On October 7, the House approved, 372-0, a bill (H.R. 3340) that would allow federal employees aged 50 and older to make additional contributions to their Thrift Savings Plan (TSP) accounts. The TSP offers federal workers retirement savings and tax benefits similar to those provided by many private corporations to their employees under 401(k) plans.
Under current law, individuals who are at least 50 years old are allowed to make additional “catch-up” contributions to their 401(k) plan, tax-sheltered annuity, or simplified employee pension plan. H.R. 3340 would extend the “catch-up” provision to federal employees who participate in the TSP.
Sponsored by Rep. Connie Morella (R-MD), the bill would allow federal employees aged 50 and older to contribute an additional $2,000 to their TSP in FY2003. The catch-up contribution would increase to $3,000 in 2004, $4,000 in 2005, and would be capped at $5,000 in 2006. According to the Congressional Budget Office, the bill would cost $280 million over a five-year period, from FY2003 through FY2007.
“The catch-up contributions will allow workers to make up for years when they weren’t employed, didn’t contribute to their plans or otherwise weren’t able to save,” explained Rep. Morella. “It is also particularly beneficial for women who have returned to the workforce after taking time away to raise families,” she said.
“At the time we began work on this bill, the markets had not imploded,” stated Del. Eleanor Holmes Norton (D-DC). “Allowing us, those of us who work in the federal government to catch up, as it were, with what is already the case in the private sector could not come at a more opportune time,” she added.
