[Congressional Record Volume 145, Number 54 (Tuesday, April 20, 1999)]
[House]
[Pages H2161-H2164]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ALLOWING FOR CONTRIBUTIONS OF CERTAIN ROLLOVER DISTRIBUTIONS TO
ACCOUNTS AND ELIMINATING CERTAIN WAITING-PERIOD REQUIREMENTS FOR
PARTICIPATING IN THRIFT SAVINGS PLAN
Mr. SCARBOROUGH. Mr. Speaker, I move to suspend the rules and pass
the
[[Page H2162]]
bill (H.R. 208) to amend title 5, United States Code, to allow for the
contribution of certain rollover distributions to accounts in the
Thrift Savings Plan, to eliminate certain waiting-period requirements
for participating in the Thrift Savings Plan, and for other purposes,
as amended.
The Clerk read as follows:
H.R. 208
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. ELIGIBLE ROLLOVER DISTRIBUTIONS.
(a) In General.--Section 8432 of title 5, United States
Code, is amended by adding at the end the following:
``(j)(1) For the purpose of this subsection--
``(A) the term `eligible rollover distribution' has the
meaning given such term by section 402(c)(4) of the Internal
Revenue Code of 1986; and
``(B) the term `qualified trust' has the meaning given such
term by section 402(c)(8) of the Internal Revenue Code of
1986.
``(2) An employee or Member may contribute to the Thrift
Savings Fund an eligible rollover distribution from a
qualified trust. A contribution made under this subsection
shall be made in the form described in section 401(a)(31) of
the Internal Revenue Code of 1986. In the case of an eligible
rollover distribution, the maximum amount transferred to the
Thrift Savings Fund shall not exceed the amount which would
otherwise have been included in the employee's or Member's
gross income for Federal income tax purposes.
``(3) The Executive Director shall prescribe regulations to
carry out this subsection.''.
(b) Effective Date.--The amendment made by this section
shall take effect on October 1, 2000, or such earlier date as
the Executive Director (as defined by section 8401 of title
5, United States Code) may by regulation prescribe, but not
before September 1, 2000.
SEC. 2. IMMEDIATE PARTICIPATION IN THE THRIFT SAVINGS PLAN.
(a) Elimination of Certain Waiting Periods for Purposes of
Employee Contributions.--Paragraph (4) of section 8432(b) of
title 5, United States Code, is amended to read as follows:
``(4) The Executive Director shall prescribe such
regulations as may be necessary to carry out the following:
``(A) Notwithstanding subparagraph (A) of paragraph (2), an
employee or Member described in such subparagraph shall be
afforded a reasonable opportunity to first make an election
under this subsection beginning on the date of commencing
service or, if that is not administratively feasible,
beginning on the earliest date thereafter that such an
election becomes administratively feasible, as determined by
the Executive Director.
``(B) An employee or Member described in subparagraph (B)
of paragraph (2) shall be afforded a reasonable opportunity
to first make an election under this subsection (based on the
appointment or election described in such subparagraph)
beginning on the date of commencing service pursuant to such
appointment or election or, if that is not administratively
feasible, beginning on the earliest date thereafter that such
an election becomes administratively feasible, as determined
by the Executive Director.
``(C) Notwithstanding the preceding provisions of this
paragraph, contributions under paragraphs (1) and (2) of
subsection (c) shall not be payable with respect to any pay
period before the earliest pay period for which such
contributions would otherwise be allowable under this
subsection if this paragraph had not been enacted.
``(D) Sections 8351(a)(2), 8440a(a)(2), 8440b(a)(2),
8440c(a)(2), and 8440d(a)(2) shall be applied in a manner
consistent with the purposes of subparagraphs (A) and (B), to
the extent those subparagraphs can be applied with respect
thereto.
``(E) Nothing in this paragraph shall affect paragraph
(3).''.
(b) Technical and Conforming Amendments.--(1) Section
8432(a) of title 5, United States Code, is amended--
(A) in the first sentence by striking ``(b)(1)'' and
inserting ``(b)''; and
(B) by amending the second sentence to read as follows:
``Contributions under this subsection pursuant to such an
election shall, with respect to each pay period for which
such election remains in effect, be made in accordance with a
program of regular contributions provided in regulations
prescribed by the Executive Director.''.
(2) Section 8432(b)(1)(B) of title 5, United States Code,
is amended by inserting ``(or any election allowable by
virtue of paragraph (4))'' after ``subparagraph (A)''.
