[House Report 107-686]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 107-686
======================================================================
FEDERAL THRIFT SAVINGS PLAN CATCH-UP CONTRIBUTIONS
_______
September 25, 2002.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Burton of Indiana, from the Committee on Government Reform,
submitted the following
R E P O R T
[To accompany H.R. 3340]
[Including cost estimate of the Congressional Budget Office]
The Committee on Government Reform, to whom was referred
the bill (H.R. 3340) to amend title 5, United States Code, to
allow certain catch-up contributions to the Thrift Savings Plan
to be made by participants age 50 or over, having considered
the same, report favorably thereon without amendment and
recommend that the bill do pass.
CONTENTS
I. Summary of Legislation...........................................1
II. Background and Need for the Legislation..........................2
III. Legislative Hearings and Committee Actions.......................2
IV. Committee Hearings and Written Testimony.........................2
V. Explanation of the Bill as Reported: Section-by-Section..........2
VI. Compliance With Rule XIII........................................3
VII. Budget Analysis and Projections..................................3
VIII.Cost Estimate of the Congressional Budget Office.................3
IX. Performance Goals and Objectives.................................5
X. Specific Constitutional Authority for This Legislation...........5
XI. Committee Recommendation.........................................5
XII. Congressional Accountability Act; Public Law 104-1...............6
XIII.Unfunded Mandates Reform Act; Public Law 104-4, Section 423......6
XIV. Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b)......6
XV. Changes in Existing Law..........................................6
I. Short Summary of Legislation
H.R. 3340 amends title 5, United States Code, to allow
certain catch-up contributions to the Thrift Savings Plan (TSP)
to be made by participants age 50 or over.
II. Background and Need for the Legislation
In the fall of 2001, President George W. Bush signed into
law the Economic Growth and Tax Relief Reconciliation Act of
2001 (P.L. 107-16). Among other things, that Act permits
employer-sponsored thrift plans, such as private sector 401(k)
plans and the TSP to allow employees age 50 and older to
contribute additional money toward their retirement.
For TSP contributions, the Tax Relief Act allows those
eligible to contribute an extra $1000 in 2002 and increases the
amount by $1000 each year from 2003 through 2005. After 2005,
the maximum contribution will be increased each year in
accordance with cost of living changes.
Employees are not automatically entitled to make catch-up
contributions. Private employers must amend their plan
documents to permit catch-up contributions. Likewise, Congress
must change laws limiting contributions to the TSP before
eligible federal employees can take advantage of the catch-up
provisions of the Tax Relief Act. H.R. 3340 makes the
appropriate changes to title 5 of the United States Code to
allow federal employees to make these catch-up contributions.
The catch-up contributions will allow workers to make-up
for years when they were not employed, did not contribute to
their plan, were otherwise not able to save, or simply did not
realize the importance of preparing for their retirement years.
The opportunity to make these extra contributions will be
particularly beneficial to women who have returned to the
workforce after taking time to raise their families. Also, many
federal employees will find this very advantageous because the
TSP was not created by law until 1986.
III. Legislative Hearings and Committee Actions
The Committee held no legislative hearings on H.R. 3340.
Representative Constance A. Morella introduced this measure on
November 11, 2001. H.R. 3340 was referred to the Committee on
Government Reform, Subcommittee on Civil Service, Census, and
Agency Organization. The Committee on Government Reform marked-
up H.R. 3340 on March 14, 2002 and approved the bill by voice
vote with no amendments. The Committee on Government Reform
favorably reported H.R. 3340 to the House of Representatives.
IV. Committee Hearings and Written Testimony
There were no hearings on the subcommittee or full
committee level.
V. Explanation of the Bill as Reported: Section-by-Section
Section 1. Catch-Up Contributions. This section allows
federal employees age 50 or older and participating in the TSP
to make additional catch-up contributions to their TSP
accounts. These catch-up contributions are in addition to the
maximum contributions currently allowed.
Subsection (a) amends section 8351(b) of title 5 and allows
eligible federal employees enrolled in the Civil Service
Retirement System to make catch-up contributions into Thrift
Savings Plans in addition to the maximums currently allowed.
This subsection allows a participant to ``make such additional
contributions to the Thrift Savings Fund as are permitted by
such section 414(v)'' of the Internal Revenue Code.
