[Congressional Record Volume 163, Number 163 (Wednesday, October 11, 2017)]
[House]
[Pages H7954-H7955]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TSP MODERNIZATION ACT OF 2017
Mr. RUSSELL. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 3031) to amend title 5, United States Code, to provide for
flexibility in making withdrawals from a Thrift Savings Plan account,
and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 3031
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``TSP Modernization Act of
2017''.
SEC. 2. THRIFT SAVINGS PLAN ACCOUNT WITHDRAWAL FLEXIBILITY.
(a) Post-Separation Partial Withdrawals.--Section 8433(c)
of title 5, United States Code, is amended--
(1) in paragraph (1)--
(A) by striking ``and who has not made a withdrawal under
subsection (h)(1)(A) may make one withdrawal'' and inserting
``may make one or more withdrawals''; and
(B) by striking ``as a single payment'' and inserting ``in
the same manner as a single payment is made''; and
(2) by adding at the end the following:
``(5) Withdrawals under this subsection shall be subject to
such other limitations or conditions as the Executive
Director may prescribe by regulation.''.
(b) Limitation on Return of Payment Relating to a Change in
Election.--Section 8433(d) of title 5, United States Code, is
amended--
(1) in paragraph (1), by inserting ``, except that in the
case of an election to receive an annuity, a former employee
or Member may not change an election under this section on or
after the date on which an annuity contract is purchased to
provide for the annuity elected by the former employee or
Member'' after ``this subchapter''; and
(2) in paragraph (2)--
(A) by striking ``change an'' and inserting return a
payment that was made pursuant to an''; and
(B) by striking ``on or after'' and all that follows
through ``the former employee or Member''.
(c) Elimination of Automatic Annuity in Absence of
Election.--Section 8433(f) of title 5, United States Code, is
amended--
(1) by striking ``(1) Notwithstanding'' and inserting
``Notwithstanding'';
(2) by striking ``this paragraph'' and inserting ``this
subsection''; and
(3) by striking paragraph (2).
(d) Allowance of Multiple Age-Based In-Service
Withdrawals.--Section 8433(h) of title 5, United States Code,
is amended--
(1) by striking paragraph (2);
(2) by redesignating paragraphs (3), (4), and
(5) as paragraphs (2), (3), and (4), respectively; and
(3) in paragraph (3), as so redesignated, by inserting
``limitations or'' before ``conditions''.
(e) Technical Amendment.--Section 8432b(h)(2)(A) of title
5, United States Code, is amended by striking ``section
8433(d), or paragraph (1) or (2) of section 8433(h)'' and
inserting ``subsection (d) or (f) of section 8433''.
(f) Regulations.--As soon as is practicable, as determined
by the Executive Director of the Federal Retirement Thrift
Investment Board, but not later than 2 years after the date
of enactment of this Act, the Executive Director shall
prescribe such regulations as are necessary to carry out the
amendments made by this section.
(g) Effective Date.--The amendments made by this section
shall take effect on the date on which the regulations
prescribed under subsection (f) take effect.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Oklahoma (Mr. Russell) and the gentlewoman from the District of
Columbia (Ms. Norton) each will control 20 minutes.
The Chair recognizes the gentleman from Oklahoma.
General Leave
Mr. RUSSELL. Mr. Speaker, I ask unanimous consent that all Members
[[Page H7955]]
may have 5 legislative days in which to revise and extend their remarks
and include extraneous material on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Oklahoma?
There was no objection.
Mr. RUSSELL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in support of H.R. 3031, the TSP Modernization
Act of 2017, introduced by Ranking Member Cummings from Maryland and
Mr. Meadows from North Carolina earlier this year.
Federal employees enrolled in the Federal Employees Retirement
System--known as FERS--enjoy the benefits of a three-part retirement
structure. Those are a defined benefit pension plan, Social Security,
and a 401(k)-style defined contribution plan known as the Thrift
Savings Plan, or TSP.
With its low administrative costs and simple design, the TSP is an
ideal retirement vehicle. Participants can choose from a variety of
investment options, including index funds designed to track the
Standard & Poor's 500 Index, the Dow Jones U.S. Completion Total Stock
Market Index, or a low-risk government securities investment fund.
Participants can also passively manage their investments by putting
money into a Lifecycle Fund, which allows the Federal Retirement Thrift
Investment Board to purchase a combination of investments based on the
year the employee is expected to retire.
Employees have a lot of options when investing their TSP funds, but
when it comes to withdrawing their funds, the options are much more
limited. This is because current statutory rules preclude employees
from taking multiple post-service partial withdrawals. Employees cannot
request a partial withdrawal or annuity purchase after making a
periodic payment withdrawal election.
