Tax Reform Measure Could Affect TSP

The House could vote soon on a measure (HR-1776) to reform various federal pension laws that could have an effect on certain provisions of the Thrift Savings Plan, since the TSP operates under many of the same laws governing 401(k) and similar programs. The bill would speed up the gradual increase in the maximum amounts that may be contributed into such accounts, while also phasing in an increase in the age after which withdrawals must be taken from such accounts. Under current policy, investors need to take certain minimum distributions in the year after they turn age 70 1/2; the bill would change that to 72 and above in 2004-2007 and raise it to 75 afterward. Before going to a House vote the bill might be subject to further Ways and Means Committee action, though, because of a controversy over the procedures used to call it up for a vote in the committee.