Senate passes TSP catch-up contributions bill

Federal employees aged 50 or older will be able to contribute thousands more dollars to their Thrift Savings Plan accounts each year, under a bill passed by Congress this week.

President Bush is expected to sign the TSP catch-up contributions bill (H.R. 3340). After he signs the bill, the board that runs the 401k-style TSP will have to issue regulations and modify its computer system before government workers will be able to make the higher contributions. Agencies across government will also have to modify their personnel computer systems to accommodate the change.

"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," Sen. Daniel Akaka, D-Hawaii, said in a statement. "It is especially beneficial for women who have returned to the workforce after taking time off to raise families."

TSP contributions are pre-tax, so putting away money into TSP accounts also lowers an employee's annual tax bill.

Under normal TSP rules, employees under the Federal Employees Retirement System will be able to contribute up to 13 percent of their paychecks each pay period to the TSP in 2003, up to an annual limit of $12,000. Employees under the Civil Service Retirement System will be able to contribute up to 8 percent per paycheck up to $12,000 for 2003.

Under the TSP catch-up contributions bill, employees aged 50 or older will be able to put $2,000 above the limit into their TSP accounts in 2003. For example, under normal rules, an employee in the Federal Employees Retirement System who makes $50,000 a year would be able to put $6,500 (13 percent of pay) into his TSP account next year. Once the bill is enacted, he will be able to put $8,500 into the account.

The maximum catch-up contribution limit will rise to $3,000 in 2004, $4,000 in 2005, and $5,000 for 2006 and every year after that.

The catch-up contribution bill was the brainchild of Rep. Connie Morella, R-Md., who lost her House seat in the Nov. 5 election. Morella made sure previous legislation accounted for the cost in lost tax revenue of the catch-up bill. She also fought for the bill when it stalled earlier this year over cost projections. The House passed the bill in October.

The bill also reauthorizes the Office of Special Counsel and the Merit Systems Protection Board, and allows employees of the Overseas Private Investment Corporation to participate in the Federal Employees Health Benefits Program.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.