Retirement System Act of 1986 to harmonize these tax changes and allow the same tax-deferred catch-up contributions permitted for private sector 401(k) plans. The 'over 50 catch-up contribution' provision in the Act will allow workers to make up for years when they were not employed, didn't contribute to their plan, or otherwise weren't able to save. It is especially beneficial for women who have returned to the workforce after taking time off to raise families," Akaka said.
In addition, the bill includes provisions from S. 3070, a bill introduced by Senator Akaka and Senator Carl Levin (D-MI) to reauthorize appropriations for the Office of Special Counsel (OSC) and the Merit Systems Protection Board (MSPB) for the next five years. These two agencies were created in 1979 to safeguard the federal government's merit-based system of employment, principally by investigating complaints and hearing and deciding appeals from federal employees of removals and other major personnel actions.
"OSC and MSPB play a large role in protecting federal whistleblowers – the brave men and women who step forward to disclose government waste, fraud, and abuse," said Akaka.
H.R. 3340 also contains the text of S. 2527, introduced by Senator Akaka and Senator Thad Cochran (R-MS), permitting employees in the Overseas Private Investment Corporation to obtain health care coverage under the Federal Employee Health Benefits Plan.