(3) Section 8432(b)(3) of title 5, United States Code, is
amended by striking ``Notwithstanding paragraph (2)(A), an''
and inserting ``An''.
(4) Section 8439(a)(1) of title 5, United States Code, is
amended by inserting ``who makes contributions or'' after
``for each individual'' and by striking ``section
8432(c)(1)'' and inserting ``section 8432''.
(5) Section 8439(c)(2) of title 5, United States Code, is
amended by adding at the end the following: ``Nothing in this
paragraph shall be considered to limit the dissemination of
information only to the times required under the preceding
sentence.''.
(6) Sections 8440a(a)(2) and 8440d(a)(2) of title 5, United
States Code, are amended by striking all after ``subject to''
and inserting ``this chapter.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
take effect on October 1, 2000, or such earlier date as the
Executive Director (as defined by section 8401 of title 5,
United States Code) may by regulation prescribe, but not
before September 1, 2000.
(2) Savings provision.--Notwithstanding any other provision
of this section, until the amendments made by this section
take effect, title 5, United States Code, shall be applied as
if this section had not been enacted.
SEC. 3. ADDITIONAL GOVERNMENT CONTRIBUTIONS FOR RETIREMENT.
(a) Federal Employees' Retirement System.--Section 8423(a)
of title 5, United States Code, is amended by adding at the
end the following:
``(5) Notwithstanding any other provision of this chapter,
effective with respect to contributions for pay periods
beginning on or after October 1, 2000, the normal-cost
percentage used for purposes of any computation under this
subsection shall be equal to--
``(A) the percentage that would otherwise apply if this
paragraph had not been enacted, plus
``(B) .01 of 1 percentage point.''.
(b) Supplemental Liability.--For purposes of applying
section 8423(b) of title 5, United States Code, and section
857(b) of the Foreign Service Act of 1980 (22 U.S.C.
4071f(b)), all amounts shall be determined as if this section
had never been enacted.
(c) Limitation on Source of Additional Contributions.--
Notwithstanding section 8423(a)(3) of title 5, United States
Code, or any other provision of law, the additional
Government contributions required to be made by reason of the
amendment made by subsection (a) shall be made out of any
amounts available to the employing agency involved, other
than any appropriation, fund, or other amounts available for
the payment of employee salaries or benefits.
(d) Conforming Amendment.--Section 307 of the Federal
Employees' Retirement System Act of 1986 (Public Law 99-335;
5 U.S.C. 8401 note) is amended by inserting ``, including the
additional amount required under section 8423(a)(5)(B) of
such title 5,'' after ``Federal Employees' Retirement
System''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Florida (Mr. Scarborough) and the gentleman from Maryland (Mr.
Cummings) each will control 20 minutes.
The Chair recognizes the gentleman from Florida (Mr. Scarborough).
General Leave
Mr. SCARBOROUGH. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days within which to revise and extend
their remarks on the bill, H.R. 208.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Florida?
There was no objection.
Mr. SCARBOROUGH. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of H.R. 208. H.R. 208 would achieve
two worthwhile objectives. First, it would allow newly hired Federal
employees to begin contributing their own money to the Thrift Savings
Plan, the Federal Government's 401(k) plan, almost immediately. Second,
Federal employees would be able to consolidate their retirement funds
in the Thrift Savings Plan.
I believe the policy underlying H.R. 208 is sound. I commend the
gentlewoman from Maryland (Mrs. Morella) for introducing this
legislation and for all of her hard work to advance this bill.
I also would like to thank the distinguished gentleman from Maryland
(Mr. Cummings), the ranking member of the Subcommittee on Civil
Service, for his strong support for this legislation. I thank the
gentleman from Indiana (Mr. Burton), the chairman of the Committee on
Government Reform and Oversight, and the gentleman from California (Mr.
Waxman) for expediting this very important legislation.
Mr. Speaker, in light of all the uncertainty surrounding Social
Security, Congress should encourage everyone, including Federal
employees, to assume more responsibility for their own retirement. H.R.
208 does exactly that.
According to the Congressional Research Service, each $1,000
employees contribute their first year will increase their Thrift
Savings Plan balances after a 30-year career by almost $19,000. That is
assuming a 10 percent rate of return, which is very good. It is a very
good incentive to save.
