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Following a public appeal from the Federal Retirement Thrift Investment Board, the House Government Reform Subcommittee on Civil Service and Agency Organization voted to eliminate open seasons in the Thrift Savings Plan.

"Today's bill contains a sensible change to the Thrift Savings Plan rules to eliminate open seasons," subcommittee Chairwoman Jo Ann Davis, R-Va., said Tuesday. "I am a firm believer that federal employees should be permitted to manage their own money. This provision allows employees to make changes in the TSP allotments throughout the year instead of just two specified open seasons."

The subcommittee approved the elimination as part of an amendment to The Federal Workforce Flexibility Act, which is designed to improve the government's ability to recruit and retain top-performing employees. The Senate already has passed the legislation but did not include any language to end the open seasons. The open season language must clear the full House and the House-Senate conference before it is signed into law.

If the measure is ultimately approved, TSP participants would be able to adjust their contribution throughout the year, and new employees would be allowed to join the 401(k)-style savings plan and begin receiving matching contributions from their agencies shortly after joining the federal workforce.

Now, plan members must wait until an open season to make these moves. The TSP holds two open seasons annually. The current one began on April 15 and is scheduled to run through June 30. The second one will be from Oct. 15 through Dec. 31.

In March, Thrift Board officials said the open season is an anachronism that was put in place at the plan's inception to provide "structure" and limit the administrative burden on the fledgling agency.

"They are no longer useful in a daily-valued plan environment," Thrift Board Chairman Andrew Saul said. "Indeed, they restrict the opportunity for employees to make contribution elections."

Outside experts agreed with Saul and TSP Executive Director Gary Amelio.

"Open seasons made sense when the FRTIB was a new agency just getting started, and lacked the administrative capability to quickly enroll participants and to implement investment elections on a real-time basis," said James Sauber, chairman of the Employee Thrift Advisory Council.

Davis said the personnel legislation will "in general make the federal government an employer of choice."

"My hope," she added, "is to see this bill move quickly through the House on its way to final passage."

COMMENTS

• If she really feels that way she should make our income tax free and we wouldn't need the tSP at all! The removal of open season is a good idea but it will increase the administrative cost of the fund and many individuals will switch funds frequently. Because those of us that use the fund as a tax dodge and long-term investment vehicle would be injured by this move I recommend that the fund do two things. 1. Charge for each shift in allocation of existing funds - not allocation of contributions. This will remove the short-term profitability potential of trading funds frequently. 2. Offer an index fund or two so we do not have to allocate between the various funds to achieve diversification. It is highly unlikely this will happen based on the fact that the fund does not charge enough for loans to stop high administrative costs from taking my money for those that borrow. There should be not borrowing from the fund for any purpose. However, if borrowing is allowed the cost should be $300 plus one percent of the outstanding balance each month. tax payer Posted May 20, 2004 7:03 AM
• It's way past time for this change. The article doesn't mention when the bill would come to the floor for a vote. The House is done for the year (did they start by the way?), and the Senate's dysfunctional. Employees may see this in 2008 if the current crop of non-legislators and executive non workers stay in power. I find it interesting that the current advertizing campaign calls the federal government "the employer of choice." Their destructive policies, lack of respect towards their workforce, and general disdain for thoughtful governance continually manifests itself through their deeds and not their words. This campaign is but another example of why the people need to retire these clowns. Retirement Manager Posted May 20, 2004 3:57 AM