[House Report 105-625]
[From the U.S. Government Publishing Office]



105th Congress                                            Rept. 105-625
                        HOUSE OF REPRESENTATIVES

 2d Session                                                      Part 1
_______________________________________________________________________


 
              FEDERAL RETIREMENT COVERAGE CORRECTIONS ACT

_______________________________________________________________________


                 July 14, 1998.--Ordered to be printed

                                _______
                                

  Mr. Burton of Indiana, from the Committee on Government Reform and 
                   Oversight, submitted the following

                              R E P O R T

                        [To accompany H.R. 3249]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Government Reform and Oversight, to whom 
was referred the bill (H.R. 3249) to provide for the 
rectification of certain retirement coverage errors affecting 
Federal employees, and for other purposes, having considered 
the same, report favorably thereon with an amendment and 
recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Summary of Legislation..........................................22
 II. Background and Need for the Legislation.........................23
III. Legislative Hearings and Committee Actions......................27
 IV. Committee Hearings and Written Testimony........................27
  V. Explanation of the Bill.........................................33
 VI. Compliance With Rule XI.........................................47
VII. Budget Analysis and Projections.................................47
VIII.Cost Estimate of the Congressional Budget Office................47

 IX. Specific Constitutional Authority for This Legislation..........57
  X. Committee Recommendation........................................57
 XI. Congressional Accountability Act; Public Law 104-1..............57
XII. Unfunded Mandates Reform Act; Public Law 104-4, Sect. 423.......57
XIII.Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b).....58

XIV. Changes in Existing Law.........................................58
 XV. Appendix........................................................63

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Federal Retirement 
Coverage Corrections Act''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Applicability.
Sec. 4. Restriction relating to future corrections.
Sec. 5. Irrevocability of elections.

 TITLE I--DESCRIPTION OF RETIREMENT COVERAGE ERRORS TO WHICH THIS ACT 
              APPLIES AND MEASURES FOR THEIR RECTIFICATION

  Subtitle A--Employee Who Should Have Been FERS Covered, But Who Was 
        Erroneously CSRS Covered or CSRS-Offset Covered Instead

Sec. 101. Elections.
Sec. 102. Effect of an election to be transferred from CSRS to FERS to 
correct a retirement coverage error.
Sec. 103. Effect of an election to be transferred from CSRS-Offset to 
FERS to correct a retirement coverage error.
Sec. 104. Effect of an election to be transferred from CSRS to CSRS-
Offset to correct a retirement coverage error.
Sec. 105. Effect of an election to be restored (or transferred) to 
CSRS-Offset after having been corrected to FERS from CSRS-Offset (or 
CSRS).

  Subtitle B--Employee Who Should Have Been FERS Covered, CSRS-Offset 
Covered, or CSRS Covered, But Who Was Erroneously Social Security-Only 
                            Covered Instead

Sec. 111. Elections.
Sec. 112. Effect of an election to become FERS covered to correct the 
retirement coverage error.
Sec. 113. Effect of an election to become CSRS-Offset covered to 
correct the retirement coverage error.
Sec. 114. Effect of an election to become CSRS covered to correct the 
retirement coverage error.

Subtitle C--Employee Who Should Have Been Social Security-Only Covered, 
  But Who Was Erroneously FERS Covered, CSRS-Offset Covered, or CSRS 
                            Covered Instead

Sec. 121. Uncorrected error: employee who should be Social Security-
Only covered, but who is erroneously FERS covered instead.
Sec. 122. Uncorrected error: employee who should be Social Security-
Only covered, but who is erroneously CSRS-Offset covered instead.
Sec. 123. Uncorrected error: employee who should be Social Security-
Only covered, but who is erroneously CSRS covered instead.
Sec. 124. Corrected error: situations under sections 121-123.
Sec. 125. Vested employees excepted from automatic exclusion.

 Subtitle D--Employee Who Should Have Been CSRS Covered or CSRS-Offset 
         Covered, But Who Was Erroneously FERS Covered Instead

Sec. 131. Elections.
Sec. 132. Effect of an election to be transferred from FERS to CSRS to 
correct a retirement coverage error.
Sec. 133. Effect of an election to be transferred from FERS to CSRS-
Offset to correct a retirement coverage error.
Sec. 134. Effect of an election to be restored to FERS after having 
been corrected to CSRS.
Sec. 135. Effect of an election to be restored to FERS after having 
been corrected to CSRS-Offset.
Sec. 136. Disqualification of certain individuals to whom same election 
was previously available.

Subtitle E--Employee Who Should Have Been CSRS-Offset Covered, But Who 
                  Was Erroneously CSRS Covered Instead

Sec. 141. Automatic transfer to CSRS-Offset.
Sec. 142. Effect of transfer.

  Subtitle F--Employee Who Should Have Been CSRS Covered, But Who Was 
                Erroneously CSRS-Offset Covered Instead

Sec. 151. Elections.
Sec. 152. Effect of an election to be transferred from CSRS-Offset to 
CSRS to correct the retirement coverage error.
Sec. 153. Effect of an election to be restored to CSRS-Offset after 
having been corrected to CSRS.

   Subtitle G--Additional Provisions Relating to Government Agencies

Sec. 161. Repayment required in certain situations.
Sec. 162. Equitable sharing of amounts payable to or from the 
Government if more than one agency involved.
Sec. 163. Provisions relating to the original responsible agency.

                      TITLE II--GENERAL PROVISIONS

Sec. 201. Identification and notification requirements.
Sec. 202. Individual appeal rights.
Sec. 203. Information to be furnished by Government agencies to 
authorities administering this Act.
Sec. 204. Social Security records.
Sec. 205. Conforming amendments respecting Social Security coverage and 
OASDI taxes.
Sec. 206. Regulations.
Sec. 207. All elections to be approved by OPM.
Sec. 208. Additional transfers to OASDI trust funds in certain cases.
Sec. 209. Technical and conforming amendments.

                      TITLE III--OTHER PROVISIONS

Sec. 301. Provisions to permit continued conformity of other Federal 
retirement systems.
Sec. 302. Certain amounts payable out of the general fund of the 
Treasury or CSRDF.
Sec. 303. Individual right of action preserved for amounts not 
otherwise provided for under this Act.
Sec. 304. Extension of open enrollment period to employees under the 
Foreign Service Retirement and Disability System.

                        TITLE IV--TAX PROVISIONS

Sec. 401. Tax provisions.

SEC. 2. DEFINITIONS.

  For purposes of this Act:
          (1) CSRS.--The term ``CSRS'' means the Civil Service 
        Retirement System.
          (2) CSRDF.--The term ``CSRDF'' means the Civil Service 
        Retirement and Disability Fund.
          (3) CSRS covered.--The term ``CSRS covered'', with respect to 
        any service, means service that is subject to the provisions of 
        subchapter III of chapter 83 of title 5, United States Code, 
        other than those that apply only with respect to an individual 
        described in section 8402(b)(2) of such title.
          (4) CSRS-offset covered.--The term ``CSRS-Offset covered'', 
        with respect to any service, means service that is subject to 
        the provisions of subchapter III of chapter 83 of title 5, 
        United States Code, that apply with respect to an individual 
        described in section 8402(b)(2) of such title.
          (5) Employee.--The term ``employee'' means any individual 
        serving in an appointive or elective office or position in the 
        executive, legislative, or judicialbranch of the Government 
who, by virtue of that service, is permitted or required to be CSRS 
covered, CSRS-Offset covered, FERS covered, or Social Security-Only 
covered.
          (6) Executive director.--The term ``Executive Director of the 
        Federal Retirement Thrift Investment Board'' or ``Executive 
        Director'' means the Executive Director appointed under section 
        8474 of title 5, United States Code.
          (7) FERS.--The term ``FERS'' means the Federal Employees' 
        Retirement System.
          (8) FERS covered.--The term ``FERS covered'', with respect to 
        any service, means service that is subject to chapter 84 of 
        title 5, United States Code.
          (9) Government.--The term ``Government'' has the meaning 
        given such term by section 8331(7) of title 5, United States 
        Code.
          (10) OASDI taxes.--The term ``OASDI taxes'' means the OASDI 
        employee tax and the OASDI employer tax.
          (11) OASDI employee tax.--The term ``OASDI employee tax'' 
        means the tax imposed under section 3101(a) of the Internal 
        Revenue Code of 1986 (relating to Old-Age, Survivors and 
        Disability Insurance).
          (12) OASDI employer tax.--The term ``OASDI employer tax'' 
        means the tax imposed under section 3111(a) of the Internal 
        Revenue Code of 1986 (relating to Old-Age, Survivors and 
        Disability Insurance).
          (13) OASDI trust funds.--The term ``OASDI trust funds'' means 
        the Federal Old-Age and Survivors Insurance Trust Fund and the 
        Federal Disability Insurance Trust Fund.
          (14) Period of erroneous coverage.--The term ``period of 
        erroneous coverage'' means, in the case of a retirement 
        coverage error, the period throughout which retirement coverage 
        is in effect pursuant to such error (or would have been in 
        effect, but for such error).
          (15) Retirement coverage determination.--The term 
        ``retirement coverage determination'' means a determination by 
        an employee or agent of the Government as to whether a 
        particular type of Government service is CSRS covered, CSRS-
        Offset covered, FERS covered, or Social Security-Only covered.
          (16) Retirement coverage error.--The term ``retirement 
        coverage error'' means a retirement coverage determination 
        that, as a result of any error, misrepresentation, or inaction 
        on the part of an employee or agent of the Government 
        (including an error as described in section 163(b)(2)), causes 
        an individual erroneously to be enrolled or not enrolled in a 
        retirement system, as further described in the applicable 
        subtitle of title I.
          (17) Social security-only covered.--The term ``Social 
        Security-Only covered'', with respect to any service, means 
        Government service that constitutes employment under section 
        210 of the Social Security Act (42 U.S.C. 410), and that--
                  (A) is subject to OASDI taxes; but
                  (B) is not subject to any retirement system for 
                Government employees (disregarding title II of the 
                Social Security Act).
          (18) Thrift savings fund.--The term ``Thrift Savings Fund'' 
        means the Thrift Savings Fund established under section 8437 of 
        title 5, United States Code.

SEC. 3. APPLICABILITY.

  (a) In General.--Subject to subsection (b), this Act shall apply with 
respect to any retirement coverage error that occurs before, on, or 
after the date of enactment of this Act, excluding any error corrected 
within 1 year after the date on which it occurs.
  (b) Limitation.--Nothing in this Act shall affect any retirement 
coverage or treatment accorded with respect to any individual in 
connection with any period beginning before the first day of the first 
applicable pay period beginning on or after January 1, 1984.

SEC. 4. RESTRICTION RELATING TO FUTURE CORRECTIONS.

  (a) In General.--Except as otherwise provided in this Act, any 
individual who, on or after the date of enactment of this Act, becomes 
or remains affected by a retirement coverage error may not be excluded 
from or made subject to any retirement system for the sole purpose of 
correcting such error.
  (b) Coordination With Other Laws.--
          (1) In general.--Nothing in this Act shall be considered to 
        preclude an election under the Federal Employees' Retirement 
        System Open Enrollment Act of 1997 (Public Law 105-61; 111 
        Stat. 1318) or any other voluntary retirement coverage election 
        authorized by statute.
          (2) Regulations.--The Office of Personnel Management shall 
        prescribe any regulations which may be necessary to apply this 
        Act in the case of any individual who changes retirement 
        coverage pursuant to a voluntary election made other than under 
        this Act.

SEC. 5. IRREVOCABILITY OF ELECTIONS.

  Any election made (or deemed to have been made) by an employee or any 
other individual under this Act shall be irrevocable.

 TITLE I--DESCRIPTION OF RETIREMENT COVERAGE ERRORS TO WHICH THIS ACT 
              APPLIES AND MEASURES FOR THEIR RECTIFICATION

  Subtitle A--Employee Who Should Have Been FERS Covered, But Who Was 
        Erroneously CSRS Covered or CSRS-Offset Covered Instead

SEC. 101. ELECTIONS.

  (a) Applicability.--This subtitle shall apply in the case of any 
employee who--
          (1) should be (or should have been) FERS covered but, as a 
        result of a retirement coverage error, is (or was) CSRS covered 
        instead; or
          (2) should be (or should have been) FERS covered but, as a 
        result of a retirement coverage error, is (or was) CSRS-Offset 
        covered instead.
  (b) Uncorrected Error.--If, at the time of making an election under 
this section, the retirement coverage error described in paragraph (1) 
or (2) of subsection (a) (as applicable) has not been corrected, the 
employee affected by such error may elect--
          (1) to be FERS covered instead; or
          (2) to remain (or instead become) CSRS-Offset covered.
  (c) Corrected Error.--If, at the time of making an election under 
this section, the retirement coverage error described in paragraph (1) 
or (2) of subsection (a) (as applicable) has been corrected, the 
employee affected by such error may elect--
          (1) to be CSRS-Offset covered instead; or
          (2) to remain FERS covered.
  (d) Default Rule.--
          (1) In general.--If the employee is given written notice in 
        accordance with section 201 as to the availability of an 
        election under this section, but does not make any such 
        election within the 6-month period beginning on the date on 
        which such notice is so given, the option under subsection 
        (b)(2) or (c)(2), as applicable, shall be deemed to have been 
        elected on the last day of such period.
          (2) CSRS not an option.--Nothing in this section shall be 
        considered to afford an employee the option of becoming or 
        remaining CSRS covered.
  (e) Retroactive Effect.--An election under this section (including an 
election by default, and an election to remain covered by the 
retirement system by which the electing individual is covered as of the 
date of the election) shall be effective retroactive to the effective 
date of the retirement coverage error (as referred to in subsection 
(a)) to which such election relates.

