New federal employees could roll over funds from their private sector 401(k) plans into the Thrift Savings Plan under a bill the House approved this week by voice vote.
The bill (H.R. 208) would also allow new employees to begin participation in the TSP immediately. Under current rules, they have to wait a year before contributing money to their TSP accounts.
"H.R. 208 is a sensible way to encourage federal employees to take personal responsibility and increase their savings for retirement, something we want all Americans to do," Rep. Connie Morella, R-Md., said Tuesday on the House floor.
Morella sponsored the bill. She has introduced another bill, H.R. 483, that includes those two provisions but also would allow federal employees to contribute money to the TSP up to the IRS annual limit, which is $10,000 this year. Currently, federal employees under the Federal Employees Retirement System can only contribute up to 10 percent of their pay to the TSP, and Civil Service Retirement System enrollees are limited to 5 percent.
Morella introduced the bill that does not include the provision on contribution limits because that provision has faced opposition from budget crunchers who say it would cost too much in lost tax revenue. Contributions to the TSP are tax-deferred. The bill that the civil service panel marked up, with only the rollover and new employee participation provisions, should face less opposition, Morella has indicated.
The bill has been referred to the Senate Governmental Affairs Committee.
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