Finally, Mr. Speaker, the gentlewoman from Maryland (Mrs. Morella)
and I have been working closely together to help offset and pay for
this benefit, and I greatly appreciate her cooperation in this process.
As a result of this work, H.R. 208 fully offsets the cost of this
benefit without raising taxes on the American people.
I encourage all Members to support this very important bill.
[[Page H2163]]
Mr. Speaker, I reserve the balance of my time.
{time} 1530
Mr. CUMMINGS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I commend my colleague, the gentlewoman from Maryland
(Mrs. Morella), for sponsoring H.R. 208. I also want to thank our
subcommittee chairman, the gentleman from Florida (Mr. Scarborough),
the gentleman from Indiana (Mr. Burton), the full committee chairman,
and certainly our ranking member, the gentleman from California (Mr.
Waxman), for bringing this bill up so quickly.
H.R. 208 makes significant reforms in the Thrift Savings Plan. This
bill contains proposals that are contained in President Clinton's
fiscal year 2000 budget. It would permit new Federal employees to begin
contributing to their TSP immediately rather than waiting a year, as
required under current law, and would let Federal employees transfer
balances from other tax deferred savings plans, including private
sector 401(k) accounts, to their TSP accounts.
Early participation in the Federal Employees Retirement System,
particularly in the Thrift Savings Plan, is critical if an employee is
going to maximize the amount of savings earned for his retirement.
The importance of saving for one's retirement is more evident to me
as the Subcommittee on Civil Service of the Committee on Government
Reform considers legislation to offer long-term care insurance as a
benefit option to Federal and postal employees and military personnel
and retirees. A study released at the beginning of this month shows
that baby boomers are concerned about their retirement security, but
are not saving adequately for their long-term care needs. H.R. 208 is
one initiative that will help the Federal work force save money for
their golden years.
At the full committee markup of this bill, the Republicans offered an
amendment to pay for the cost of the legislation by requiring agencies
to divert money from their already hard-pressed salaries and expense
accounts into the Civil Service Retirement and Disability Trust Fund.
The Democrats strongly opposed this provision and worked in a swift and
bipartisan manner to formulate an acceptable alternative that would
require agencies to pay for the cost, but prohibit them from using
salaries and benefit accounts for this purpose.
I support this prohibition, Mr. Speaker, because Federal employees
have been squeezed enough. Inadequate pay raises, increasing costs in
health insurance premiums, and the constant threat of layoffs and
contracting out have caused serious problems in Federal agencies.
Enough is enough.
I am pleased now to be able to support this legislation because it
helps Federal employees save for their retirement and removes the
possibility that any of them would have to lose their jobs to pay for
it.
Again, I congratulate the gentlewoman from Maryland (Mrs. Morella),
my colleague, and I urge all Members to join me in supporting this
legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. SCARBOROUGH. Mr. Speaker, I yield 5 minutes to the gentlewoman
from Maryland (Mrs. Morella), who is, of course, a great champion of
Federal employees and who is the architect of this bill.
Mrs. MORELLA. Mr. Speaker, I thank the chairman of the subcommittee
for yielding me this time, and I am really delighted this important
legislation is coming before the House today.
I certainly want to thank the chairman of the Committee on Government
Reform, the gentleman from Indiana (Mr. Burton), the chairman of the
Subcommittee on Civil Service, the gentleman from Florida (Mr.
Scarborough), as well as the committee's ranking minority member, the
gentleman from California (Mr. Waxman), and of course we have just
heard from the subcommittee's ranking minority member, the gentleman
from Maryland (Mr. Cummings), my colleague, for all their strong
support throughout.
Mr. Speaker, when I thank my colleagues I know that I also speak for
the thousands of Federal employees with whom I have met and who have
written and called my office and the offices of others in support of
this legislation.
This legislation would bolster two critical components of Federal
employees' retirement benefits, the Thrift Savings Plan. The Thrift
Savings Plan is critical for all Federal employees but is particularly
important for those employees hired in the last decade who, under the
Federal Employees Retirement System, receive smaller civil service
benefits and need to invest more to enhance their retirement income.
Currently, employees can elect to begin contributing to the TSP only
during two semiannual election periods that are established by law.
Newly hired employees are first eligible to participate during the
second election period after being hired. Now, what that means is that
these employees must wait from 6 to 12 months, depending upon their
dates of hire, before they may contribute their own funds.
Allowing employees to begin contributing to the Thrift Savings Plan
immediately makes it more likely that employees will get into or
continue the habit of saving for retirement through payroll deduction.
