Federal employees could contribute up to $9,500 annually to the Thrift Savings Plan under a bill introduced in Congress this week.
The bill, sponsored by Rep. Connie Morella, R-Md., would also allow new employees to "roll-in" funds from their private sector 401(K) plans and begin contributing money to the TSP from their paychecks immediately upon entering federal service, rather than waiting six to 12 months.
The TSP is a major component of the Federal Employees Retirement System (FERS), the retirement package to which most employees hired after 1984 belong. FERS employees can currently contribute up to 10 percent of their salaries to the TSP, to a maximum of $9,500 per year (the IRS limit). The government matches up to 5 percent of employees' contributions. Employees under the Civil Service Retirement System, to which employees hired before 1984 belong, can contribute up to 5 percent of their salaries, but the government makes no matching contributions.
The bill would eliminate the percentage cap for employees making less than $95,000, allowing them to contribute up to the $9,500 limit. The government contribution would not change.
"Federal employees face uncertainty caused by federal downsizing, and they are increasingly insecure about their retirement," Morella said. She said the legislation would encourage federal employees to save more for retirement.
To see the bill (H.R. 2526), click here.
For more information on the Thrift Savings Plan, see Govexec.com's TSP Guide.