Prospects Called Favorable on TSP ‘Catch-Up’ Bill

Another plan that officials say seems to have a strong chance of passage would allow Thrift Savings Plan investors age 50 and over to make special “catch-up” investments over and above any percentage of salary or dollar limits applying to them. Such special investments are authorized for similar retirement savings plans in the private sector under a tax law passed last year, but because of the TSP’s nature, separate legislation is needed to make such investments available there. Bills are ready for floor votes in both the House (HR-3340) and Senate (S-1822). The potential cost in lost tax revenues is not an issue because that was already assumed in last year’s tax bill, and the Bush administration has indicated its support for the TSP catch-up measure. It’s unclear whether a provision to allow $1,000 catch-ups in 2002 could be made effective in the TSP this year; the legislation would allow investors to make an additional investment of $2,000 in 2003, $3,000 in 2004, $4,000 in 2005 and $5,000 in 2006. After 2006, the allowable amount would be indexed to inflation.