Subsection (b)(1) amends subsection (a) of section 8432 of
title 5 and allows eligible federal employees enrolled in the
Federal Employees' Retirement System to make catch-up
contributions into Thrift Savings Plans in addition to the
maximums currently allowed. This subsection allows these
employees to ``make such additional contributions to the Thrift
Savings Fund as are permitted by such section 414(v)'' of the
Internal Revenue Code.
Subsection (b)(2) amends section 8440f of title 5 to allow
those federal employees listed in sections 8440a, 8440b, 8440c,
8440d, and 8440e of title 5 and enrolled in the Federal
Employees' Retirement System to make catch-up contributions
into Thrift Savings Plans permitted under Internal Revenue Code
section 414(v). The employees affected under this section are
federal judges and justices, bankruptcy judges and magistrates,
claims court judges, judges of the U.S. Court of Appeals for
Veterans Claims, and members of the uniformed services.
Subsection (c) provides that the amendments shall take
effect on the earliest practicable date as determined by the
Executive Director of the Federal Retirement Thrift Investment
Management System.
VI. Compliance With Rule XIII
Pursuant to rule XIII, clause 3(c)(1) of the Rules of the
House of Representatives, under the authority of rule X, clause
2(b)(1) and clause 3(f), the results and findings from
Committee oversight activities are incorporated in the bill and
this report.
VII. Budget Analysis and Projections
The budget analysis and projections required by section
308(a) of the Congressional Budget Act of 1974 are contained in
the estimate of the Congress Budget Office.
The Committee does not disagree with the estimate from the
Congressional Budget Office (CBO), but it would note that lost
revenue attributed to H.R. 3340 has already been accounted for
when the CBO/Joint Committee on Taxation scored the Economic
Growth and Tax Relief Reconciliation Act of 2001 (P.L. 107-16).
VIII. Cost Estimate of the Congressional Budget Office
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 5, 2002.
Hon. Daniel Burton,
Chairman, Committee on Government Reform,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3340, a bill to
amend Title 5, United States Code, to allow certain catchup
contributions to the Thrift Savings Plan to be made by
participants age 50 or over.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Ed Harris.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
H.R. 3340--A bill to amend title 5, United States Code, to allow
certain catch-up contributions to the Thrift Savings Plan to be
made by participants age 50 or over
Summary: H.R. 3340 would amend the Federal Employees
Retirement System Act of 1986. This amendment would allow the
Federal Thrift Savings Plan (TSP) to permit federal employees
at least 50 years of age to make additional contributions to
the TSP. CBO estimates that enacting H.R. 3340 would reduce
revenues by $280 million over the 2003-2007 period, and by $408
million over the 2003-2012 period. Since H.R. 3340 would affect
receipts, pay-as-you-go procedures would apply.
H.R. 3340 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Because the bill would allow certain federal employees to
increase the amount of taxable income they defer, state and
local governments could face reduced income tax receipts. CBO
estimates such losses would not exceed $20 million in any of
the first five years after enactment of the bill.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 3340 is shown in the following table.
----------------------------------------------------------------------------------------------------------------
By fiscal year in millions of dollars--
-----------------------------------------------------
2002 2003 2004 2005 2006 2007
----------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Estimated revenues........................................ 0 -59 -77 -71 -42 -31
----------------------------------------------------------------------------------------------------------------
Basis of estimate: Current law limits the amounts that
federal employees can contribute to the TSP. Contributions to
the TSP are tax-deferred, and thus no federal income tax is
paid on the contribution, or the association investment
earnings, until the money is withdrawn from the TSP. The
Economic Growth and Tax Relief Reconciliation Act of 2001
(Public Law 107-16) expanded the provisions of the tax code
pertaining to tax deferred accounts to permit ``catch-up''
contributions. H.R. 3340 would change federal retirement
provisions to take advantage of the new tax law changes. Under
H.R. 3340, federal employees at least 50 years of age could
make additional catch-up contributions to the TSP. The
allowable amount of catch-up contributions would be $2,000 in
2003, $3,000 in 2004, $4,000 in 2005, $5,000 in 2006, and
indexed to inflation thereafter. Under the bill, employees
would contribute more money to their TSP accounts than under
prior law, and thus taxes would be deferred on more of their
income.