Early saving is especially important in order to maximize the effect of
compound earnings and to take full advantage of the benefit of pretax
savings accorded to tax deferred retirement plans.
This bill would eliminate all waiting periods for employee
contributions to the TSP for new hires and rehires. Employees who are
hired or rehired would be eligible to contribute their own funds
immediately.
Further, ensuring the portability of retirement savings is important
because portable retirement savings can follow employees as they change
jobs. It also would preserve the special tax status accorded to these
funds. So while the Internal Revenue Code currently allows transfers of
retirement savings between 401(k) plans, such transfers are not
authorized for the Thrift Savings Plan. There is no justification for
this limitation.
H.R. 208 would authorize employees to transfer funds from certain tax
deferred savings plans from a previous job to their TSP accounts. The
funds so transferred would be subject to the rules governing the plan
which accepts the transfer.
Mr. Speaker, during the committee markup of H.R. 208, I offered an
amendment in the nature of a substitute to this bill to provide offsets
to the anticipated decrease in Federal Government general tax revenues
that would result from employees taking advantage of the benefits
offered by H.R. 208. Because H.R. 208 would eliminate all waiting
periods for employee contributions to the TSP for new hires and
rehires, it is estimated that about 400,000 employees hired over the
1999-2003 period would participate in the TSP. As a result, the Federal
Government would forgo tax revenues over that period, 1999-2003.
The amendment I offered will provide funding to compensate the
Federal Government for these lost revenues. And I want to make it
clear, this amendment does not require agencies to use any of their
salary and expense account funding to accomplish these goals. In fact,
it makes clear that they may not use funding intended for employees'
salary and expense accounts for those expenses. The amendment assures
Federal employees that the legislation is designed to improve benefits
for Federal employees, and it will not unintentionally result in
furloughs or reductions in force at Federal agencies.
In closing, Mr. Speaker, I want to stress that H.R. 208 is a sensible
way to encourage Federal employees to take personal responsibility and
increase their savings for retirement, something we want all Americans
to do. I urge my colleagues to join me in supporting this important
measure, and again I thank the committee chair, the ranking member, the
subcommittee chair, the gentleman from Florida (Mr. Scarborough), and
the ranking member, the gentleman from Maryland (Mr. Cummings), for
their support throughout the way.
Mr. CUMMINGS. Mr. Speaker, I yield 3 minutes to the gentleman from
Maryland (Mr. Hoyer), my distinguished colleague who has constantly
been at the forefront of protecting the rights of Federal employees,
and who has been constantly sensitive to their needs and their
concerns.
[[Page H2164]]
(Mr. HOYER asked and was given permission to revise and extend his
remarks.)
Mr. HOYER. Mr. Speaker, I thank the distinguished ranking member, my
colleague, the gentleman from Maryland (Mr. Cummings), for his kind
comments and for his leadership on this bill, and in particular for his
leadership on ensuring the fact that we did not rob from Peter to pay
Paul as it related to employee pay and benefits.
I also want to thank the gentleman from Florida (Mr. Scarborough),
the distinguished chairman of the subcommittee, for his leadership in
facilitating this bill to the floor. He is motioning that Mr.
Nesterczuk made him do it, but for whatever reasons, he did it. We are
pleased; I want him to know that.
I also want to take the opportunity to congratulate my colleague, the
gentlewoman from Maryland (Mrs. Connie Morella), who, as the gentleman
from Florida (Mr. Scarborough) said, is always in the forefront of
advocating on behalf of our Federal employee work force.
Mr. Speaker, I would simply add this. The bill has been explained by
the gentlewoman from Maryland (Mrs. Morella) herself, the gentleman
from Florida (Mr. Scarborough), the gentleman from Maryland (Mr.
Cummings), and many Members on this floor talking about the necessity
to recruit and retain good people. This will be a major recruitment
tool, in my opinion, for the Federal Government because it will give
the ability to Federal employers to say that first of all its employees
can transfer whatever savings they now have in a 401(k) or similarly
situated program from a tax standpoint and switch that into the Thrift
Savings Plan.
The Thrift Savings Plan, which, by the way, was the creation of
Senator Ted Stevens from Alaska and Congressman Bill Ford from
Michigan, has been an extraordinarily good program for Federal
employees. It was created in 1984 and took effect in 1987 as the
integrated retirement system that we now have dealing with retirement
and Social Security and the Thrift Savings Plan. Those three components
now make up a Federal employees retirement benefit package.