SEC. 102. EFFECT OF AN ELECTION TO BE TRANSFERRED FROM CSRS TO FERS TO 
                    CORRECT A RETIREMENT COVERAGE ERROR.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 101(a)(1) who elects 
the option under section 101(b)(1).
  (b) Disposition of Contributions to the CSRDF.--
          (1) Employee contributions.--
                  (A) Transfer to oasdi trust funds.--There shall be 
                transferred from the CSRDF to the OASDI trust funds an 
                amount--
                          (i) equal to the amount of the OASDI employee 
                        tax that should have been deducted and withheld 
                        from the Federal wages of the employee for the 
                        period of erroneous coverage involved; but
                          (ii) not to exceed the amount of the 
                        employee's lump-sum credit attributable to the 
                        period of erroneous coverage involved.
                  (B) Rule if there are excess csrdf contributions.--If 
                the amount described in subparagraph (A)(ii) exceeds 
                the sum of--
                          (i) the amount described in subparagraph 
                        (A)(i), plus
                          (ii) the amount that should have been 
                        deducted under section 8422 of title 5, United 
                        States Code, from pay of such employee for the 
                        period of erroneous coverage involved,
                the excess shall be refunded to the employee.
                  (C) Rule if csrdf contributions are insufficient.--If 
                the amount described in subparagraph (A)(ii) is less 
                than the sum of the respective amounts described in 
                clauses (i) and (ii) of subparagraph (B), the shortfall 
                shall be made up (in such manner as the Director of the 
                Office of Personnel Management, with the concurrence of 
                the Commissioner of Social Security, shall by 
                regulation prescribe) by the agency in or under which 
                the employee is then employed, out of amounts otherwise 
                available in the appropriation, fund, or account from 
                which any OASDI employer tax or contribution to the 
                CSRDF (as applicable) may be made.
                  (D) Definition of lump-sum credit.--For purposes of 
                this paragraph, the term ``lump-sum credit'' has the 
                meaning given such term by section 8331 of title 5, 
                United States Code.
          (2) Government contributions.--
                  (A) Transfer to oasdi trust funds.--There shall be 
                transferred from the CSRDF to the OASDI trust funds the 
                amount of the OASDI employer tax that should have been 
                paid with respect to the employee for the period of 
                erroneous coverage involved.
                  (B) Rule if there are excess csrdf contributions.--If 
                the total Government contributions to the CSRDF that 
                were made with respect to the employee for the period 
                of erroneous coverage involved exceed the sum of--
                          (i) the amount required to be transferred 
                        under subparagraph (A), plus
                          (ii) the amount that should have been 
                        contributed by the Government under section 
                        8423 of title 5, United States Code, for such 
                        employee with respect to such period,
                the excess shall be transferred to the agency in or 
                under which the employee is then employed, to the 
                credit of the appropriation, fund, or account from 
                which any Government contributions to the CSRDF may be 
                made (to remain available until expended).
                  (C) Rule if csrdf contributions are insufficient.--If 
                the total Government contributions to the CSRDF that 
                were made with respect to the employee for the period 
                of erroneous coverage involved are less than the sum of 
                the respective amounts described in clauses (i) and 
                (ii) of subparagraph (B), the shortfall shall be made 
                up by the agency in or under which the employee is then 
                employed, out of amounts otherwise available in the 
                appropriation, fund, or account referred to in 
                subparagraph (B) in such manner as the Director of the 
                Office of Personnel Management, with the concurrence of 
                the Commissioner of Social Security, shall by 
                regulation prescribe.
  (c) Makeup Contributions to the Thrift Savings Fund.--
          (1) In general.--An employee to whom this section applies is 
        entitled to have contributed to the Thrift Savings Fund on such 
        employee's behalf, in addition to any regular employee or 
        Government contributions that would be permitted or required 
        for the year in which the contributions under this subsection 
        are made, an amount equal to the sum of--
                  (A) the amount determined under paragraph (2) with 
                respect to such employee for the period of erroneous 
                coverage involved;
                  (B) an amount equal to the total contributions that 
                should have been made for such employee under section 
                8432(c)(1) of title 5, United States Code, for the 
                period of erroneous coverage involved;
                  (C) an amount equal to the total contributions that 
                should have been made for such employee under section 
                8432(c)(2) of title 5, United States Code, for the 
                period of erroneous coverage involved (taking into 
                account both the amount referred to in subparagraph (A) 
                and any contributions to the Thrift Savings Fund 
                actually made by such employee with respect to the 
                period involved); and
                  (D) an amount equal to lost earnings on the amounts 
                referred to in subparagraphs (A) through (C), 
                determined in accordance with paragraph (3).
          (2) Amount based on average percentage of pay contributed by 
        employees during period of erroneous coverage.--
                  (A) In general.--The amount determined under this 
                paragraph with respect to an employee for a period of 
                erroneous coverage shall be equal to the amount of the 
                contributions such employee would have made if, during 
                each calendar year in such period, the employee had 
                contributed the percentage of such employee's basic pay 
                for such year specified in subparagraph (B) (determined 
                disregarding any contributions actually made by such 
                employee with respect to the year involved).
                  (B) Percentage to be applied.--
                          (i) In general.--The percentage to be applied 
                        under this subparagraph in the case of any 
                        employee with respect to a particular year is--
                                  (I) the average percentage of basic 
                                pay that was contributed for such year 
                                under section 8432(a) of title 5, 
                                United States Code, by full-time FERS 
                                covered employees who contributed to 
                                the Thrift Savings Fund in such year 
                                and for whom a salary rate is recorded 
                                (as of June 30 of such year) in the 
                                central personnel data file maintained 
                                by the Office of Personnel Management; 
                                or
                                  (II) if such average percentage for 
                                the year in question is unavailable, 
                                the average percentage for the most 
                                recent year prior to the year in 
                                question that is available.
                          (ii) Percentage contributed.--For purposes of 
                        clause (i)(I), the percentage of basic pay for 
                        each employee included in the average shall be 
                        determined by dividing the total employee 
                        contributions received into the Thrift Savings 
                        Plan account of that employee during such year 
                        by the annual salary rate for that employee as 
                        recorded in the central personnel data file 
                        (referred to in clause (i)(I)) as of June 30 of 
                        such year.
                  (C) Limitations.--In no event may the amount 
                determined under this paragraph for an individual with 
                respect to a year exceed the amount that, if added to 
                the amount of the contributions that were actually made 
                by such individual to the Thrift Savings Fund with 
                respect to such year (if any), would cause the total to 
                exceed--
                          (i) any limitation under section 415 or any 
                        other provision of the Internal Revenue Code of 
                        1986 that would have applied to such employee 
                        with respect to such year; or
                          (ii) any limitation under section 8432(a) or 
                        any other provision of title 5, United States 
                        Code, that would have applied to such employee 
                        with respect to such year.
          (3) Lost earnings.--
                  (A) In general.--Lost earnings on any amounts 
                referred to in subparagraph (A), (B), or (C) of 
                paragraph (1) shall, to the extent those amounts are 
                attributable to contributions that should have been 
                made with respect to a particular year, be determined 
                in the same way as if those amounts had in fact been 
                timely contributed and allocated among the TSP 
                investment funds in accordance with--
                          (i) the investment fund election that was 
                        accepted by the employing agency before the 
                        date the contribution should have been made and 
                        that was still in effect as of that date; or
                          (ii) if no such election was then in effect 
                        for the employee, the investment fund election 
                        attributed to such employee with respect to 
                        such year.
                  (B) Investment fund election attributed.--For 
                purposes of subparagraph (A)(ii), the investment fund 
                election attributed to an employee with respect to a 
                particular year is--
                          (i) the average percentage allocation of TSP 
                        contributions among the TSP investment funds 
                        from all sources, with respect to that year, 
                        except that the investment fund election 
                        attributed to contributions in years prior to 
                        1991 shall be the G Fund; or
                          (ii) if such average percentage allocation 
                        for the year in question is unavailable, the 
                        average percentage allocation for the most 
                        recent year prior to the year in question that 
                        is available.
                  (C) Definition of investment fund election, etc.--For 
                purposes of this paragraph--
                          (i) the term ``investment fund election'' 
                        means a choice by a participant concerning how 
                        contributions to the Thrift Savings Plan shall 
                        be allocated among the TSP investment funds;
                          (ii) the term ``participant'' means any 
                        person with an account in the Thrift Savings 
                        Plan, or who would have an account in the 
                        Thrift Savings Plan but for an employing agency 
                        error (including an error as described in 
                        section 163(b)(2));
                          (iii) the term ``TSP investment funds'' means 
                        the C Fund, the F Fund, the G Fund, and any 
                        other investment fund in the Thrift Savings 
                        Plan created after December 27, 1996; and
                          (iv) the terms ``C Fund'', ``F Fund'', and 
                        ``G Fund'' refer to the funds described in 
                        paragraphs (1), (3), and (4), respectively, of 
                        section 8438(a) of title 5, United States Code.
          (4) Makeup contribution to be made in a lump sum.--
                  (A) In general.--Any amount to which an employee is 
                entitled under this subsection shall be paid promptly 
                by the agency in or under which the electing employee 
                is (as of the date of the election) employed, in a lump 
                sum, upon notification to such agency under 
                subparagraph (B)(ii) as to the amount due.
                  (B) Board functions.--The regulations under paragraph 
                (6) shall include provisions under which--
                          (i) each employing agency shall be required 
                        to determine and notify the Federal Retirement 
                        Thrift Investment Board, in a timely manner, as 
                        to any amounts under paragraph (1)(A)-(C) owed 
                        by such agency; and
                          (ii) the Board shall, based on the 
                        information it receives from an agency under 
                        clause (i), determine lost earnings on those 
                        amounts and promptly notify such agency as to 
                        the total amounts due from it under this 
                        subsection.
          (5) Justices and judges; magistrates; etc.--The preceding 
        provisions of this subsection shall not apply in the case of 
        any employee who, pursuant to the election referred to in 
        subsection (a), becomes subject to section 8440a, 8440b, 8440c, 
        or 8440d of title 5, United States Code.
          (6) Regulations.--The Executive Director of the Federal 
        Retirement Thrift Investment Board shall prescribe any 
        regulations necessary to carry out this subsection.

SEC. 103. EFFECT OF AN ELECTION TO BE TRANSFERRED FROM CSRS-OFFSET TO 
                    FERS TO CORRECT A RETIREMENT COVERAGE ERROR.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 101(a)(2) who elects 
the option under section 101(b)(1).
  (b) Effect of Election.--In the case of an employee described in 
subsection (a), the following provisions shall apply:
          (1) Section 102(b) (relating to disposition of contributions 
        to the CSRDF), but disregarding provisions relating to 
        transfers to OASDI trust funds.
          (2) Section 102(c) (relating to makeup contributions to the 
        Thrift Savings Fund).

SEC. 104. EFFECT OF AN ELECTION TO BE TRANSFERRED FROM CSRS TO CSRS-
                    OFFSET TO CORRECT A RETIREMENT COVERAGE ERROR.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 101(a)(1) who elects 
the option under section 101(b)(2).
  (b) Same as in the Case of an Election to Ratify Erroneous CSRS-
Offset Coverage.--
          (1) In general.--The effect of an election described in 
        subsection (a) shall be as described in section 101(b)(2), 
        except that the provisions of section 102(b) shall also apply.
          (2) Appropriate percentages to be used in determining 
        employee and government contributions to csrdf.--For purposes 
        of paragraph (1), section 102(b) shall be applied by 
        substituting ``the relevant provisions of section 8334(k)'' for 
        ``section 8422'' and ``section 8423''.

SEC. 105. EFFECT OF AN ELECTION TO BE RESTORED (OR TRANSFERRED) TO 
                    CSRS-OFFSET AFTER HAVING BEEN CORRECTED TO FERS 
                    FROM CSRS-OFFSET (OR CSRS).

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in paragraph (1) or (2) of 
section 101(a) who (after having been corrected to FERS coverage) 
elects the option under section 101(c)(1).
  (b) Disposition of Contributions to the CSRDF.--
          (1) In general.--The provisions of section 102(b) shall apply 
        in the case of an employee described in subsection (a), subject 
        to paragraph (2).
          (2) No transfers for amounts already paid into oasdi, etc.--
        For purposes of paragraph (1), section 102(b) shall be applied 
        in conformance with the following:
                  (A) No double payments into oasdi.--To the extent 
                that the appropriate OASDI employee or employer tax has 
                already been paid for the total period involved (or any 
                portion thereof), reduce the respective amounts 
                required by paragraphs (1)(A)(i) and (2)(A) of section 
                102(b) accordingly.
                  (B) Appropriate percentages to be used in determining 
                employee and government contributions to csrdf.--
                Substitute ``the relevant provisions of section 
                8334(k)'' for ``section 8422'' and ``section 8423''.
                  (C) Appropriate lump-sum credit to be used.--
                Substitute ``8401'' for ``8331'' in paragraph (1)(D) 
                thereof.
                  (D) Provisions to be applied with respect to the 
                total period involved.--Substitute ``total period 
                involved (as defined by section 105)'' for ``period of 
                erroneous coverage involved''.
  (c) Disposition of Excess TSP Contributions.--
          (1) Government contributions.--All Government contributions 
        made on behalf of the employee to the Thrift Savings Fund that 
        are attributable to the total period involved (including any 
        earnings thereon) shall be forfeited. For the purpose of 
        section 8437(d) of title 5, United States Code, amounts so 
        forfeited shall be treated as if they were amounts forfeited 
        under section 8432(g) of such title.
          (2) Employee contributions.--The election referred to in 
        subsection (a) shall not be taken into account for purposes of 
        any determination relating to the disposition of any employee 
        contributions to the Thrift Savings Fund, attributable to the 
        total period involved, that were in excess of the maximum 
        amount that would have been allowable under applicable 
        provisions of subchapter III of chapter 83 of title 5, United 
        States Code (including any earnings thereon).
  (d) Definition of Total Period Involved.--For purposes of this 
section, the term ``total period involved'' means the period beginning 
on the effective date of the retirement coverage error involved and 
ending on the day before the date on which the election described in 
subsection (a) is made.

  Subtitle B--Employee Who Should Have Been FERS Covered, CSRS-Offset 
Covered, or CSRS Covered, But Who Was Erroneously Social Security-Only 
                            Covered Instead

SEC. 111. ELECTIONS.

  (a) Applicability.--This subtitle shall apply in the case of any 
employee who--
          (1) should be (or should have been) FERS covered but, as a 
        result of a retirement coverage error, is (or was) Social 
        Security-Only covered instead;
          (2) should be (or should have been) CSRS-Offset covered but, 
        as a result of a retirement coverage error, is (or was) Social 
        Security-Only covered instead; or
          (3) should be (or should have been) CSRS covered but, as a 
        result of a retirement coverage error, is (or was) Social 
        Security-Only covered instead.
  (b) Uncorrected Error.--If, at the time of making an election under 
this section, the retirement coverage error described in paragraph (1), 
(2), or (3) of subsection (a) (as applicable) has not been corrected, 
the employee affected by such error may elect--
          (1)(A) in the case of an error described in subsection 
        (a)(1), to be FERS covered as well;
          (B) in the case of an error described in subsection (a)(2), 
        to be CSRS-Offset covered as well; or
          (C) in the case of an error described in subsection (a)(3), 
        to be CSRS covered instead; or
          (2) to remain Social Security-Only covered.
  (c) Corrected Error.--
          (1) In general.--Not later than 6 months after the date of 
        enactment of this Act, there shall be submitted to the Congress 
        a proposal (including any necessary draft legislation) to carry 
        out the policy described in paragraph (2).
          (2) Policy.--Under the proposal, any employee with respect to 
        whom the retirement coverage error described in paragraph (1), 
        (2), or (3) of subsection (a) (as applicable) has already been 
        corrected, but under terms less advantageous to the employee 
        than would have been the case under this Act, shall be afforded 
        a reasonable opportunity to obtain treatment comparable to the 
        treatment afforded under this Act.
          (3) Joint action.--This subsection shall be carried out by 
        the Director of the Office of Personnel Management, in 
        consultation with the Executive Director of the Federal 
        Retirement Thrift Investment Board and the Commissioner of 
        Social Security.
  (d) Default Rule.--In the case of any employee to whom subsection (b) 
applies, if the employee is given written notice in accordance with 
section 201 as to the availability of an election under this section, 
but does not make any such election within the 6-month period beginning 
on the date on which such notice is so given, the option under 
subsection (b)(2) shall be deemed to have been elected on the last day 
of such period.
  (e) Retroactive Effect.--An election under this section (including an 
election by default, and an election to remain covered by the 
retirement system by which the electing individual is covered as of the 
date of the election) shall be effective retroactive to the effective 
date of the retirement coverage error (as referred to in subsection 
(a)) to which such election relates.

SEC. 112. EFFECT OF AN ELECTION TO BECOME FERS COVERED TO CORRECT THE 
                    RETIREMENT COVERAGE ERROR.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 111(a)(1) who elects 
the option under section 111(b)(1)(A).
  (b) Makeup Contributions to the CSRDF.--Upon notification that an 
employee has made an election under this section, the agency in or 
under which such employee is employed shall promptly pay to the CSRDF, 
in a lump sum, an amount equal to the sum of--
          (1) the amount that should have been deducted and withheld 
        from the pay of the employee for the period of erroneous 
        coverage involved under section 8422 of title 5, United States 
        Code; and
          (2) the Government contributions that should have been paid 
        for the period of erroneous coverage involved under section 
        8423 of title 5, United States Code.
  (c) Makeup Contributions to the Thrift Savings Fund.--Section 102(c) 
shall apply in the case of an employee described in subsection (a).

