WASHINGTON, DC—Senate Governmental Affairs Committee Chairman Susan Collins (R-ME) introduced the “Thrift Savings Plan Open Elections Act of 2004,” legislation 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.
“Restricting the periods during which employees can contribute to their retirement unfairly penalizes them and discourages their participation,” said Senator Collins. “By allowing employees to initiate, modify, or terminate contributions to the TSP in any period, provided the amount does not exceed existing limits for contributions, my legislation ensures that federal employees will have greater control over their investment decisions.”
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.
Senate Governmental Affairs Ranking Member Joe Lieberman (D-CT) and Senators Daniel Akaka (D-HI), Peter Fitzgerald (R-IL), and George Voinovich (R-OH), who also serve on the Committee, are original sponsors of the legislation.
Senator Collins’ legislation 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.