President Bush signed a bill last Wednesday that will allow federal workers aged 50 or older to contribute more money to their Thrift Savings Plan accounts.
The Senate passed the legislation on Nov. 13.
The bill, introduced by Rep. Connie Morella, R-Md., who lost her bid for re-election in November, would let older employees in the Federal Employee Retirement System or the Civil Service Retirement System contribute as much as $2,000 a year more to their TSP accounts starting in 2003.
Previously, workers in the Federal Employee Retirement System could contribute up to 13 percent of their paychecks to TSP accounts each year, up to an annual limit of $12,000. Civil Service Retirement System employees could contribute up to 8 percent of their paychecks, also up to a limit of $12,000.
This means that a 50-year-old employee in the Federal Employees Retirement System earning $50,000 a year could have contributed up to $6,500 to his 2003 TSP account, under the old rules. But under H.R. 3340, that employee would be able to deposit up to $8,500 in the account.
The catch-up limit will increase to $3,000 in 2004, $4,000 in 2005 and $5,000 in 2006 and succeeding years.
"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 serve," said Sen. Daniel Akaka, D-Hawaii, in a statement. "It is especially beneficial for women who have returned to the workforce after taking time off to raise families."
Higher contributions also allow workers to save money at tax time, since employees make TSP contributions on a pre-tax basis.
The bill also reauthorizes the Merit System Protection Board and the Office of Special Counsel. In addition, it allows some Overseas Private Investment Corporation employees to enroll in the Federal Employee Benefits Program.