SEC. 113. EFFECT OF AN ELECTION TO BECOME CSRS-OFFSET COVERED TO 
                    CORRECT THE RETIREMENT COVERAGE ERROR.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 111(a)(2) who elects 
the option under section 111(b)(1)(B).
  (b) Makeup Contributions to the CSRDF.--Upon notification that an 
employee has made an election under this section, the agency in or 
under which such employee is employed shall promptly pay to the CSRDF, 
in a lump sum, an amount equal to the sum of--
          (1) the amount that should have been deducted and withheld 
        from the pay of the employee for the period of erroneous 
        coverage involved under section 8334 of title 5, United States 
        Code; and
          (2) the Government contributions that should have been paid 
        under section 8334 of title 5, United States Code, for the 
        period of erroneous coverage involved.
  (c) Makeup Contributions to the Thrift Savings Fund.--
          (1) In general.--Makeup contributions to the Thrift Savings 
        Fund shall be made by the employing agency in the same manner 
        as described in section 102(c) (but disregarding subparagraphs 
        (B) and (C) of paragraph (1) thereof, and the other provisions 
        of section 102(c) to the extent that they relate to those 
        subparagraphs).
          (2) Appropriate percentages, etc. to be used.--For purposes 
        of paragraph (1), section 102(c) shall be applied--
                  (A) by substituting ``section 8351(b)'' for ``section 
                8432(a)'' and by substituting ``CSRS covered and CSRS-
                Offset covered'' for ``FERS covered'' in paragraph 
                (2)(B)(i) thereof; and
                  (B) by substituting ``section 8351(b)(2)'' for 
                ``section 8432(a)'' in paragraph (2)(C)(ii) thereof.

SEC. 114. EFFECT OF AN ELECTION TO BECOME CSRS COVERED TO CORRECT THE 
                    RETIREMENT COVERAGE ERROR.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 111(a)(3) who elects 
the option under section 111(b)(1)(C).
  (b) Makeup Contributions to the CSRDF.--
          (1) In general.--Upon notification that an employee has made 
        an election under this section, the agency in or under which 
        such employee is employed shall promptly pay to the CSRDF, in a 
        lump sum, an amount equal to the sum of--
                  (A) the amount that should have been deducted and 
                withheld from the pay of the employee for the period of 
                erroneous coverage involved under section 8334 of title 
                5, United States Code; and
                  (B) the Government contributions that should have 
                been paid under such section for the period of 
                erroneous coverage involved.
          (2) Agency to be reimbursed for certain amounts.--
                  (A) In general.--The employee for whom the payment 
                under paragraph (1) is made shall repay to the agency 
                (referred to in paragraph (1)) an amount equal to the 
                OASDI employee taxes refunded or refundable to such 
                employee for any portion of the period of erroneous 
                coverage involved (computed in such manner as the 
                Director of the Office of Personnel Management, with 
                the concurrence of the Secretary of the Treasury, shall 
                by regulation prescribe), not to exceed the amount 
                described in paragraph (1)(A).
                  (B) Right of recovery; waiver.--If the employee fails 
                to repay the amount required under subparagraph (A), a 
                sum equal to the amount outstanding is recoverable by 
                the Government from the employee (or the employee's 
                estate, if applicable) by--
                          (i) setoff against accrued pay, compensation, 
                        amount of retirement credit, or another amount 
                        due the employee from the Government; and
                          (ii) such other method as is provided by law 
                        for the recovery of amounts owing to the 
                        Government.
                The head of the agency concerned may waive, in whole or 
                in part, a right of recovery under this paragraph if it 
                is shown that recovery would be against equity and good 
                conscience or against the public interest.
                  (C) Treatment of amounts repaid or recovered.--Any 
                amount repaid by, or recovered from, an individual (or 
                an estate) under this paragraph shall be credited to 
                the appropriation account from which the amount 
                involved was originally paid.
  (c) Makeup Contributions to the Thrift Savings Fund.--In the case of 
an employee described in subsection (a), makeup contributions to the 
Thrift Savings Fund shall be made in the same manner as described in 
section 113(c).

Subtitle C--Employee Who Should Have Been Social Security-Only Covered, 
  But Who Was Erroneously FERS Covered, CSRS-Offset Covered, or CSRS 
                            Covered Instead

SEC. 121. UNCORRECTED ERROR: EMPLOYEE WHO SHOULD BE SOCIAL SECURITY-
                    ONLY COVERED, BUT WHO IS ERRONEOUSLY FERS COVERED 
                    INSTEAD.

  (a) In General.--Except as provided in section 125, this section 
shall apply in the case of any employee who should be Social Security-
Only covered but, as a result of a retirement coverage error, is FERS 
covered instead.
  (b) Automatic Exclusion From FERS.--An employee described in 
subsection (a) shall not, by reason of the retirement coverage error 
described in subsection (a), be eligible to be treated as an individual 
who is FERS covered.
  (c) Disposition of Contributions to the CSRDF.--
          (1) Employee contributions.--There shall be paid to the 
        employee, from the CSRDF, any lump-sum credit to which such 
        employee would be entitled under section 8424 of title 5, 
        United States Code, to the extent attributable to the period of 
        erroneous coverage involved.
          (2) Government contributions.--There shall be transferred 
        from the CSRDF to the agency in or under which the employee is 
        then employed, to the credit of the appropriation, fund, or 
        account of such agency from which any Government contributions 
        to the CSRDF may be made (to remain available untilexpended), 
an amount equal to the Government contributions, attributable to such 
employee for the period of erroneous coverage involved, that were made 
under section 8423 of title 5, United States Code.
  (d) Disposition of TSP Contributions.--
          (1) Government contributions.--All Government contributions 
        made on behalf of the employee to the Thrift Savings Fund that 
        are attributable to the period of erroneous coverage involved 
        (including any earnings thereon) shall be forfeited in the same 
        manner as described in section 105(c).
          (2) Employee contributions.--Notwithstanding any other 
        provision of this section or any other provision of law, any 
        contributions made by the employee to the Thrift Savings Fund 
        during the period of erroneous coverage involved (including any 
        earnings thereon) shall be treated as if such employee had then 
        been correctly covered.

SEC. 122. UNCORRECTED ERROR: EMPLOYEE WHO SHOULD BE SOCIAL SECURITY-
                    ONLY COVERED, BUT WHO IS ERRONEOUSLY CSRS-OFFSET 
                    COVERED INSTEAD.

  (a) In General.--Except as provided in section 125, this section 
shall apply in the case of any employee who should be Social Security-
Only covered but, as a result of a retirement coverage error, is CSRS-
Offset covered instead.
  (b) Automatic Exclusion From CSRS-Offset.--An employee described in 
subsection (a) shall not, by reason of the retirement coverage error 
described in subsection (a), be eligible to be treated as an individual 
who is CSRS-Offset covered.
  (c) Disposition of Contributions to the CSRDF.--
          (1) Employee contributions.--There shall be paid to the 
        employee, from the CSRDF, the lump-sum credit to which such 
        employee would be entitled under section 8342 of title 5, 
        United States Code, to the extent attributable to the period of 
        erroneous coverage involved.
          (2) Government contributions.--There shall be transferred 
        from the CSRDF to the agency in or under which the employee is 
        then employed, to the credit of the appropriation, fund, or 
        account of such agency from which any Government contributions 
        to the CSRDF may be made (to remain available until expended), 
        an amount equal to the Government contributions that were made 
        under section 8334 of title 5, United States Code, and 
        attributable to such employee for the period of erroneous 
        coverage involved.
  (d) Disposition of TSP Contributions.--In the case of an employee 
described in subsection (a), section 121(d)(2) shall apply.

SEC. 123. UNCORRECTED ERROR: EMPLOYEE WHO SHOULD BE SOCIAL SECURITY-
                    ONLY COVERED, BUT WHO IS ERRONEOUSLY CSRS COVERED 
                    INSTEAD.

  (a) In General.--Except as provided in section 125, this section 
shall apply in the case of any employee who should be Social Security-
Only covered but, as a result of a retirement coverage error, is CSRS 
covered instead.
  (b) Automatic Exclusion From CSRS.--An employee described in 
subsection (a) shall not, by reason of the retirement coverage error 
described in subsection (a), be eligible to be treated as an individual 
who is CSRS covered.
  (c) Disposition of Contributions to the CSRDF.--
          (1) In general.--In the case of an employee described in 
        subsection (a), section 102(b) shall apply.
          (2) Irrelevant provisions to be disregarded.--For purposes of 
        paragraph (1), section 102(b) shall be applied disregarding 
        paragraphs (1)(B)(ii) and (2)(B)(ii) thereof.
  (d) Disposition of TSP Contributions.--In the case of an employee 
described in subsection (a), section 121(d)(2) shall apply.

SEC. 124. CORRECTED ERROR: SITUATIONS UNDER SECTIONS 121-123.

  (a) In General.--Not later than 6 months after the date of enactment 
of this Act, there shall be submitted to the Congress a proposal 
(including any necessary draft legislation) to carry out the policy 
described in subsection (b).
  (b) Policy.--Under the proposal, any employee with respect to whom 
the applicable retirement coverage error (referred to in section 121, 
122, or 123, as applicable) has already been corrected, but under terms 
less advantageous to the employee than would have been the case under 
this Act, shall be afforded a reasonable opportunity to obtain 
treatment comparable to the treatment afforded under this Act.
  (c) Joint Action.--This section shall be carried out by the Director 
of the Office of Personnel Management, in consultation with the 
Executive Director of the Federal Retirement Thrift Investment Board 
and the Commissioner of Social Security.

SEC. 125. VESTED EMPLOYEES EXCEPTED FROM AUTOMATIC EXCLUSION.

  (a) In General.--Nothing in this subtitle shall, by reason of any 
retirement coverage error, result in the automatic exclusion of any 
employee from FERS, CSRS-Offset, or CSRS if, as of the date on which 
notice of such error is given (in accordance with section 201), such 
employee's rights have vested under the retirement system involved.
  (b) Vesting.--For purposes of this section, vesting of rights shall 
be considered to have occurred if, as of the date as of which the 
determination is made, the employee has completed at least 5 years of 
civilian service, taking into account only creditable service under 
section 8332 or 8411 of title 5, United States Code.
  (c) Elections.--
          (1) Erroneously fers covered.--Any employee affected by an 
        error described in section 121 who is determined under this 
        section to satisfy subsection (b) may elect--
                  (A) to be treated in accordance with section 121; or
                  (B) to remain FERS covered.
          (2) Other cases.--Any employee affected by an error described 
        in section 122 or 123 who is determined under this section to 
        satisfy subsection (b) may elect--
                  (A) to be treated in accordance with section 122 or 
                123 (as applicable); or
                  (B) to remain (or instead become) CSRS-Offset 
                covered.
  (d) Effect of An Election To Be Transferred from CSRS to CSRS-
Offset.--In the case of an employee affected by an error described in 
section 123 who elects the option under subsection (c)(2)(B), the 
effect of the election shall be the same as described in section 104.
  (e) Default Rule.--If the employee does not make any election within 
the 6-month period beginning on the date on which the appropriate 
notice is given to such employee, the option under paragraph (1)(B) or 
(2)(B) of subsection (c), as applicable, shall be deemed to have been 
elected as of the last day of such period. Nothing in this section 
shall be considered to afford an employee the option of becoming or 
remaining CSRS covered.
  (f) Retroactive Effect.--An election under this section (including an 
election by default, and an election to remain covered by the 
retirement system by which the electing individual is covered as of the 
date of the election) shall be effective retroactive to the effective 
date of the retirement coverage error to which the election relates.
  (g) Special Rule In Case of Disability.--If, as of the date referred 
to in subsection (a), the employee is entitled to receive an annuity 
under chapter 83 or 84 of title 5, United States Code, based on 
disability, or compensation under subchapter I of chapter 81 of such 
title for injury to, or disability of, such employee, subsections (a) 
and (b) shall be applied by substituting (for the date that would 
otherwise apply) the date as of which entitlement to such annuity or 
compensation terminates (if at all).
  (h) Notification.--Any notice under section 201 shall include such 
additional information or other modifications as the Office of 
Personnel Management may by regulation prescribe in connection with the 
situations covered by this subtitle, particularly as they relate to the 
consequences of being vested or not vested.

 Subtitle D--Employee Who Should Have Been CSRS Covered or CSRS-Offset 
         Covered, But Who Was Erroneously FERS Covered Instead

SEC. 131. ELECTIONS.

  (a) Applicability.--This subtitle shall apply in the case of any 
employee who--
          (1) should be (or should have been) CSRS covered but, as a 
        result of a retirement coverage error, is (or was) FERS covered 
        instead; or
          (2) should be (or should have been) CSRS-Offset covered but, 
        as a result of a retirement coverage error, is (or was) FERS 
        covered instead.
  (b) Uncorrected Error.--If, at the time of making an election under 
this section, the retirement coverage error described in paragraph (1) 
or (2) of subsection (a) (as applicable) has not been corrected, the 
employee affected by such error may elect--
          (1)(A) in the case of an error described in subsection 
        (a)(1), to be CSRS covered instead; or
          (B) in the case of an error described in subsection (a)(2), 
        to be CSRS-Offset covered instead; or
          (2) to remain FERS covered.
  (c) Corrected Error.--If, at the time of making an election under 
this section, the retirement coverage error described in paragraph (1) 
or (2) of subsection (a) (as applicable) has been corrected, the 
employee affected by such error may elect--
          (1) to be FERS covered instead; or
          (2)(A) in the case of an error described in subsection 
        (a)(1), to remain CSRS covered; or
          (B) in the case of an error described in subsection (a)(2), 
        to remain CSRS-Offset covered.
  (d) Default Rule.--If the employee is given written notice in 
accordance with section 201 as to the availability of an election under 
this section, but does not make any such election within the 6-month 
period beginning on the date on which such notice is so given, the 
option under subsection (b)(2) or (c)(2), as applicable, shall be 
deemed to have been elected on the last day of such period.
  (e) Retroactive Effect.--An election under this section (including an 
election by default, and an election to remain covered by the 
retirement system by which the electing individual is covered as of the 
date of the election) shall be effective retroactive to the effective 
date of the retirement coverage error (as referred to in subsection 
(a)) to which such election relates.

SEC. 132. EFFECT OF AN ELECTION TO BE TRANSFERRED FROM FERS TO CSRS TO 
                    CORRECT A RETIREMENT COVERAGE ERROR.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 131(a)(1) who elects 
the option available to such employee under section 131(b)(1)(A).
  (b) Makeup Contributions to the CSRDF.--
          (1) In general.--Upon notification that an employee has made 
        an election under this section, the agency in or under which 
        such employee is employed shall promptly pay to the CSRDF, in a 
        lump sum, an amount equal to the excess of--
                  (A) the amount by which--
                          (i) the amount that should have been deducted 
                        and withheld from the pay of the employee for 
                        the period of erroneous coverage involved under 
                        section 8334 of title 5, United States Code, 
                        exceeds
                          (ii) the amount that was actually deducted 
                        and withheld from the pay of the employee for 
                        the period of erroneous coverage involved under 
                        section 8422 of such title (and not refunded), 
                        over
                  (B) the amount by which--
                          (i) the amount of the Government 
                        contributions actually made under section 8423 
                        of such title with respect to the employee for 
                        the period of erroneous coverage involved, 
                        exceeds
                          (ii) the amount of the Government 
                        contributions that should have been made under 
                        section 8334 of such title with respect to the 
                        employee for the period of erroneous coverage 
                        involved.
          (2) Agency to be reimbursed for certain amounts.--
                  (A) In general.--The employee for whom the payment 
                under paragraph (1) is made shall repay to the agency 
                (referred to in paragraph (1)) an amount equal to the 
                OASDI employee taxes refunded or refundable to such 
                employee for any portion of the period of erroneous 
                coverage involved (computed in such manner as the 
                Director of the Office of Personnel Management, with 
                the concurrence of the Commissioner of Social Security, 
                shall by regulation prescribe), not to exceed the 
                amount described in paragraph (1)(A).
                  (B) Right of recovery; waiver.--If the employee fails 
                to repay the amount required under subparagraph (A), a 
                sum equal to the amount outstanding is recoverable by 
                the Government from the employee (or the employee's 
                estate, if applicable) by--
                          (i) setoff against accrued pay, compensation, 
                        amount of retirement credit, or another amount 
                        due the employee from the Government; and
                          (ii) such other method as is provided by law 
                        for the recovery of amounts owing to the 
                        Government.
                The head of the agency concerned may waive, in whole or 
                in part, a right of recovery under this paragraph if it 
                is shown that recovery would be against equity and good 
                conscience or against the public interest.
                  (C) Treatment of amounts repaid or recovered.--Any 
                amount repaid by, or recovered from, an individual (or 
                an estate) under this paragraph shall be credited to 
                the appropriation, fund, or account from which the 
                amount involved was originally paid.
  (c) Disposition of Excess TSP Contributions.--Section 105(c) shall 
apply in the case of an employee described in subsection (a).