So not only will we allow them to put their money in from previous
programs, but in addition to that, we will let them do so from the very
beginning of their employment. I think that is a critical aspect of
this legislation. I think it will be an incentive for employees to come
on board; and I congratulate the committee for bringing this
legislation to the floor and will certainly support it
enthusiastically.
Mr. CUMMINGS. Mr. Speaker, I yield 3 minutes to the gentlewoman from
the District of Columbia (Ms. Eleanor Holmes Norton).
We are very pleased, Mr. Speaker, at this point to recognize my
distinguished colleague from the District of Columbia, and a member of
our subcommittee who, too, has been at the forefront of protecting the
rights of Federal employees, and one who has put forth her own
legislation from time to time to make sure that those rights are
protected. I am just so glad that she is on our subcommittee because
she makes sure that we keep an institutional memory of the things that
we should have been doing for Federal employees and the things that we
must do.
Ms. NORTON. Mr. Speaker, I thank the gentleman from Maryland for his
very kind remarks and for yielding me this time, and I congratulate him
for his consistent hard work and vigilance on behalf of Federal
employees, especially for his particular contribution to this bill and
seeing how it was paid for.
I congratulate the gentlewoman from Maryland for writing this bill,
and the gentleman from Florida (Mr. Scarborough) for his hard work in
making sure that the bill was shaped in a bipartisan manner and reached
the floor here today.
Mr. Speaker, this bill is, first and foremost, a richly deserved
benefit for Federal employees who have fallen way behind the private
sector in state-of-the-art benefits, but it has a more important
implication for the Federal Government itself.
Mr. Speaker, the Federal Government seems not to have heard that
there is a labor shortage out there, and it is a shortage that goes
from the top to the bottom of the work force.
There is a fierce competition for labor at all levels. The Federal
Government has literally not joined this competition. It is as if this
were 1960, when college graduates and skilled workers automatically
gravitated to Federal employment. That has not been the case now for a
long time, and it is going to show in our Federal work force.
Therefore, the implications of this bill are larger than the modest
benefit it provides to our employees in eliminating the waiting period
for when an employee can make a contribution to the Thrift Savings Plan
and in allowing transfers from a 401(k) savings account.
A way to understand the importance of this bill, if we mean to
attract good people to work for the Federal Government, is to imagine
an employee looking around among her options and seeing that she could
not transfer her 401(k), and seeing that she would have a 6-to-12-month
break in engaging in tax-exempt savings herself. It seems to me she
might well move on to almost any large employer today where we will
find such benefits to be state-of-the-art. There are plenty of
alternatives. No large, smart employer would fail to have comparable
benefits to those which this bill modestly affords.
{time} 1545
Social Security is the most important issue facing the 106th
Congress. The President and the Republican majority together are
encouraging private savings and investment. If we are serious about
encouraging Americans to engage in private saving and our savings are
at a low point, then it is time we took care of home first, and the
Thrift Savings Account is the place to begin.
Mr. CUMMINGS. Mr. Speaker, may I inquire as to how much time we have
remaining?
The SPEAKER pro tempore (Mr. Pease). The gentleman from Maryland (Mr.
Cummings) has 10\1/2\ minutes remaining, and the gentleman from Florida
(Mr. Scarborough) has 12\1/2\ minutes remaining.
Mr. CUMMINGS. Mr. Speaker, I yield myself such time as I may consume.
We have no additional speakers.
In summary, Mr. Speaker, I am very, very pleased that this
legislation is before us. I think it sends a very strong statement to
our Federal employees and those who are considering possibly coming
into the Federal Government, and that is that the Congress of the
United States of America cares about them and cares about their
security in retirement.
Mr. Speaker, I just urge all of my colleagues to vote for this very,
very important legislation.
Mr. Speaker, I yield back the balance of my time.
Mr. SCARBOROUGH. Mr. Speaker, I yield myself the balance of my time.
H.R. 208 is a sound bill, and it is fully paid for. Once again, I
want to commend the gentlewoman from Maryland (Mrs. Morella) for her
hard work on this bill, as well as the gentleman from Maryland (Mr.
Cummings), the ranking member, and I urge all Members to support it.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Florida (Mr. Scarborough) that the House suspend the
rules and pass the bill, H.R. 208, as amended.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________