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The Senate unanimously approved a bill Friday that would eliminate open seasons restrictions on contributions to the Thrift Savings Plan.

Open seasons have been used since the inception of the 401(k)-style federal retirement savings plan to restrict TSP participants from altering their contributions too often. This year, federal workers can adjust their retirement contributions during two periods, the first ended June 30 while the second runs from Oct. 15 through Dec. 31.

"Allowing employees to join the Thrift Savings Plan or to make other changes when they choose -- not just during two yearly open enrollment periods -- will give employees more control over their investment decisions," said Sen. Susan Collins, R-Maine, chairwoman of the Senate Governmental Affairs Committee. Officials at the TSP have thrown their support behind the bill (S. 2479), telling Congress that once-practical restrictions on changes have now outlived their usefulness.

If it is passed by the House and signed by the president, the Senate legislation still will not affect open season restrictions on the government's matching contributions. If new employees do not begin contributing immediately, they will need to wait for an open enrollment period to begin receiving matching contributions from their agencies. Lawmakers decided it would cost too much, about $300 million a year, to remove the restrictions on government matching.

Agencies match employee contributions dollar-for-dollar on the first 3 percent of salary employees contribute each pay period and 50 cents on the dollar for the next 2 percent of pay.

The Senate bill, known as the Thrift Savings Plan Open Elections Act of 2004, has been endorsed by the Employee Thrift Advisory Council, the American Federation of Government Employees, the National Treasury Employees Union, the National Association of Retired Federal Employees, the Federal Managers Association, and the Senior Executives Association.

The House Government Reform Committee proposed a more expansive version of the open seasons bill, which would have eliminated restrictions on government matching, but lawmakers eventually scrapped that version and are expected to go along with the Senate legislation.

COMMENTS

• If you are a FERS employee ... contribute enough money to the Plan to get agency matching funds. Any excess retirement contribution that you are currently making to the Plan should go to a Roth IRA. Talk to a good tax advisor and he/she will explain why you should do this. If you are a CSRS employee (which I am) I see absolutely no reason to be contributing any more of my money into this Plan. It is a Roth IRA and a tax-deferred annuity for me. If you cannot make another loan because you already have one, remember that you can probably do a Hardship Withdrawal from the plan. There is a tax consequence for this but at least you will have your money out of the plan. GovExec.com reader Posted August 1, 2004 9:26 AM
• Why are you complaining about Amelio telling you where to invest your money? You've got five investment options, and the free will to put the money where you want. If you don't like those choices, then stop contributing to TSP and put your money elsewhere. It's as simple as that. Complain all you want about Amelio, but at least complain about things that actually make sense. GovExec.com reader Posted July 19, 2004 2:26 PM
• Now that we have that straightened out can we get someone to have Mr. Amelio stop telling us where we should be investing OUR money? Amelio is the real problem with the TSP. Is the money in TSP mine or Amelio's? GovExec.com reader Posted July 19, 2004 9:15 AM