SEC. 133. EFFECT OF AN ELECTION TO BE TRANSFERRED FROM FERS TO CSRS-
                    OFFSET TO CORRECT A RETIREMENT COVERAGE ERROR.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 131(a)(2) who elects 
the option available to such employee under section 131(b)(1)(B).
  (b) Effect.--The effect of an election referred to in subsection (a) 
shall be substantially the same as that described in section 105.

SEC. 134. EFFECT OF AN ELECTION TO BE RESTORED TO FERS AFTER HAVING 
                    BEEN CORRECTED TO CSRS.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 131(a)(1) who elects 
the option under section 131(c)(1).
  (b) Effect.--The effect of an election referred to in subsection (a) 
shall be substantially the same as that described in section 102.

SEC. 135. EFFECT OF AN ELECTION TO BE RESTORED TO FERS AFTER HAVING 
                    BEEN CORRECTED TO CSRS-OFFSET.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 131(a)(2) who elects 
the option under section 131(c)(1).
  (b) Effect.--The effect of an election referred to in subsection (a) 
shall be substantially the same as that described in section 103.

SEC. 136. DISQUALIFICATION OF CERTAIN INDIVIDUALS TO WHOM SAME ELECTION 
                    WAS PREVIOUSLY AVAILABLE.

  Notwithstanding any other provision of this subtitle, an election 
under this subtitle shall not be available in the case of any 
individual to whom an election under section 846.204 of title 5 of the 
Code of Federal Regulations (as in effect as of January 1, 1997) was 
made available in connection with the same error pursuant to 
notification provided in accordance with such section.

Subtitle E--Employee Who Should Have Been CSRS-Offset Covered, But Who 
                  Was Erroneously CSRS Covered Instead

SEC. 141. AUTOMATIC TRANSFER TO CSRS-OFFSET.

  (a) Applicability.--This subtitle shall apply in the case of any 
employee who should be (or should have been) CSRS-Offset covered but, 
as a result of a retirement coverage error, is (or was) CSRS covered 
instead.
  (b) Uncorrected Error.--If the error has not been corrected, the 
employee shall be treated in the same way as if such employee had 
instead been CSRS-Offset covered, effective retroactive to the 
effective date of such error.
  (c) Corrected Error.--If the error has been corrected, the correction 
shall (to the extent not already carried out) be made effective 
retroactive to the effective date of such error.

SEC. 142. EFFECT OF TRANSFER.

  The effect of a transfer under section 141 shall be as set forth in 
regulations which the Office of Personnel Management shall prescribe 
consistent with section 104.

  Subtitle F--Employee Who Should Have Been CSRS Covered, But Who Was 
                Erroneously CSRS-Offset Covered Instead

SEC. 151. ELECTIONS.

  (a) Applicability.--This subtitle shall apply in the case of any 
employee who should be (or should have been) CSRS covered but, as a 
result of a retirement coverage error, is (or was) CSRS-Offset covered 
instead.
  (b) Uncorrected Error.--If, at the time of making an election under 
this section, the retirement coverage error described in subsection (a) 
has not been corrected, the employee affected by such error may elect--
          (1) to be CSRS covered instead; or
          (2) to remain CSRS-Offset covered.
  (c) Corrected Error.--If, at the time of making an election under 
this section, the retirement coverage error described in subsection (a) 
has been corrected, the employee affected by such error may elect--
          (1) to be CSRS-Offset covered instead; or
          (2) to remain CSRS covered.
  (d) Default Rule.--If the employee is given written notice in 
accordance with section 201 as to the availability of an election under 
this section, but does not make any such election within the 6-month 
period beginning on the date on which such notice is so given, the 
option under subsection (b)(2) or (c)(2), as applicable, shall be 
deemed to have been elected on the last day of such period.
  (e) Retroactive Effect.--An election under this section (including an 
election by default, and an election to remain covered by the 
retirement system by which the electing individual is covered as of the 
date of the election) shall be effective retroactive to the effective 
date of the retirement coverage error (as referred to in subsection 
(a)) to which such election relates.

SEC. 152. EFFECT OF AN ELECTION TO BE TRANSFERRED FROM CSRS-OFFSET TO 
                    CSRS TO CORRECT THE RETIREMENT COVERAGE ERROR.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 151(a) who elects 
the option available to such employee under section 151(b)(1).
  (b) Makeup Contributions to the CSRDF.--
          (1) In general.--Upon notification that an employee has made 
        an election under this section, the agency in or under which 
        such employee is employed shall promptly pay to the CSRDF, in a 
        lump sum, an amount equal to the amount by which--
                  (A) the amount that should have been deducted and 
                withheld from the pay of the employee for the period of 
                erroneous coverage involved under section 8334 of title 
                5, United States Code (by virtue of being CSRS 
                covered), exceeds
                  (B) any nonrefunded amounts actually deducted and 
                withheld from the pay of the employee for the period of 
                erroneous coverage involved under such section 
                (pursuant to CSRS-Offset coverage).
          (2) Agency to be reimbursed for certain amounts.--
                  (A) In general.--The employee for whom the payment 
                under paragraph (1) is made shall repay to the agency 
                (referred to in paragraph (1)) an amount equal to the 
                OASDI employee taxes refunded or refundable to such 
                employee for any portion of the period of erroneous 
                coverage involved (computed in such manner as the 
                Director of the Office of Personnel Management, with 
                the concurrence of the Commissioner of Social Security, 
                shall by regulation prescribe), not to exceed the 
                amount described in paragraph (1)(A).
                  (B) Right of recovery; waiver.--If the employee fails 
                to repay the amount required under subparagraph (A), a 
                sum equal to the amount outstanding is recoverable by 
                the Government from the employee (or the employee's 
                estate, if applicable) by--
                          (i) setoff against accrued pay, compensation, 
                        amount of retirement credit, or another amount 
                        due the employee from the Government; and
                          (ii) such other method as is provided by law 
                        for the recovery of amounts owing to the 
                        Government.
                The head of the agency concerned may waive, in whole or 
                in part, a right of recovery under this paragraph if it 
                is shown that recovery would be against equity and good 
                conscience or against the public interest.
                  (C) Treatment of amounts repaid or recovered.--Any 
                amount repaid by, or recovered from, an individual (or 
                an estate) under this paragraph shall be credited to 
                the appropriation, fund, or account from which the 
                amount involved was originally paid.

SEC. 153. EFFECT OF AN ELECTION TO BE RESTORED TO CSRS-OFFSET AFTER 
                    HAVING BEEN CORRECTED TO CSRS.

  (a) Applicability.--This section shall apply in the case of any 
employee affected by an error described in section 151(a) who elects 
the option available to such employee under section 151(c)(1).
  (b) Disposition of Contributions to the CSRDF.--In the case of an 
employee described in subsection (a), the provisions of section 102(b) 
shall apply, except that, in applying such provisions--
          (1) ``the applicable provisions of section 8334'' shall be 
        substituted for ``section 8422'' in paragraph (1)(B)(ii) 
        thereof; and
          (2) ``the applicable provisions of section 8334'' shall be 
        substituted for ``section 8423'' in paragraph (2)(B)(ii) 
        thereof.

   Subtitle G--Additional Provisions Relating to Government Agencies

SEC. 161. REPAYMENT REQUIRED IN CERTAIN SITUATIONS.

  (a) In General.--An individual who previously received a payment 
ordered by a court or provided as a settlement of claim for losses 
resulting from a retirement coverage error shall not be entitled to 
make an election under this Act unless repayment of the amount so 
received by such individual is waived in whole or in part by the Office 
of Personnel Management, and any amount not waived is repaid.
  (b) Regulations.--Any repayment under this section shall be made in 
accordance with regulations prescribed by the Office.

SEC. 162. EQUITABLE SHARING OF AMOUNTS PAYABLE TO OR FROM THE 
                    GOVERNMENT IF MORE THAN ONE AGENCY INVOLVED.

  The Office of Personnel Management shall by regulation prescribe 
rules under which, in the case of an employee who has been employed in 
or under more than 1 agency since the date of the retirement coverage 
error involved (and before its rectification under this Act), any 
contributions or other amounts required to be paid to or from the then 
current employing agency (other than lost earnings under section 
163(a)(2)) shall be equitably allocated between or among the 
appropriate agencies.

SEC. 163. PROVISIONS RELATING TO THE ORIGINAL RESPONSIBLE AGENCY.

  (a) Obligations of the Original Responsible Agency.--
          (1) Expenses for services of financial advisor.--The Office 
        of Personnel Management shall by regulation prescribe rules 
        under which, in the case of any employee eligible to make an 
        election under this Act, the original responsible agency (as 
        determined under succeeding provisions of this section) shall 
        pay (or make reimbursement for) any reasonable expenses 
        incurred by such employee for services received from any 
        licensed financial or legal consultant or advisor in connection 
        with such election.
          (2) Special rules.--Such regulations shall also include 
        provisions to ensure that, to the extent lost earnings under 
        the Thrift Savings Fund are involved in connection with a 
        particular error, the original responsible agency--
                  (A) shall pay (or reimburse any other agency that 
                pays) any amounts to the Thrift Savings Fund 
                representing lost earnings with respect to such error; 
                and
                  (B) shall be entitled to receive (directly from the 
                Thrift Savings Fund or through transfer from another 
                agency) any amounts paid out of the Thrift Savings Fund 
                representing a refund of lost earnings to which the 
                Government is entitled with respect to such error.
  (b) Original Responsible Agency Defined.--For purposes of this Act, 
the term ``original responsible agency'', with respect to a retirement 
coverage error affecting an employee, means--
          (1) except in the situation described in paragraph (2), the 
        agency determined by the Office of Personnel Management to have 
        made the initial retirement coverage error (including one made 
        before January 1, 1984); or
          (2) if the error is attributable, in whole or in part, to an 
        erroneous regulation promulgated by the Office of Personnel 
        Management, such Office.
  (c) Procedures for Identifying the Original Responsible Agency.--
          (1) In general.--For purposes of this section, the original 
        responsible agency, in any situation to which this section 
        applies, shall be identified by the Office of Personnel 
        Management in accordance with regulations which the Office 
        shall prescribe.
          (2) Finality.--A determination made by the Office under this 
        subsection shall be final and not subject to any review.
  (d) If Original Responsible Agency No Longer Exists.--If the agency 
which (before the application of this subsection) is identified as the 
original responsible agency no longer exists (whether because of a 
reorganization or otherwise)--
          (1) the successor agency (as determined under regulations 
        prescribed by the Office) shall be treated as the original 
        responsible agency; or
          (2) if none, this section shall be applied by substituting 
        the CSRDF for the original responsible agency.
  (e) Source of Payments If Error Due to Erroneous OPM Regulations.--In 
any case in which the Office of Personnel Management is the original 
responsible agency by reason of subsection (b)(2), any amounts payable 
to or from the Office under this section shall be payable to or from 
the CSRDF.

                      TITLE II--GENERAL PROVISIONS

SEC. 201. IDENTIFICATION AND NOTIFICATION REQUIREMENTS.

  (a) In General.--The Office of Personnel Management shall prescribe 
regulations under which Government agencies shall take such measures as 
may be necessary to ensure that all individuals who are (or have been) 
affected by a retirement coverage error giving rise to any election or 
automatic change in retirement coverage under this Act shall be 
promptly identified and notified in accordance with this section.
  (b) Matter To Be Included in Notice to Individuals.--Any notice 
furnished under this section shall be made in writing and shall include 
at least the following:
          (1) Description of error.--A description of the error 
        involved, including a clear and concise explanation as to why 
        the original retirement coverage determination was erroneous, 
        citations to (and a summary description of) the pertinent 
        provisions of law, and how that determination should instead 
        have been made.
          (2) Method for rectification.--How the error is to be 
        rectified under this Act, including whether rectification will 
        be achieved through an automatic change in retirement coverage 
        (and, if so, the time, form, and manner in which that change 
        will be effected) or an election.
          (3) Election procedures, etc.--If an election is provided 
        under this Act, all relevant information as to how such an 
        election may be made, the options available, the differences 
        between those respective options (as further specified in 
        succeeding provisions of this subsection), and the consequences 
        of failing to make a timely election.
          (4) Accrued benefits, etc.--With respect to the (or each) 
        retirement system by which the individual is then covered 
        (disregarding the Thrift Savings Plan), and to the extent 
        applicable:
                  (A) A brief summary of any benefits accrued.
                  (B) The amount of employee contributions made to date 
                and the effect of any applicable disposition rules 
                relating thereto (including provisions relating to 
                excess amounts or shortfalls).
                  (C) The amount of any Government contributions made 
                to date and the effect of any applicable disposition 
                rules relating thereto (including provisions relating 
                to excess amounts or shortfalls).
          (5) Thrift savings fund.--With respect to the Thrift Savings 
        Fund, the balance that then is (or would be) credited to the 
        individual's account depending on the option chosen, with any 
        such balance to be shown both in the aggregate and broken down 
        by--
                  (A) individual contributions,
                  (B) automatic (1 percent) Government contributions, 
                and
                  (C) matching Government contributions,
        including lost earnings on each and the extent to which any 
        makeup contributions or forfeitures would be involved.
          (6) OASDI benefits.--Such information regarding benefits 
        under title II of the Social Security Act as the Commissioner 
        of Social Security considers appropriate.
          (7) Other information.--Any other information that the 
        Director of the Office of Personnel Management may by 
        regulation prescribe after consultation with the Executive 
        Director of the Federal Retirement Thrift Investment Board and 
        such other agency heads as the Director considers appropriate, 
        including any appeal rights available to the individual.
  (c) Comparisons.--Any amounts required to be included under 
subsection (b)(4) shall, with respect to the respective retirement 
systems involved, be determined--
          (1) as of the date the retirement coverage error was 
        corrected (if applicable);
          (2) as of the then most recent date for which those benefits 
        and amounts are ascertainable, assuming no change in retirement 
        coverage; and
          (3) as of the then most recent date for which those benefits 
        and amounts are ascertainable, assuming the alternative option 
        is chosen.
  (d) Past Errors.--All measures required under this section shall, 
with respect to errors preceding the date specified in section 206(e) 
(relating to the effective date for all regulations prescribed under 
this Act), be completed no later than December 31, 2001.

SEC. 202. INDIVIDUAL APPEAL RIGHTS.

  (a) In General.--An individual aggrieved by a final determination 
under this Act shall be entitled to appeal such determination to the 
Merit Systems Protection Board under section 7701 of title 5, United 
States Code.
  (b) Notification Appeals.--The Office of Personnel Management shall 
by regulation establish procedures under which individuals may bring an 
appeal to the Office with respect to any failure to have been properly 
notified in accordance with section 201. A final determination under 
this subsection shall be appealable under subsection (a).