Based on data from the Office of Personnel Management and
the Federal Retirement Thrift Investment Board, CBO estimates
approximately 200,000 federal employees would make catch-up
contributions in 2003. Under current law, the amount of
allowable contributions to the TSP is scheduled to rise
substantially between 2002 and 2006, so CBO estimates that the
number of employees making catch-up contributions would drop to
fewer than 50,000 by 2006. CBO estimates the federal government
would forgo about $408 million in federal income taxes over the
2003-2012 period as a result of this provision.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in governmental receipts that are subject to pay-as-
you-go procedures are shown in the following table. For the
purposes of enforcing pay-as-you-go procedures, only the
effects through 2006 are counted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
---------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts............................................. 0 -59 -77 -71 -42 -31 -32 -33 -33 -19 -11
Changes in outlays.............................................. Not applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: H.R. 3340
contains no intergovernmental or new private-sector mandates as
defined in UMRA. Because the bill would allow certain federal
employees to increase the amount of taxable income they defer,
state and local governments could face reduced income tax
receipts, CBO estimates such losses would not exceed $20
million in any of the first five years after enactment of the
bill.
Estimate prepared by: Federal revenues: Ed Harris; impact
on state, local, and tribal governments: Susan Sieg Tompkins;
impact on the private sector: Paige Piper/Bach.
Estimate approved by: G. Thomas Woodward, Assistant
Director for Tax Analysis.
IX. Performance Goals and Objectives
H.R. 3340 does not authorize funding. Therefore, clause
3(c) of rule 13 of the Rules of the House of Representatives is
inapplicable.
X. Specific Constitutional Authority for This Legislation
Clauses 1 and 18 of Article I, Sec. 8 of the Constitution
grant Congress the power to enact this law.
XI. Committee Recommendation
On March 14, 2002, a quorum being present, the Committee
ordered the bill, as amended, favorably reported.
COMMITTEE ON GOVERNMENT REFORM--107TH CONGRESS
Date: March 14, 2002.
Final Passage of H.R. 3340.
Offered by: Hon. Dan Burton (IN).
Adopted by voice vote.
XII. Congressional Accountability Act; Public Law 104-1; Section
102(B)(3)
H.R. 3340 applies to eligible employees in the legislative
branch of the federal government who participate in the Civil
Service Retirement System and the Federal Employees' Retirement
System.
XIII. Unfunded Mandates Reform Act; Public Law 104-4; Section 423
H.R. 3340 does not impose any federal mandates on state,
local, or tribal governments, or the private sector, and it
does not preempt any state or local law.
XIV. Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b)
The Committee finds that H.R. 3340 does not establish or
authorize establishment of an advisory committee within the
definition of 5 U.S.C. App., Section 5(b).
XV. Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
TITLE 5, UNITED STATES CODE
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
Subpart G--Insurance and Annuities
* * * * * * *
CHAPTER 83--RETIREMENT
* * * * * * *
SUBCHAPTER III--CIVIL SERVICE RETIREMENT
* * * * * * *
Sec. 8351. Participation in the Thrift Savings Plan
(a) * * *
(b)(1) * * *
(2)(A) * * *
* * * * * * *
(C) Notwithstanding any limitation under this paragraph, an
eligible participant (as defined by section 414(v) of the
Internal Revenue Code of 1986) may make such additional
contributions to the Thrift Savings Fund as are permitted by
such section 414(v) and regulations of the Executive Director
consistent therewith.
* * * * * * *
CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
* * * * * * *
SUBCHAPTER III--THRIFT SAVINGS PLAN
* * * * * * *
Sec. 8432. Contributions
(a)(1) * * *
* * * * * * *
(3) Notwithstanding any limitation under this subsection, an
eligible participant (as defined by section 414(v) of the
Internal Revenue Code of 1986) may make such additional
contributions to the Thrift Savings Fund as are permitted by
such section 414(v) and regulations of the Executive Director
consistent therewith.
* * * * * * *
Sec. 8440f. Maximum percentage allowable for certain participants
(a) The maximum percentage allowable under this section shall
be determined in accordance with the following table:
In the case of a pay period beginning in fiscal year: The maximum
percentage
allowable is:
2001.......................................................... 6
2002.......................................................... 7
2003.......................................................... 8
2004.......................................................... 9
2005.......................................................... 10
2006 or thereafter............................................ 100.
* * * * * * *
(b) Notwithstanding any limitation under this section, an
eligible participant (as defined by section 414(v) of the
Internal Revenue Code of 1986) may make such additional
contributions to the Thrift Savings Fund as are permitted by
such section 414(v) and regulations of the Executive Director
consistent therewith.
* * * * * * *