WASHINGTON, DC — The U.S. Senate today unanimously approved Senate Governmental Affairs Committee Chairman Susan Collins’ (R-ME) legislation (S. 2479) to provide federal employees with maximum flexibility to tailor their investment decisions by eliminating the current restrictions on when employee contributions to the Thrift Savings Plan (TSP) can begin or be modified.
“Allowing employees to join the Thrift Savings Plan or to make other changes when they choose — not just during two yearly “open enrollment” periods — will give employees more control over their investment decisions,” said Senator Collins.
Since its inception in 1987, the TSP has provided federal employees with the opportunity to participate in a retirement savings plan similar to the 401(k) plans offered by many private companies. Under current law, newly hired employees can sign up to contribute to the TSP during an initial 60-day eligibility period. If an employee chooses not to make an election during that time, he or she must wait until an “open season,” or biannually designated period, to do so. If an employee stops contributing to the TSP outside of an open season, he or she must wait until the second open season after contributions stop before contributions can resume.
Open seasons were practical when TSP was first created because the program lacked the administrative capability to quickly enroll participants and to implement investment elections on a real-time basis. With introduction of the automatic record-keeping system, however, the program has outgrown its existing framework.
Senator Collins’ legislation, the Thrift Savings Plan Open Elections Act of 2004, has the support of the Federal Retirement Thrift Investment Board, the Employee Thrift Advisory Council, the American Federation of Government Employees, the National Treasury Employees Union, the National Association of Retired Federal Employees, the Federal Managers Association, and the Senior Executives Association.