SEC. 203. INFORMATION TO BE FURNISHED BY GOVERNMENT AGENCIES TO 
                    AUTHORITIES ADMINISTERING THIS ACT.

  (a) Applicability.--The authorities identified in this subsection 
are:
          (1) The Director of the Office of Personnel Management.
          (2) The Commissioner of Social Security.
          (3) The Executive Director of the Federal Retirement Thrift 
        Investment Board.
  (b) Authority To Obtain Information.--Each authority identified in 
subsection (a) may secure directly from any department or agency of the 
United States information necessary to enable such authority to carry 
out its responsibilities under this Act. Upon request of the authority 
involved, the head of the department or agency involved shall furnish 
that information to the requesting authority.
  (c) Limitation; Safeguards.--Each of the respective authorities under 
subsection (a)--
          (1) shall request only such information as that authority 
        considers necessary; and
          (2) shall establish, by regulation or otherwise, appropriate 
        safeguards to ensure that any information obtained under this 
        section shall be used only for the purpose authorized.

SEC. 204. SOCIAL SECURITY RECORDS.

  Notwithstanding any limitations in section 205 of the Social Security 
Act regarding the modification of wage records maintained by the 
Commissioner of Social Security for purposes of title II of such Act, 
the Commissioner of Social Security shall modify the wage record of 
each employee affected by a retirement coverage error to change, add, 
or delete any entry regarding service as an employee to the extent 
necessary to carry out the purposes of this Act or the Social Security 
Act.

SEC. 205. CONFORMING AMENDMENTS RESPECTING SOCIAL SECURITY COVERAGE AND 
                    OASDI TAXES.

  (a) Social Security Coverage.--Section 210(a)(5)(H) of the Social 
Security Act (42 U.S.C. 410(a)(5)(H)) is amended--
          (1) in clause (i) by striking ``or'' at the end;
          (2) in clause (ii) by striking the semicolon and inserting 
        ``, or''; and
          (3) by adding at the end the following:
                          ``(iii)(I) described in section 111(a)(3) of 
                        the Federal Retirement Coverage Corrections 
                        Act, on or after the effective date of an 
                        election (or deemed election) by such 
                        individual under section 111(b)(2) of such Act,
                          ``(II) described in section 131(a)(1) of such 
                        Act, on or after the effective date of an 
                        election (or deemed election) by such 
                        individual under subsection (b)(2) or (c)(1) of 
                        section 131 of such Act, or
                          ``(III) described in section 151(a) of such 
                        Act, on or after the effective date of an 
                        election (or deemed election) by such 
                        individual under subsection (b)(2) or (c)(1) of 
                        section 151 of such Act;''.
  (b) OASDI Taxes.--Section 3121(b)(5)(H) of the Internal Revenue Code 
of 1986 is amended--
          (1) in clause (i) by striking ``or'' at the end;
          (2) in clause (ii) by striking the semicolon and inserting 
        ``, or''; and
          (3) by adding at the end the following:
                          ``(iii)(I) described in section 111(a)(3) of 
                        the Federal Retirement Coverage Corrections 
                        Act, on or after the effective date of an 
                        election (or deemed election) by such 
                        individual under section 111(b)(2) of such Act,
                          ``(II) described in section 131(a)(1) of such 
                        Act, on or after the effective date of an 
                        election (or deemed election) by such 
                        individual under subsection (b)(2) or (c)(1) of 
                        section 131 of such Act, or
                          ``(III) described in section 151(a) of such 
                        Act, on or after the effective date of an 
                        election (or deemed election) by such 
                        individual under subsection (b)(2) or (c)(1) of 
                        section 151 of such Act;''.

SEC. 206. REGULATIONS.

  (a) In General.--Any regulations necessary to carry out this Act 
shall be prescribed by the Director of the Office of Personnel 
Management, the Executive Director of the Federal Retirement Thrift 
Investment Board, the Commissioner of Social Security, the Secretary of 
the Treasury, and any other appropriate authority, with respect to 
matters within their respective areas of jurisdiction.
  (b) Matters To Be Included.--The regulations prescribed by the 
Director of the Office of Personnel Management shall include at least 
the following:
          (1) Former employees, annuitants, and survivor annuitants.--
                  (A) In general.--Provisions under which, to the 
                maximum extent practicable and in appropriate 
                circumstances, any election available to an employee 
                under subtitle A, B, D, or F of title I shall be 
                available to a former employee, annuitant, or survivor 
                annuitant.
                  (B) Subtitle c situations.--Provisions under which 
                subtitle C of title I shall apply in the case of a 
                former employee.
                  (C) Subtitle e situations.--Provisions under which 
                the purposes of this paragraph shall be carried with 
                respect to any situation under subtitle E of title I.
          (2) Former spouses.--Provisions under which appropriate 
        notification shall be afforded to any former spouse affected by 
        a change in retirement coverage pursuant to this Act.
          (3) Procedural requirements.--Provisions establishing the 
        procedural requirements in accordance with which any 
        determinations under this Act (not otherwise addressed in this 
        Act) shall be made, in conformance with the requirements of 
        this Act.
          (4) Authority to make actuarial reduction in annuity by 
        reason of certain unpaid amounts.--Provisions under which any 
        payment required to be made by an individual to the Government 
        in order to make an election under this Act which remains 
        unpaid may be made by a reduction in the appropriate annuity or 
        survivor annuity. The reduction shall, to the extent 
        practicable, be designed so that the present value of the 
        future reduction is actuarially equivalent to the amount so 
        required.
  (c) Definitions.--For purposes of this section--
          (1) the term ``annuitant'' means any individual who is an 
        annuitant as defined by section 8331(9) or 8401(2) of title 5, 
        United States Code; and
          (2) the term ``former employee'' includes any former employee 
        who satisfies the service requirement for title to a deferred 
        annuity under chapter 83 or 84 of such title 5 (as applicable), 
        but--
                  (A) has not attained the minimum age required for 
                title to such an annuity; or
                  (B) has not filed claim therefor.
  (d) Coordination Rule.--In prescribing regulations to carry out this 
Act, the Director of the Office of Personnel Management shall consult 
with--
          (1) the Administrative Office of the United States Courts;
          (2) the Clerk of the House of Representatives;
          (3) the Sergeant at Arms and Doorkeeper of the Senate; and
          (4) other appropriate officers or authorities.
  (e) Effective Date.--All regulations necessary to carry out this Act 
shall take effect as of the first day of the first month beginning 
after the end of the 6-month period beginning on the date of enactment 
of this Act.

SEC. 207. ALL ELECTIONS TO BE APPROVED BY OPM.

  Notwithstanding any other provision of this Act, no election under 
this Act (other than an election by default) may be given effect until 
the Office of Personnel Management has determined, in writing, that 
such election is in compliance with the requirements of this Act.

SEC. 208. ADDITIONAL TRANSFERS TO OASDI TRUST FUNDS IN CERTAIN CASES.

  If the Commissioner of Social Security determines that the payment of 
the OASDI taxes described in this Act did not result in a credit to the 
OASDI trustfunds of an equal amount, the Commissioner of Social 
Security shall notify the Secretary of the Treasury of the amount of 
any shortfall. Promptly upon receiving such notification, the Secretary 
of the Treasury shall transfer an amount equal to such shortfall from 
the general fund of the Treasury to the OASDI trust funds.

SEC. 209. TECHNICAL AND CONFORMING AMENDMENTS.

  (a) Amendment Relating to Limitation on Sources from which 
Contributions to the Thrift Savings Fund Are Allowed.--Section 8432(h) 
of title 5, United States Code, is amended by striking ``title.'' and 
inserting ``title or the Federal Retirement Coverage Corrections 
Act.''.
  (b) Description of Amounts Comprising the Thrift Savings Fund.--
Section 8437(b) of title 5, United States Code, is amended by striking 
``expenses).'' and inserting ``expenses), as well as contributions 
under the Federal Retirement Coverage Corrections Act (and lost 
earnings made up under such Act).''.
  (c) Administrative Expenses.--
          (1) Thrift savings plan.--Section 8437(d) of title 5, United 
        States Code, is amended by inserting ``(including the 
        provisions of the Federal Retirement Coverage Corrections Act 
        that relate to this subchapter)'' after ``this subchapter''.
          (2) CSRS, csrs-offset, fers.--Section 8348(a)(2) of title 5, 
        United States Code, is amended by striking ``statutes;'' and 
        inserting ``statutes (including the provisions of the Federal 
        Retirement Coverage Corrections Act that relate to this 
        subchapter);''.
          (3) MSPB.--Section 8348(a)(3) of title 5, United States Code, 
        is amended by striking ``title.'' and inserting ``title and the 
        Federal Retirement Coverage Corrections Act.''.

                      TITLE III--OTHER PROVISIONS

SEC. 301. PROVISIONS TO PERMIT CONTINUED CONFORMITY OF OTHER FEDERAL 
                    RETIREMENT SYSTEMS.

  (a) Foreign Service.--Sections 827 and 851 of the Foreign Service Act 
of 1980 (22 U.S.C. 4067 and 4071) shall apply with respect to this Act 
in the same manner as if this Act were part of--
          (1) the Civil Service Retirement System, to the extent this 
        Act relates to the Civil Service Retirement System; and
          (2) the Federal Employees' Retirement System, to the extent 
        this Act relates to the Federal Employees' Retirement System.
  (b) Central Intelligence Agency.--Sections 292 and 301 of the Central 
Intelligence Agency Retirement Act (50 U.S.C. 2141 and 2151) shall 
apply with respect to this Act in the same manner as if this Act were 
part of--
          (1) the Civil Service Retirement System, to the extent this 
        Act relates to the Civil Service Retirement System; and
          (2) the Federal Employees' Retirement System, to the extent 
        this Act relates to the Federal Employees' Retirement System.

SEC. 302. CERTAIN AMOUNTS PAYABLE OUT OF THE GENERAL FUND OF THE 
                    TREASURY OR CSRDF.

  (a) General Fund of the Treasury.--
          (1) In general.--Notwithstanding any other provision of this 
        Act or any other provision of law (but subject to paragraph 
        (2)), all amounts for which an Executive agency would otherwise 
        be liable by virtue of an election made (or deemed to have been 
        made) under this Act shall, to the extent the liability relates 
        to amounts payable for any portion of a period of erroneous 
        coverage (or of a period described in section 105(d)), instead 
        be paid by the Secretary of the Treasury from amounts in the 
        general fund of the Treasury of the United States not otherwise 
        appropriated, if or to the extent that the Director of the 
        Office of Management and Budget determines, on application of 
        the agency involved, that the payment by such agency of those 
        amounts would substantially impair the agency's ability to 
        accomplish its mission. For purposes of the preceding sentence, 
        a substantial impairment may include a reduction in force if 
        the Director of the Office of Management and Budget determines 
        that such reduction in force is attributable solely to payments 
        required under this Act.
          (2) Exception.--This subsection shall not apply with respect 
        to any amount for which an Executive agency would otherwise be 
        liable by reason of any retirement coverage error as to which 
        the notification required under section 201 is not given before 
        January 1, 2002.
          (3) Definition.--For purposes of this subsection, the term 
        ``Executive agency'' has the meaning given such term by section 
        105 of title 5, United States Code, but does not include the 
        General Accounting Office.
  (b) CSRDF.--
          (1) In general.--For purposes of section 8348(f) of title 5, 
        United States Code, any unfunded liability in the CSRDF created 
        as a result of an election made (or deemed to have been made) 
        under this Act, as determined by the Office of Personnel 
        Management, shall be considered a new benefit payable from the 
        CSRDF.
          (2) Coordination rule.--Paragraph (1) shall not apply to the 
        extent that subsection (h), (i), or (m) of section 8348 of 
        title 5, United States Code, would otherwise apply.

SEC. 303. INDIVIDUAL RIGHT OF ACTION PRESERVED FOR AMOUNTS NOT 
                    OTHERWISE PROVIDED FOR UNDER THIS ACT.

  Nothing in this Act shall preclude an individual from bringing a 
claim against the Government of the United States which such individual 
may have under section 1346(b) or chapter 171 of title 28, United 
States Code, or any other provision of law (except to the extent the 
claim is for any amounts otherwise provided for under this Act).

SEC. 304. EXTENSION OF OPEN ENROLLMENT PERIOD TO EMPLOYEES UNDER THE 
                    FOREIGN SERVICE RETIREMENT AND DISABILITY SYSTEM.

  Section 860 of the Foreign Service Act of 1980 (22 U.S.C. 4071i) is 
amended by inserting after the first sentence the following: ``The 
Secretary of State shall, in addition, issue regulations providing for 
an election for coverage under the Foreign Service Pension System for 
employees covered under the Foreign Service Retirement and Disability 
System comparable to the election provided for by the Federal 
Employees' Retirement System Open Enrollment Act of 1997.''.

                        TITLE IV--TAX PROVISIONS

SEC. 401. TAX PROVISIONS.

  (a) Plan Qualification.--No retirement plan of the United States (or 
any agency thereof) shall fail to be treated as a qualified plan under 
the Internal Revenue Code of 1986 by reason of any action taken under 
this Act.
  (b) Transfers.--For purposes of the Internal Revenue Code of 1986, no 
amount shall be includible in the gross income of any individual by 
reason of any direct transfer under this Act between funds or any 
Government contribution under this Act to any fund or account.
  (c) Distribution of Excess CSRS Contributions.--Section 72(t) of the 
Internal Revenue Code of 1986 (relating to 10-percent additional tax on 
early distributions from qualified retirement plans) shall not apply to 
the distribution of the excess described in section 102(b)(1)(B) of 
this Act or to any other refund paid under this Act from the Civil 
Service Retirement and Disability Fund.

                    I. Short Summary of Legislation

    Through no fault of their own, thousands of Federal 
employees have been erroneously placed in the wrong Federal 
retirement system. The vast majority of these errors involve 
misclassifications in either the Federal Employees Retirement 
System (FERS) or the Civil Service Retirement System (CSRS). 
When these errors are discovered, the Office of Personnel 
Management (OPM) and other Federal agencies must correct the 
mistake by automatically enrolling misclassified employees in 
the correct system. Because corrections do not currently 
include make-whole relief, their effects are often devastating 
for the employees involved.
    The Federal Retirement Coverage Corrections Act addresses 
this problem and accomplishes a number of objectives: It 
provides comprehensive coverage of retirement coverage errors. 
Employees affected by an error are provided a status quo 
option, and employees' Thrift Savings Plan (TSP) accounts are 
made whole. Agencies are held accountable for their mistakes. 
Unfair tax consequences of corrections are prevented. To ensure 
fairness and accuracy, the bill requires centralized oversight 
of the corrections process and provides affected employees with 
administrative and judicial review. The bill protects the 
integrity of the Social Security trust funds, and it protects 
all employees from reductions in force (RIFs) to pay for the 
required remedies.
    The bill provides a consistent framework to correct all 
retirement coverage errors for employees with accounts in the 
Civil Service Retirement and Disabilities Fund (CSRDF) and also 
covers former employees, annuitants, and survivors. It extends 
the same correction options to employees in retirement systems 
for the Foreign Service and the Central Intelligence Agency.
    With two exceptions, employees may choose between the 
retirement system they were mistakenly placed in or the system 
they should have been placed in retroactively to the date of 
the error. One exception prevents employees who were 
erroneously placed in the CSRS from electing that system; they 
may, however, choose to be enrolled in the CSRS-Offset system. 
The other exception affects employees who should have been in 
Social Security only, without retirement participation, but who 
were erroneously enrolled in one of the Federal retirement 
systems. These employees may not remain in a Federal retirement 
system unless they had already vested.
    The bill adapts an Internal Revenue Service (IRS) Revenue 
Procedure, Rev. Proc. 94-62, that applies to similar mistakes 
in the private sector as a model for make-up contributions to 
employees' TSP accounts to make them whole. The agencies 
responsible for retirement coverage errors bear the cost of 
making up lost earnings on employees' TSP accounts. Agencies, 
not employees, make all necessary contributions to the Civil 
Service Retirement and Disability Fund (CSRDF), Social Security 
trust funds, as well as the TSP. They also pay the reasonable 
costs of financial and legal advice employees need to make 
informed decisions under the Act. In some cases, agencies may 
collect from employees an amount equal to the refund of Social 
Security contributions due the employees.
    The bill's tax provisions prevent employees from incurring 
undue tax burdens as a result of an election under this Act.
    OPM will be required to issue regulations to ensure uniform 
implementation of the bill's provisions and to ensure that 
employees are properly informed as to the status of their 
various retirement accounts in order to make an informed 
election. Corrections under the bill are not final until 
approved by OPM. Employees may appeal corrections to the Merit 
Systems Protection Board (MSPB), and seek judicial review by 
the United States Court of Appeals for the Federal Circuit. The 
bill does not impair any right employees may have to sue for 
other damages under the Federal Tort Claims Act.
    The integrity of the Social Security trust funds is 
preserved. The bill amends the Social Security Act so CSRS-
eligible employees who choose coverage under FERS or Social 
Security may receive Social Security benefits. Current law 
excludes CSRS-eligibles from the Social Security program.
    Agencies will make all necessary payments from appropriated 
funds. However, if the Director of OMB determines that making 
such payments would impair an agency's mission (including 
RIFs), the payments may be made from the Treasury's general 
fund.

