Conferees agree to let military members join TSP

House and Senate conferees on the fiscal 2000 defense authorization bill agreed last week to allow military service members to participate in the Thrift Savings Plan.

The provision would allow military personnel, including reservists, to contribute up to five percent of basic pay or reserve pay before taxes each month. Employees may also invest special and incentive payments under the plan, but total annual contributions are limited to $10,000.

The government is not required to match contributions to the TSP, but under the proposal the Secretary of Defense could offer matching funds in exchange for a military commitment of six years to service members with critical skills.

The popular plan, now available to federal civil service members, allows Federal Employees Retirement System enrollees to contribute as much as 10 percent of their salaries to the TSP. Agencies match FERS employees' contributions up to 5 percent of salary, including an automatic 1 percent agency contribution all FERS employees receive.

Civil Service Retirement System employees are allowed to contribute up to 5 percent of their salaries to the TSP, but they receive no agency matching contributions.

Currently the Thrift Savings Plan covers 2.3 million employees and invests about $62 billion. In the past year, the TSP's C fund, which invests in common stocks, has gained 20.1 percent.

The provision is contingent on the President asking for and the Congress enacting offsets that would pay for the program in the fiscal 2001 budget.