Washington – Senate Governmental Affairs Committee Chairman Fred Thompson (R-TN) today announced that the Senate has approved HR 208, legislation to expand participation in the Federal Employees Thrift Savings Plan (TSP) by enabling participants to make contributions sooner and contribute “rollover” funds from qualified savings plans.
“These changes create new incentives for federal employees to participate in the Thrift Savings Plan, thus encouraging savings for retirement,” Chairman Thompson said. “Early participation in the Thrift Savings Plan is critical if an employee is going to accrue adequate savings for retirement. Further, Congress should encourage everyone, including federal employees, to assume more responsibility for their own retirement and this bill does exactly that.”
According the Thompson, H.R. 208 permits newly hired federal employees to begin making tax-advantaged contributions toward their own retirement earlier than allowed under existing law. Current law requires new hires to wait until the second TSP open season after they begin working for the government, which for many new employees may be as long as a year. By reducing the waiting period for participation, H.R. 208 encourages employees to begin their retirement savings immediately.
Second, employees are allowed to contribute “rollover” distributions from qualified trusts, such as 401(k) plans and IRAs to the TSP. These rollover contributions are not permitted under current law. By permitting these roll-overs, the legislation allows employees to consolidate their retirement savings in one account for greater ease of administration.
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