              II. Background and Need for the Legislation

    Most civil servants are covered by one of two distinctly 
different retirement systems, CSRS and FERS. The CSRS is a 
stand-alone defined benefit retirement plan that does not 
include Social Security coverage. FERS, on the other hand, is a 
three-tiered system consisting of Social Security coverage, a 
defined benefit plan, and the TSP. The TSP is a defined 
contribution plan, similar to 401(k) plans offered by many 
private employers, which is administered by the Federal 
Retirement Thrift Investment Board (Thrift Board). (CSRS 
employees who vested in CSRS before separating from the 
government for more than one year may be covered by a variant 
of the CSRS system called CSRS-Offset. A hybrid, CSRS-Offset 
also takes account of Social Security benefits to which the 
employee may be eligible.) Contributions to the TSP are an 
essential part of the FERS system because the FERS basic 
annuity is substantially lower than the CSRS annuity.
    Under CSRS, 7% of employees' basic pay is withheld from 
their pay and deposited in the CSRDF. Social Security taxes are 
not withheld, and CSRS employees are not eligible to 
participate in Social Security. CSRS employees may contribute 
up to 5% of their basic pay to the TSP, but, unlike FERS, 
agencies make no contribution on their behalf. Their CSRS 
annuity is calculated based on the average of the highest 3 
salaries earned. The salary replacement rate accrues at 1.5% 
per year for the first 5 years of service, 1.75% for the next 5 
years, and 2% for each year after the first 10. After a thirty-
year career, retiring CSRS employees would thus receive a 
pension worth approximately 56 percent of the average high 3 
years of pre-retirement salaries.
    FERS employees pay full Social Security taxes (in 1998, 
6.2% on the first $68,400) plus an amount equal to the 
difference between 7% of basic pay and the Social Security tax 
rate as the employee share of the FERS defined benefit. The 
percentage of pay employees have contributed to the TSP has 
increased gradually since 1988. Currently FERS employees 
average about 6.4%, but may contribute up to 10% of their 
salary, subject to the IRS cap (currently $10,000 per year). 
The employing agency automatically contributes at least 1% of 
basic pay to the TSP, even if the employee contributes nothing, 
and will match employee contributions up to 5%. The FERS 
benefit is also calculated based on the average of the highest 
3 salaries earned. The salary replacement rate accruesat 1% per 
year of service, which increases to 1.1% if retirement is after age 62. 
After a thirty-year career, retiring FERS employees would thus receive 
a pension worth approximately 30 percent (33 percent at age 62 or over) 
of the average high 3 years of pre-retirement salaries plus the same 
Social Security benefits payable to a similarly situated private sector 
retiree.
    On December 31, 1983 the CSRS was closed to new 
enrollments. Effective January 1, 1984 new Federal employees 
were put into the Social Security system, and their retirement 
deductions held in a CSRS Interim account pending creation of a 
new retirement system. On January 1, 1987, FERS was 
established. In addition to their Social Security deductions 
(currently 6.2%), FERS employees also contribute an amount 
which is the difference between 7% of pay and the Social 
Security deduction.
    Since no new system existed from January of 1984 to January 
1, 1987, new hires during this period were left in limbo. After 
the creation of FERS, all employees in the CSRS Interim plan 
were to be transferred into FERS. Unfortunately, many employees 
were not transferred and were left with the erroneous belief 
that they were correctly enrolled in the CSRS. Approximately 
200,000 new Federal employees were hired during this time, and 
some as yet unknown fraction of them may have been affected.
    Other employees have also been affected by retirement 
enrollment errors. These include temporary employees who 
converted from positions for which retirement benefits were not 
available, to permanent employment status under which they 
would qualify for FERS but not CSRS. They also include 
employees re-hired after a break in service and employees with 
creditable military service. Some of these errors occurred 
after the January 1987 creation of FERS, thereby extending the 
time period during which employees may have been affected by 
enrollment errors.

                       ``Correction'' Procedures

    OPM has identified twelve different scenarios under which 
Federal employees might become enrolled in the wrong retirement 
system. These situations are shown on Chart 1.





    The most challenging scenarios are those that require 
moving employees between CSRS or CSRS-Offset enrollment and 
FERS enrollment. These are the errors that hold the greatest 
potential for serious financial consequences to the employees.
    When agencies shift people from CSRS to FERS, the employees 
have no choice in the conversion, no matter how long they have 
worked for the government. The law does not permit anyone to 
have become enrolled in CSRS after January 1, 1984, so OPM has 
held that agencies cannot leave people in CSRS if they do not 
belong there.
    OPM requires agencies to take corrective actions, but has 
established no guidance on providing employees with a briefing 
or formal consultation before the change takes effect. Agencies 
have sometimes performed ``stealth'' corrections, where they 
simply alter personnel records, then let the affected employees 
find out about the change later. One witness at a Civil Service 
Subcommittee hearing on this issue, for example, saw a shift in 
his CSRS account balance on his payroll stub. When he called 
the personnel office, the personnel officer started the 
conversation, ``I've been dreading this call for two months. * 
* *'' Another victim of these adjustments, a 59-year old GS-7 
grandmother employed by the Department of Housing and Urban 
Development, is still facing increased Social Security 
deductions from her pay each pay period.
    Attempts to make employees whole through administrative 
action have been complicated by statutory restrictions. 
Reconstructing Social Security accounts is hampered by the six 
year IRS limit on repayment of old Social Security taxes. Lump 
sum deposits in TSP accounts to make up lost employee 
contributions have only recently been permitted. Until it 
adopted new regulations on January 29, 1998, the Thrift Board 
held that make-up contributions by employees could not be 
attributed to past years, but had to be counted against the 
applicable IRS deferral limit for the year in which they were 
made.

          Damages to Federal Employees from Enrollment Errors

    Employees who should have been in FERS, but who were 
wrongly enrolled in either CSRS or CSRS-Offset are exposed to 
the most serious harm. These employees have not been permitted 
to participate fully in the TSP. Nor were they encouraged by 
the availability of government matching contributions to 
participate. In addition, until they are notified of the error, 
these employees believe that they are in a system that will 
provide a much higher retirement annuity upon retirement and 
structure their financial planning accordingly. Consequently, 
when the error is uncovered, their plans are thrown into 
disarray and they frequently find themselves with TSP accounts 
that are substantially lower than they would have been had the 
employees known they would receive only a FERS annuity.
    To compound the problem, it is simply unrealistic to expect 
that many of these employees would have the financial resources 
available to make retroactive TSP contributions. Certainly that 
would be impossible for many lower-paid Federalemployees. But 
even many high-paid employees would find themselves faced with such 
difficult dilemmas as choosing between fully financing their own 
retirement or providing for their children's education, all because a 
Federal agency made an error.
    The Committee believes that the victims of these agency 
errors should be given a meaningful choice between enrollment 
in the retirement system they should have been placed in or 
continued enrollment in the erroneous system. But that 
objective cannot be achieved unless the Federal government 
shoulders the burden of making up past employee contributions 
to the TSP. That is the very same burden the IRS's Rev. Proc. 
94-62 calls upon private employers to assume in similar 
circumstances. Private employers are required under Rev. Proc. 
94-62, to make a contribution on behalf of employees equal to 
the average contribution percentage of the employee's group, 
including any matching contributions. The Revenue Procedure 
also requires that ``the correction method should restore both 
current and former participants to the benefit levels they 
would have had if the defect had not occurred.''
    In order to implement these principles, the bill requires 
agencies to make retroactive TSP contributions for affected 
employees based upon the average contribution rates of 
appropriate TSP contributors. Agency matching contributions and 
lost earnings based upon the average investment allocations of 
TSP participants are also required.

            III. Legislative Hearings and Committee Actions

    Rep. John L. Mica introduced H.R. 3249 on February 24, 1998 
after the Committee on Government Reform and Oversight's 
Subcommittee on Civil Service held a legislative hearing on the 
Chairman's mark. The bill as introduced reflected amendments to 
the Chairman's mark offered at that meeting by Mr. Cummings and 
Mrs. Morella. Mr. Cummings' amendment provided that amounts for 
which agencies would otherwise be liable under the bill would 
be paid from the CSRDF when employees are notified of the error 
before January 1, 2003. Mrs. Morella's amendment preserved any 
rights affected employees may have to recover other damages 
under the Federal Tort Claims Act. The bill was referred to the 
Committee on Government Reform and Oversight and, in addition, 
to the Committee on Ways and Means on February 24, 1998. On 
March 5, 1998 the Committee on Government Reform and Oversight 
considered the bill. Rep. Mica offered an amendment in the 
nature of a substitute, which was adopted by the Committee. The 
Committee ordered H.R. 3249, as amended, reported to the House.

