Matchless
Congress moves to eliminate TSP open seasons for employee contributions, but to keep restrictions on when agencies can provide matching funds.
Senators and House members have rallied around legislation to do away with open season restrictions on federal employee contributions to the Thrift Savings Plan, but have set aside a plan to eliminate similar restrictions on agency matching contributions.
Currently, participants in the 401(k)-style savings plan can adjust their retirement contributions during two periods each year. If new employees do not begin contributing immediately, they must wait for an open season to join and begin receiving matching contributions from their agencies. The current open season began on April 15 and ended June 30. The second one will be from Oct. 15 through Dec. 31.
The Federal Workforce Flexibility Act, recently passed by the House Government Reform Committee, originally included an amendment to eliminate open seasons for both employee and agency contributions. The Senate's Thrift Savings Plan Open Elections Act of 2004, however, included only the language to remove the open season restriction for employee contributions, leaving the agency contribution restriction in place.
Agencies match employee contributions dollar-for-dollar on the first 3 percent of salary employees contribute each pay period and 50 cents on the dollar for the next 2 percent of pay.
Under the Senate's approach, employees could begin contributing to the plan at any time, but would have to wait for an open season to begin receiving matching funds from their agency. House aides said they believed the Government Reform Committee would eventually accept the Senate version of the legislation.
The decision to keep the agency matching restrictions in place was made after a bipartisan group of senators learned that the move could cost agencies about $300 million a year, according to a Senate aide. The government might also lose more than $100 million a year if employee contribution rules are changed, because contributions to the plan are made on a pre-tax basis.
The aide said senators wanted to lift all the open season restrictions, but it was unrealistic to place the larger financial burden on agencies.
TSP officials asked Congress to lift the restrictions in March. TSP Board Chairman Andrew Saul told lawmakers that doing so "would expand participant access to the TSP and simplify plan administration."