Statutory rules also require the purchase of an annuity if a
participant fails to make an election by age 70\1/2\. The rules also
restrict an employee's ability to make multiple in-service, age-based
withdrawals.
The Board conducted a study in 2013, which found that separated
participants moved $9 billion from the TSP fund to other, costlier
institutions. Nearly one out of every three of these participants cited
a desire for additional withdrawal flexibility.
The study also found that, among currently employed participants, the
same ratio of participants requested additional withdrawal flexibility
for age-based withdrawals to address life events that arise. This bill
would afford those additional flexibilities to address those concerns.
The bill provides more control to Federal employees over their own
retirement by allowing for multiple post-separation partial withdrawals
and in-service, age-based withdrawals. H.R. 3031 allows employees to
change withdrawal elections as they grow older, and it allows the Board
to avoid purchasing expensive annuities if a participant fails to make
an election by age 70\1/2\.
This bill puts power and control in the hands of the employees that
make our Federal Government run to make retirement decisions based on
their personal situations.
Mr. Speaker, I urge my colleagues to support the bill, and I reserve
the balance of my time.
Ms. NORTON. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in strong support of H.R. 3031, the TSP
Modernization Act of 2017.
I am proud to be a cosponsor of this legislation, which would help
modernize the Federal Government's Thrift Savings Plan by aligning it
with current practices for private sector 401(k)s.
I thank Ranking Member Cummings and Chairman Meadows for their work
on this important, bipartisan bill that would give TSP participants
more flexibility in making withdrawals from their accounts.
Mr. Speaker, I urge my colleagues to support H.R. 3031, and I reserve
the balance of my time.
Mr. RUSSELL. Mr. Speaker, I reserve the balance of my time.
Ms. NORTON. Mr. Speaker, I yield such time as he may consume to the
gentleman from Maryland (Mr. Cummings), who is the ranking member of
the full committee.
Mr. CUMMINGS. Mr. Speaker, I thank the gentlewoman for yielding.
Mr. Speaker, I rise in strong support of H.R. 3031, the TSP
Modernization Act of 2017.
I thank the Government Operations Subcommittee chairman, Mr. Meadows,
for working with me in a bipartisan manner on this commonsense, good
government bill. I also thank the Oversight and Government Reform
Committee chairman, Mr. Gowdy, for his support of this legislation.
Congressman Meadows and I introduced this legislation to make the
Federal Government's Thrift Savings Plan more closely align with
private sector best practices by allowing TSP participants more
flexible withdrawal options.
In 2013, the Federal Retirement Thrift Investment Board found that
employees who separated from Federal service transferred $9 billion out
of their TSP accounts to other financial institutions. TSP participants
do this because private sector 401(k) plans provide more flexibility,
and they wanted more options for withdrawing money in case they needed
it.
A 2014 survey of TSP participants who withdrew funds showed that more
than 50 percent reported that they wanted more flexibility to withdraw
funds to address life events.
Current law limits participants to only one withdrawal from their TSP
accounts while in Federal service after reaching age 59\1/2\, and
participants who make this type of age-based withdrawal cannot take
another partial withdrawal once they separate from service. Similarly,
participants who are separated from Federal service and who have not
made a prior age-based withdrawal are restricted to making only one
partial separation withdrawal.
H.R. 3031 would eliminate these restrictions and allow participants
to make multiple age-based and post-separation withdrawals from TSP
accounts. The bill also would allow participants to elect to combine
partial withdrawals with an annuity. It also would eliminate automatic
annuities as a default option in the absence of an election by
participants.
By providing greater withdrawal flexibility, studies show that
participants would be more likely to keep their assets in their TSP
accounts. For example, a study issued by Vanguard in 2013 found that 50
percent more participants and assets remain in retirement plans when
partial disbursements are allowed.
Providing more withdrawal options for Federal employees and retirees
in the TSP may help their financial security since administrative fees
for the TSP are much lower than fees charged by other financial
institutions.
This legislation is supported by the National Active and Retired
Federal Employees Association, the American Federation of Government
Employees, and the National Treasury Employees Union.
Ms. NORTON. Mr. Speaker, I support this legislation, and I yield back
the balance of my time.
Mr. RUSSELL. Mr. Speaker, I wish to thank Chairman Gowdy, Ranking
Member Cummings, and Chairman Meadows for their outstanding work in
addressing the needs of Federal employees who give selfless public
service to our Nation and should have this flexibility in their
retirement planning.
Mr. Speaker, I urge the adoption of the bill, and I yield back the
balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Oklahoma (Mr. Russell) that the House suspend the rules
and pass the bill, H.R. 3031, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
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