TSP Catch-Up Bill Clears Hurdle

Backers of legislation (HR-3340 and S-1822) to allow Thrift Savings Plan participants age 50 and older to make catch-up investments to their accounts hope to move the plan promptly, now that an apparent budgetary hurdle to enactment has been overcome. Earlier the Congressional Budget Office had said that savings of $408 million over 10 years would have to be found to offset the cost in lost tax revenue. However, the congressional Joint Committee on Taxation has issued a letter saying those costs were included in a tax bill enacted last year allowing such special investments in tax-advantaged retirement plans (separate legislation is needed to make the catch-up provision apply to the TSP). Sponsors of the plan also note that the Bush administration’s budget proposal for the upcoming fiscal year assumes that those costs already are accounted for. The Office of Personnel Management recently sent a letter to Congress supporting the plan as good for recruitment and retention.