              IV. Committee Hearings and Written Testimony

    In addition to the legislative hearing referred to in 
section II, the Subcommittee on Civil Service also held an 
oversight hearing on this problem on July 31, 1997. Several 
employees who had been victimized by agency retirement coverage 
errors testified at that hearing. They were: Alan White (Office 
of the Inspector General, Department of Defense), David Mangam 
(Army War College), Mr. John Gabrielli (Internal Revenue 
Service), and E. Barry Schrum (Department of Energy). Other 
witnesses were William E. Flynn, Associate Director, Retirement 
and Insurance Service, Office of Personnel Management; Sarah 
Hall Ingram, Associate Chief Counsel, Employee Benefits/Exempt 
Organizations, Internal Revenue Service; Diane Disney, Deputy 
Assistant Secretary (Civilian Personnel), Department of 
Defense; and Linda Oakey-Hemphill, Agency Retirement Counselor, 
Department of the Treasury.
    Mr. Alan White reported that he was hired by the Department 
of the Air Force as a criminal investigator in August 1984, and 
had remained in CSRS through his transfer to the Inspector 
General's office in the Department of Defense. The mistake in 
his retirement enrollment was detected when he requested an 
estimate of the cost of buying CSRS credit for his military 
service. His personnel office changed his retirement enrollment 
to FERS on February 28, 1996, retroactive to his entry on duty 
in 1984. He learned about the change by mail on a Saturday, 
when his leave and earnings statement reported a drop in his 
CSRS account from $51,000 to $103. His personnel office did not 
notify him of the change until April, and both his agency and 
OPM proved unresponsive in providing guidance. Mr. White read a 
statement from Mrs. Deborah Monroe, a GS-7 program assistant in 
the Chicago office of the Department of Housing and Urban 
Development who had been in the CSRS since August of 1983 and 
was involuntarily converted to FERS in 1995. She reported that 
both her agency and OPM told her that nothing could be done to 
correct her situation.
    Mr. David Mangam of the Army War College had completed a 
military career when he accepted an overseas limited 
appointment from the Department of Defense in 1983. In 1984, he 
gained a career-conditional appointment at the Army War 
College, and was enrolled in CSRS when hired. He indicated that 
he would not have accepted the position unless he was able to 
benefit from the coverage of the CSRS, because he was 
interested in converting his military service under that 
system. The agency changed his enrollment in November of 1996 
and OPM's review fully supported the agency's action. He 
reported that the complete transition between the systems would 
require 257 pay periods--or nearly 10 years. He estimated that 
the mistake would cost him $30,000 per year, assuming 
retirement after 35 years of service. He also reported 
suffering aggravation of a diabetic condition that his doctors 
associated with the stress of the transition.
    Mr. John Gabrielli of the Internal Revenue Service's 
Buffalo, NY, office reported that he began service as a 
temporary appointee and was converted to career-conditional 
status in September 1984, at which time he was enrolled in 
CSRS. He was provided an opportunity to enroll in FERS during 
1987, but rejected it. He and four other employees were 
notified of the enrollment error on April 13, 1993, and were 
adjusted to FERS coverage, effective in May of 1991. He 
reported that he still had not received notice of what credit 
he would receive for funds transferred from his CSRS account to 
his Social Security account, and whether he would receive a 
refund of any differences. He noted that the National Treasury 
Employees Union had assisted efforts to get appropriations 
language requiring OPM to address the issue, but that OPM had 
not provided a solution to date.
    Mr. E. Barry Schrum is a criminal investigator with the 
Department of Energy's Office of Inspector General. He was 
hired in December of 1984 and enrolled in the CSRS under law 
enforcement retirement provisions. He, too, had been provided 
opportunity to elect FERS coverage in 1987, but chose to remain 
in CSRS. The Department's OIG personnel office informed him of 
the mistaken enrollment in April of 1996 and notified that he 
would be retroactively changed to FERS enrollment. That change 
was made effective in a June 25, 1996 memorandum. He testified 
that he was informed at that time that he would be able to make 
retroactive contributions to the TSP, and that he would have to 
remain continuously employed in the Federal service for eight 
years to make up the back contributions to the TSP. He 
recommended legislation that would require the agencies that 
made the mistakes to make employees whole, and submitted a 
letter from the Department of Energy attorney which claimed 
that the Department lacks the authority to compensate employees 
for these errors under current law.
    Under questioning, all of the employee witnesses asserted 
that they had little support from their agencies and virtually 
none from OPM. Two of the witnesses are parties to litigation, 
filed July 28, 1997, after completing administrative review 
through their agencies and having an initial claim from Mr. 
White denied by the Merit Systems Protection Board. They 
reported extensive legal fees associated with the litigation 
and the administrative reviews. Mr. Gabrielli reported that he 
lacked the means to pursue resolution of his case through an 
attorney, and that he was assisted by his union.
    Mr. William E. Flynn of the Office of Personnel Management 
noted that the resolution of this problem would require actions 
of OPM, the Thrift Board, the Internal Revenue Service, the 
Social Security Administration, and the Treasury Department. He 
reported that these agencies are conducting discussions, but 
that they had not agreed on a solution to the problems 
associated with enrollment errors. He added that a 
comprehensive solution is desirable to address concerns of 
employees, former employees, annuitants, and survivors who have 
been affected by these concerns. Under questioning from Mr. 
Mica and Mr. Cummings, Mr. Flynn agreed to submit a proposal to 
resolve these problems to the Subcommittee no later than 
September 10, 1997. Mr. Flynn admitted that OPM had no idea of 
the number of individuals affected by these enrollment errors, 
and that he could not estimate the cost of correcting the 
errors throughout the Federal service.
    Ms. Sarah Hall Ingram of the Internal Revenue Service 
admitted that the range of legal and tax policy questions 
associated with correcting these errors in retirement coverage 
were complicated and unclear. The IRS administers and collects 
the FICA taxes paid to the Social Security system, and private 
employers are normally required to deposit these in a timely 
manner. Federal employers are subject to nearly identical 
requirements for payment of these taxes. Few of these 
procedures, however, are intended for situations where mistakes 
in calculating the tax obligation require correction years 
after the tax should have been paid. She also noted that the 
Internal Revenue Code restricts the amount that an employee can 
contribute to a tax-deferred retirement account, and that such 
limits might have to be amended as part of any resolution of 
these issues.
    Ms. Diane Disney reported that the Department of Defense 
had found as many as 3,100 employees of the approximately 
170,000 hired between 1984 and 1986 who might have been placed 
into wrong retirement systems. In reviewing those records, many 
of the CSRS classifications were correct because of previous 
Federal service, but she conceded that the Defense Finance and 
Accounting Service is in the process of correcting 500 
employees'' records. She noted the difficulties of correcting 
mistakes that are now more than 10 years old, and that some of 
the options essential to make employees whole are not 
authorized by current law.
    Ms. Linda Oakey-Hemphill of the Department of the Treasury 
described extensive interagency negotiations to attempt 
resolution of the issues, and reported that such concerns had 
been raised as early as 1987. She noted that the automated 
information available in personnel systems is not adequate to 
identify the enrollment errors, and does not provide adequate 
guidance for resolution of the cases. She reported that the 
Department of the Treasury had corrected as many as 600 cases 
since 1992, but could not estimate the number of additional 
errors that could remain in the system.
    The subcommittee also held a legislative hearing 
immediately before it marked up the Chairman's draft of H.R. 
3249. Witnesses at that hearing were William E. Flynn, 
Associate Director, Retirement and Insurance Service, Office of 
Personnel Management; Roger W. Mehle, Executive Director, 
Federal Retirement Thrift Investment Board; Thomas O'Rourke, 
Partner, Shaw, Bransford & O'Rourke, Washington, DC; and Daniel 
F. Geisler, President American Foreign Service Association.
    Mr. Flynn testified that the Administration strongly 
preferred legislation that it had prepared to deal with the 
problem of misclassified employees and urged the subcommittee 
to use that bill rather than the Chairman's mark as the basis 
for legislation. He contended that the Administration's bill 
represented the consensus of a number of agencies to resolve 
the myriad intricate and intertwined aspects of the problems 
created by agency errors. In his view, corrective legislation 
must meet four discrete objectives:
          (1) the remedy must demonstrate that the government 
        cares about Federal employees who have been harmed by 
        retirement coverage errors and is committed to an 
        equitable solution for these employees and their 
        families;
          (2) employees should have a choice between corrected 
        coverage and the benefit they expected to receive 
        without disturbing Social Security coverage laws;
          (3) the options provided to the employee should be 
        easy to understand; and
          (4) administrative aspects of the remedy should be 
        minimized to keep the solutions simple and timely.
He argued that the Administration's bill satisfies these 
criteria. Mr. Flynn also testified that there were 
``fundamental differences'' between the Administration's bill 
and thelanguage under consideration by the subcommittee. Under 
both approaches, he said, employees who were erroneously placed in CSRS 
or CSRS-Offset will have the option of retroactive placement in FERS, 
but only under the subcommittee's proposal would individuals electing 
FERS coverage be entitled to a substantial agency-funded payment to the 
TSP. He pointed out that misclassified employees may make retroactive 
contributions to the TSP and receive matching contributions and 
earnings.
    Mr. Flynn acknowledged that the subcommittee's proposal is 
based upon rules applicable to defined contribution plans in 
the private sector. However, he contended that private sector 
rules were inappropriate because Federal employees may 
participate in both defined contribution and defined benefit 
plans. He also argued that government make-up contributions to 
the TSP on behalf of individuals create ``intractable'' 
problems involving cost, equity, and complexity, while the 
Administration's plan provides adequate ``make whole'' relief 
by offering CSRS or CSRS-Offset coverage as alternatives to 
FERS. According to Mr. Flynn, this approach is satisfactory 
because employees ``will always receive at least as much as 
they believed they were going to get.'' In contrast, he 
contended that the subcommittee's approach would overcompensate 
some employees and under compensate others. Finally, Mr. Flynn 
also argued that the subcommittee's approach was unnecessarily 
complex, in part because it held agencies accountable for their 
errors rather than make payments from the retirement fund.
    Mr. Mehle presented the views of the Thrift Board and 
emphasized that the Thrift Board does not take a position on 
the appropriateness of benefit levels available under the 
retirement programs or the TSP. He also noted that the Thrift 
Board first addressed the problem of misclassified employees in 
1989 when it proposed legislation to permit agency payments of 
lost earnings employees suffered when agencies failed to permit 
timely employee contributions to the TSP. That proposal was 
enacted. However Congress did not then adopt the Thrift Board's 
suggestion that it allow misclassified employees to elect to 
remain in the CSRS, even though the Board recognized then that 
the procedures it recommended would not provide an adequate 
remedy in the case of a long-standing retirement coverage 
error. In his testimony, Mr. Mehle acknowledged that many 
employees may be disadvantaged by current rules that leave them 
responsible for making up lost employee contribution, either 
because they have only a relatively short period of active 
service before retiring or because they lack the financial 
resources to make themselves whole.
    Both the Administration and subcommittee proposals, Mr. 
Mehle noted, would allow affected employees to elect coverage 
under CSRS or CSRS-Offset and predicted that most would choose 
that option. He also noted that whereas the Administration's 
proposal would simply apply existing correction law, the 
subcommittee's approach would create a new system to deal with 
misclassification errors. However, he contended that the 
subcommittee's proposal might create unintended consequences 
and impose significant administrative burdens on the Thrift 
Board. The unintended consequences largely consisted of what he 
considered disparate treatment of affected employees. He also 
argued that because the corrective mechanism under the 
subcommittee proposal differed so substantially from current 
rules, the Thrift Board would not be able to use its existing 
software or computers to perform calculations and, 
consequently, would have to contract for that service. In 
addition, he argued that the Thrift Board would not have ready 
access to the information it would need to perform the tasks 
assigned to it under the subcommittee proposal.
    Mr. O'Rourke testified that he is an attorney in private 
practice who specializes in tax, pension, and estate issues. He 
is currently representing a number of Federal employees who 
were improperly placed in the CSRS and then involuntarily 
switched to FERS. He estimates that he has been contacted by 
approximately 50 such individuals. The losses these individuals 
suffer, he stated, result from the fact that FERS participants 
will receive significantly smaller annuities than their CSRS 
counterparts and have been denied the opportunity to 
intelligently plan for a FERS retirement by building up an 
adequate TSP balance. He also described the ``anguish and 
frustration'' these retirement coverage errors have caused the 
employees who have contacted him. Two of his clients have 
suffered heart attacks, one has had a nervous breakdown as a 
result of the stress created by this problem, and a number have 
described marital problems. They have found agency personnel 
sympathetic to their plight, but impotent to provide a 
satisfactory remedy under existing law.
    Mr. O'Rourke emphasized that legislation is necessary to 
resolve the problem of misclassified employees. After reviewing 
both the Administration's proposal and the subcommittee's, Mr. 
O'Rourke concluded that the subcommittee's approach was 
preferable. He believed that both proposals took positive steps 
to protect affected employees by allowing them to choose 
retirement coverage that provides essentially the same benefits 
they thought they would earn. However, he found the 
Administration's approach unfair to individuals who, after 
being notified of the retirement coverage error and removed 
from CSRS, have attempted to mitigate their losses. In his 
view, the Administration's draft would not make such 
individuals whole and would even punish them further by 
inflicting significant financial harm on them whichever option 
they chose. Employees who choose FERS coverage would lose 
forever the earnings on contributions they could have made 
during the period of erroneous coverage. Those who elect CSRS-
Offset would be exposed to additional income taxes and penalty 
taxes based upon distributions from their existing TSP 
accounts.
    In contrast, Mr. O'Rourke testified, the subcommittee's 
approach attempts to make individuals whole and would not 
expose them to additional tax burdens. He also contended that 
the subcommittee's proposal includes a ``reasonable and 
objective mechanism'' to provide make whole relief for those 
electing FERS coverage that prevents individuals from making 
TSP investment decisions based upon hindsight, yet relieves 
them of the financial burden of correcting an error they did 
not cause.
    Nevertheless, Mr. O'Rourke criticized the subcommittee's 
draft for requiring employees to make retroactive Social 
Security contributions. In the private sector, he pointed out, 
such costs would be borne by employers, and he believed the 
Federalgovernment should bear the same burden it imposes on 
other employers. He also faulted both proposals for not explicitly 
preserving employees' rights to relief under other statutes, such as 
the Federal Tort Claims Act and the Back Pay Act. This, he argued, is 
necessary to permit employers to compensate employees for all of the 
harm they have suffered as a result of these agency errors.
    Mr. Geisler testified on behalf of the American Foreign 
Service Association (AFSA). AFSA is a professional association 
for 23,000 active and retired foreign service officers and 
specialists, and it serves as the bargaining agent for foreign 
service personnel at the State Department, the Agency for 
International Development, the U.S. Information Service, the 
Commerce Department's Foreign Commercial Service, and the 
Department of Agriculture's Foreign Agricultural Service.
    In AFSA's view, employees who are victims of these agency 
errors should have real options, which requires make-whole 
relief of the kind provided in the subcommittee proposal. He 
illustrated this by citing the example of a foreign service 
officer who was erroneously placed in the Foreign Service 
Retirement and Disability System, which is analogous to CSRS, 
on January 1, 1987. This error was not discovered until August 
1997. Upon discovery, he was placed in the Foreign Service 
Pensions System (FSPS), which is similar to FERS. The agency 
credited the individual's TSP account with the automatic 1% 
agency contribution for the period of erroneous coverage, and 
will make retroactive contributions with the appropriate agency 
match. However, because the TSP is an integral part of the 
FSPS, the individual is now faced with the need to make up 10 
years worth of contributions. And even if he makes such 
contributions, he will lose the earnings he would have realized 
on those TSP contributions had they been made over the years. 
Mr. Geisler pointed out that employees who do not have much 
discretionary income cannot reasonably be expected to 
immediately contribute years of foregone employee 
contributions. Consequently, they would be left with inadequate 
retirement coverage.
    AFSA believes the make-whole relief in the subcommittee's 
proposal permits employees the opportunity to make real 
choices. Mr. Geisler believes the averaging methods proposed in 
the subcommittee's draft benefits those on the lower end of the 
pay scale more than higher-paid employees. Nevertheless, he 
found it a fair approach because it prevents the use of ``20/20 
hindsight'' by making retroactive investments without risk and 
it helps those lower-paid employees who need it most. Under the 
subcommittee's approach, Mr. Geisler believes individuals will 
be able to choose freely the retirement system that is best 
suited for them rather than being forced to remain in the older 
system simply because they cannot afford to make prohibitively 
high TSP contributions.

       V. Explanation of the Bill as Reported: Section-by-Section

               Section 1. Short Title; Table of Contents

    The short title of this Act is the Federal Retirement 
Coverage Corrections Act.

                         Section 2. Definitions

    This section defines key terms used in the Act.

                        Section 3. Applicability

    The Act applies to all retirement coverage errors that have 
not been corrected within one year, whether they occurred 
before or after its enactment. However, the Act does not affect 
any retirement coverage or treatment beginning before the first 
pay period after January 1, 1984.

         Section 4. Restriction Relating to Future Corrections

    This section provides that on or after the date of 
enactment, retirement coverage errors may be corrected only in 
accordance with this Act. It also provides that nothing in the 
Act affects the right of any individual to make an election 
under the Federal Employees' Retirement System Open Enrollment 
Act of 1997 (Public Law 105-61; 111 Stat. 1318). The Office of 
Personnel Management (OPM) shall prescribe regulations to apply 
this Act to any person who, other than under this Act, makes a 
voluntary election to change retirement coverage.

                 Section 5. Irrevocability of Elections

    Elections made (or deemed to have been made) under this Act 
are irrevocable.

 TITLE I--DESCRIPTION OF RETIREMENT COVERAGE ERRORS TO WHICH THIS ACT 
              APPLIES AND MEASURES FOR THEIR RECTIFICATION

 Subtitle A--Employees Who Should Have Been FERS Covered, But Who Was 
        Erroneously CSRS Covered or CSRS-Offset Covered Instead

                         Section 101. Elections

    This section describes the employees covered by subtitle A 
and the options available to them under this Act.
    Subsection (a). Applicability.--Subtitle A applies to 
employees who should have been covered by the Federal Employees 
Retirement System (FERS), but who were erroneously enrolled in 
either the Civil Service Retirement System (CSRS) or CSRS-
Offset instead.
    Subsection (b). Uncorrected Error.--If the retirement 
coverage error has not been corrected at the time the employee 
is to make an election under this section, the employee may 
elect to be enrolled in FERS or to remain (or be transferred 
to) CSRS-Offset.
    Subsection (c). Corrected Error.--If the retirement 
coverage error has been corrected at the time the employee is 
to make an election under this section, the employee may elect 
to be enrolled in CSRS-Offset or to remain in FERS.
    Subsection (d). Default Rule.--This subsection establishes 
a default rule for employees who do not make an election within 
6 months after receiving the noticerequired under section 201. 
Under this default rule, employees will be deemed to have elected to 
remain in the system (other than CSRS) they are in at the time when 
they should have made the election. This subsection also provides that 
employees who should have been covered by FERS may not elect to enroll 
or remain in CSRS rather than CSRS-Offset.
    Subsection (e). Retroactive Effect.--All elections under 
this section shall be retroactive to the date of the retirement 
coverage error.

Section 102. Effect Of An Election To Be Transferred From CSRS To FERS 
                 To Correct A Retirement Coverage Error

    This section describes the disposition of contributions to 
the Civil Service Retirement and Disability Fund (CSRDF), 
transfers to the Federal Old Age and Survivors Insurance Trust 
Fund and the Federal Disability Insurance Trust Fund, referred 
to collectively as the OASDI trust funds, and make-up 
contributions to the Thrift Savings Fund if an employee elects 
to be transferred from CSRS to FERS under section 101(a)(1).
    Subsection (b). Disposition of Contributions to the 
CSRDF.--Some or all of the employee and government 
contributions to the CSRDF shall be transferred to the OASDI 
trust funds.
    Subsection (b)(1). Employee Contributions.--The amount of 
employee contributions to the CSRDF transferred shall be equal 
to the lesser of (1) the amount of the OASDI employee tax that 
should have been withheld from the employee's Federal wages 
during the period of erroneous coverage or (2) the amount of 
the employee's lump-sum credit, as defined in 5 U.S.C. 
Sec. 8331(8), attributable to the period of erroneous coverage. 
(Under this definition, the lump-sum credit is equal to the 
unrefunded amount of the employee's retirement contributions 
and deposits and interest on those contributions and deposits.)
    If the appropriate portion of the employee's lump-sum 
credit exceeds the sum of the amount to be transferred plus the 
amount of FERS retirement contributions that should have been 
deducted under 5 U.S.C. Sec. 8422, the excess shall be refunded 
to the employee.
    If the appropriate portion of the employee's lump-sum 
credit is less than the sum of the amount required to be 
transferred and the amount of FERS retirement contributions 
that should have been deducted, the employing agency shall make 
up the shortfall to the OASDI trust funds and the CSRDF, as 
required.
    The Director of OPM, in concurrence with the Commissioner 
of Social Security, shall prescribe regulations governing 
agency make-up payments to the OASDI trust funds and the CSRDF.
    Subsection (b)(2). Government Contributions.--An amount 
equal to the amount of OASDI employer taxes that should have 
been withheld during the period of erroneous coverage shall be 
transferred from the CSRDF to the OASDI trust funds. If the 
total amount of government contributions to the CSRDF for the 
period of erroneous coverage exceeds the sum of the amount to 
be transferred and the amount the government should have 
contributed to FERS under 5 U.S.C. Sec. 8423 during the period 
of erroneous coverage, the excess shall be transferred to the 
agency then employing the individual. If government 
contributions for the period of erroneous coverage are less 
than this sum, the agency then employing the individual shall 
make up the difference. The Director of OPM, in concurrence 
with the Commissioner of Social Security, shall prescribe 
regulations governing agency make-up payments to the OASDI 
trust funds and the CSRDF.
    Subsection (c). Make-up Contributions To The Thrift Savings 
Fund.--This subsection provides that the employing agency shall 
make a lump sum contribution to the Thrift Savings Fund to 
compensate affected employees for lost opportunities to invest 
in the Thrift Savings Plan (TSP). The lump sum contribution 
shall make up for employee contributions foregone because of an 
agency's mistake, lost agency automatic 1% contributions, lost 
agency matching contributions (based upon both the make-up 
contribution described in subsection (c)(2) and any TSP 
contributions the employee actually made), and lost earnings on 
the total investment.
    Subsection (c)(2). Amount Based On Average Percentage Of 
Pay Contributed By Employees During Period Of Erroneous 
Coverage.--This subsection establishes rules for calculating 
the amount of the contribution to make up for employee 
contributions foregone. The amount contributed for each 
calendar year during the period of erroneous coverage shall 
equal the average percentage contributed by full-time FERS 
covered employees who contributed to the Thrift Savings Fund in 
that year. (If the average contribution rate is not available 
for a particular year, the average for the most recent prior 
year shall be used.) However, the amount of the make-up 
contribution for a year plus any amounts actually contributed 
by the employee during that year may not exceed any ceiling 
established by title 5 of the United States Code or the 
Internal Revenue Code of 1986.
    Subsection (c)(3). Lost Earnings.--Under this subsection, 
lost earnings are to be calculated as if all employee and 
agency contributions made up had been timely made and allocated 
among the TSP investment funds in accordance with the following 
rules. First, for periods in which the employee actually made 
contributions to the TSP, the contributions made up shall be 
allocated in accordance with the employee's own investment fund 
election during that period. And second, if the employee did 
not make any contributions to the TSP during a period, the 
contributions made up shall be allocated in accordance with the 
average percentage allocation of all TSP contributions among 
the TSP funds in effect during that year. (If an average 
allocation for a year is not available, the allocation for the 
most recent prior year shall be used.)
    Subsection (c)(4). Make-up Contribution To Be Made In A 
Lump Sum.--This subsection requires that the employing agency 
shall promptly pay the make-up contribution in one lump sum. 
Under regulations prescribed by the Thrift Board, agencies must 
provide the Thrift Board with the amounts on which lost 
earnings are to be calculated. The Thrift Board will perform 
the calculation and promptly notify the agency of the amount 
owed.
    Subsection (c)(5). Justices and Judges; Magistrates; Etc.--
This subsection provides that Justices, Judges, and other 
employees who become subject to section 8440a, 8440b, 8440c, or 
8440d of title 5, United States Code, shall not be entitled to 
a make-up contribution.
    Subsection (c)(6). Regulations.--The Executive Director of 
the Thrift Board shall prescribe regulations necessary to carry 
out this subsection.

 Section 103. Effect Of An Election To Be Transferred From CSRS-Offset 
             To FERS To Correct A Retirement Coverage Error

    This section applies when an employee who should have been 
enrolled in FERS but was mistakenly enrolled in CSRS-Offset 
elects to become FERS covered. In such a case, contributions to 
the CSRDF shall be disposed of in accordance with section 
102(b), disregarding the provision relating to transfers to the 
OASDI trust funds. Make-up contributions to the Thrift Savings 
Fund shall be made in accordance with section 102(c).

Section 104. Effect Of An Election To Be Transferred From CSRS To CSRS-
             Offset To Correct A Retirement Coverage Error

    This section applies when an employee who should have been 
enrolled in FERS but was mistakenly enrolled in CSRS elects to 
become CSRS-Offset covered. The effect of such an election 
shall be as described in section 101(b)(2), except that section 
102(b) shall also apply. In applying section 102(b), the 
provisions of 5 U.S.C. Sec. 8334(k) establishing employee and 
agency contributions under CSRS-Offset shall be substituted for 
sections 8422 and 8423, which, respectively, define employee 
and agency contributions to FERS.

 Section 105. Effect Of An Election To Be Restored (Or Transferred) To 
CSRS-Offset After Having Been Transferred To FERS From CSRS-Offset (Or 
                                 CSRS)

    This section applies when an employee who should have been 
enrolled in FERS, but was mistakenly enrolled in CSRS or CSRS-
Offset, elects to become CSRS-Offset covered after having been 
corrected to FERS. The provisions of section 102(b) shall 
govern the disposition of CSRDF contributions, with the 
following modifications: The agency and employee shall receive 
a credit for OASDI employer and employee taxes already paid. In 
determining amounts owed, the contribution rates for CSRS-
Offset shall be used rather than the FERS contribution rates, 
and the FERS lump-sum credit defined in section 5 U.S.C. 
Sec. 8401 shall be used rather than the CSRS lump-sum credit. 
In addition, calculations shall be based upon the period 
beginning with the date of the retirement coverage error and 
ending on the day before the election under this section is 
effective.
    Government contributions to the TSP and earnings on those 
contributions shall be forfeited and retained in the Thrift 
Savings Fund to defray expenses of administering the TSP. 
Employees will be permitted to retain their individual TSP 
contributions and associated earnings in their TSP account, 
even if those contributions exceeded the applicable limit for 
CSRS and CSRS-Offset employees.

  Subtitle B--Employee Who Should Have Been FERS Covered, CSRS-Offset 
Covered, or CSRS Covered, But Who Was Erroneously Social Security-Only 
                                Covered

                         Section 111. Elections

    This section applies to an employee who should have been 
enrolled in one of the Federal employee retirement programs but 
who was erroneously covered only by Social Security. If the 
error has not been corrected at the time of the election, an 
employee may elect to be covered by the retirement system the 
employee should have been in originally. Employees may also 
choose to remain covered only by Social Security. An employee 
who does not make an election within the required time shall be 
deemed to have elected to remain covered only by Social 
Security. Elections shall be retroactive to the date of the 
retirement coverage error.
    Within 6 months after this Act is enacted, OPM, the 
Commissioner of Social Security, and the Executive Director of 
the Thrift Board shall submit a legislative proposal to provide 
employees whose retirement errors have been corrected under 
terms less advantageous than are provided in this Act with the 
opportunity to receive equivalent relief.

 Section 112. Effect Of An Election To Become FERS Covered To Correct 
                     The Retirement Coverage Error

    This section applies to an employee who should have been 
FERS covered and elects to become covered by FERS as well as 
Social Security. In such cases, the employing agency must pay 
the full amount of employee and government contributions to 
FERS that would have been required under 5 U.S.C. 
Sec. Sec. 8422 and 8423. Make-up contributions to the TSP shall 
be governed by section 102(c) of this Act.

  Section 113. Effect Of An Election To Become CSRS-Offset Covered To 
                      Correct The Retirement Error

    This section applies to an employee who should have been 
CSRS-Offset covered and elects to become covered by CSRS-Offset 
as well as Social Security. In such cases, the employing agency 
must pay the full amount of employee and government 
contributions required under subchapter III of chapter 83 of 
title 5, United States Code that would have been required 
during the period of erroneous coverage had the employee been 
CSRS-Offset covered. Make-up contributions to the TSP shall, 
with the following exceptions, be governed by section 102(c) of 
this Act. The employee shall not be entitled to any 
contributions to make up for agency contributions or earnings 
thereon and make-up contributions shall be subject to the 5% 
ceiling established 5 U.S.C. Sec. 8351(b).

 Section 114. Effect Of An Election to Become CSRS Covered To Correct 
                     The Retirement Coverage Error

    This section applies when an employee who should have been 
CSRS covered elects to become CSRS covered to correct the 
retirement coverage error. The employing agency is required to 
make a lump sum payment to the CSRDF equal to the employee and 
government contributions that should have been made for the 
period of erroneous coverage under 5 U.S.C. Sec. 8334. However, 
the agency is entitled to be reimbursed for the amount of 
employee OASDI taxes refundable to the employee (up to the 
amount of employee CSRDF contributions made on the employee's 
behalf). If the employee does not reimburse the agency as 
required by this section, the agency may collect the amount due 
by setoff against accrued pay, compensation, amount of 
retirement credit, or any other amount due the employee from 
the government. The agency may also collect the debt by any 
other method provided by law for recovering amounts owing to 
the government.
    The agency shall also make retroactive contributions to the 
TSP in accordance with section 113.

Subtitle C--Employee Who Should Have Been Social Security-Only Covered, 
  But Who Was Erroneously FERS Covered, CSRS-Offset Covered, or CSRS 
                            Covered Instead

Section 121. Uncorrected Error: Employee Who Should Be Social Security-
       Only Covered, But Who is Erroneously FERS Covered Instead

    This section applies to an employee who should have been 
covered only by Social Security but was erroneously covered by 
FERS as well. An employee who has not vested in FERS shall be 
automatically excluded from FERS. The employee shall receive 
from the CSRDF the lump-sum credit to which the employee would 
be entitled under 5 U.S.C. Sec. 8424 for the period of 
erroneous coverage. Employer contributions made under section 
8423 during the period of erroneous coverage shall be paid from 
the CSRDF to the employing agency. Government contributions to 
the Thrift Savings Fund and associated earnings shall be 
forfeited, but employees may retain their own contributions and 
earnings on such contributions in their TSP account.

Section 122. Uncorrected Error: Employee Who Should Be Social Security-
    Only Covered, But Who Is Erroneously CSRS-Offset Covered Instead

    This section applies to an employee who should have been 
covered only by Social Security but was erroneously covered by 
CSRS-Offset as well. An employee who has not vested in CSRS-
Offset shall be automatically excluded from CSRS-Offset. The 
employee shall receive from the CSRDF the lump-sum credit to 
which the employee would be entitled under 5 U.S.C. Sec. 8342 
for the period of erroneous coverage. Employer contributions 
made under section 8334 during the period of erroneous coverage 
shall be paid from the CSRDF to the employing agency. Employees 
may retain their own contributions and earnings on such 
contributions in their TSP account.

Section 123. Uncorrected Error: Employee Who Should Be Social Security-
       Only Covered, But Who Is Erroneously CSRS Covered Instead

    This section applies to an employee who should have been 
covered only by Social Security but was erroneously covered by 
CSRS instead. An employee who has not vested in CSRS shall be 
automatically excluded from CSRS. Employee and government 
contributions to the CSRDF shall be disposed of in accordance 
with section 102(b), disregarding certain specified provisions 
of that section. Employees may retain their own contributions 
and earnings on such contributions in their TSP account.

    Section 124. Corrected Error: Situations Under Sections 121-123

    Within 6 months of the date of enactment of this Act, the 
Director of OPM, the Commissioner of Social Security, and the 
Executive Director of the Thrift Board shall submit a 
legislative proposal to provide relief equivalent to that 
available under this Act to any employee who was affected by a 
retirement described in sections 121 through 123 that has 
already been corrected.

    Section 125. Vested Employees Excepted From Automatic Exclusion

    Employees who have vested in FERS, CSRS-Offset, or CSRS as 
of the date on which the notice of a retirement coverage error 
is given shall not be automatically excluded from such systems. 
An employee has vested when the employee has completed at least 
5 years of civilian service creditable under 5 U.S.C. 
Sec. Sec. 8332 or 8411.
    An employee who was erroneously FERS covered may elect to 
be covered only by Social Security or to remain FERS covered. 
An employee who was erroneously CSRS-Offset or CSRS covered may 
elect to be covered only by Social Security or to remain (or 
become) CSRS-Offset covered. The effect of an election to 
become CSRS-Offset covered after having been in CSRS shall be 
the same as in section 104. If the employee does not make any 
election within the required 6-month period, the employee shall 
be deemed to have elected to remain FERS covered or to remain 
(or become) CSRS-Offset covered, as applicable. All elections 
under this section shall be retroactive to the date of the 
retirement coverage error.
    Special rules apply to an employee who is receiving 
disability retirement under chapters 83 or 84 of title 5, 
United States Code or workers' compensation under subchapter I 
of chapter 81, of title 5, United States Code on the date of 
the notice of erroneous coverage. Such employees shall not be 
excluded from a retirement program if the have vested as of the 
date their annuity or compensation terminates.
    Notices required under section 201 of this Act shall 
include such additional information or other modifications as 
OPM may prescribe by regulation in connection with situations 
under this subtitle.

 Subtitle D--Employee Who Should Have Been CSRS Covered or CSRS-Offset 
         Covered, But Who Was Erroneously FERS Covered Instead

                         Section 131. Elections

    This section applies to an employee who should have been 
enrolled in either the CSRS or CSRS-Offset retirement system, 
but who was instead erroneously placed under the FERS system. 
If the error has not been corrected prior to the date of 
enactment of this Act, the employee may choose to be covered by 
the CSRS or CSRS-Offset systems, as appropriate, or to remain 
in FERS. When the error has been corrected, the employee may 
elect to become FERS covered or to remain in CSRS or CSRS-
Offset. If the employee does not make an election within the 
time required, the status quo will be maintained. Elections are 
retroactive to the date of the retirement coverage error.

Section 132. Effect of An Election To Be Transferred From FERS To CSRS 
                 To Correct A Retirement Coverage Error

    This section applies when an employee who should have been 
in the CSRS system elects to be transferred from FERS to CSRS 
to correct the retirement coverage error. The employing agency 
shall make a lump sum payment to the CSRDF. That lump sum shall 
equal the amount by which the difference between the amount of 
the employee CSRS contributions required and employee FERS 
contributions actually made exceeds the difference between the 
amount of the agency's actual contributions under FERS and the 
amount of contributions that should have been made for the 
period of erroneous coverage.
    The agency is entitled to be reimbursed for the amount of 
employee OASDI taxes refundable to the employee (up to the 
amount described in the preceding sentence). If the employee 
does not reimburse the agency as required by this section, the 
agency may collect the amount due by setoff against accrued 
pay, compensation, amount of retirement credit, or any other 
amount due the employee from the government. The agency may 
also collect the debt by any other method provided by law for 
recovering amounts owing to the government.
    Excess TSP contributions shall be disposed of in accordance 
with section 105(c).

Section 133. Effect Of An Election To Be Transferred From FERS To CSRS-
             Offset To Correct A Retirement Coverage Error

    This section applies when an employee who should have been 
in the CSRS-Offset system elects to be transferred from FERS to 
CSRS-Offset to correct the retirement coverage error. The 
effect of this election is substantially similar to the effect 
of an election under section 105.

Section 134. Effect Of An Election To Be Restored To FERS After Having 
                         Been Corrected to CSRS

    This section applies when an employee who should have been 
in the CSRS system, but was wrongly placed in FERS, elects to 
be restored to FERS after having been previously corrected to 
CSRS. The effect of this election is substantially the same as 
that described in section 102.

Section 135. Effect Of An Election To Be Restored To FERS After Having 
                     Been Corrected To CSRS-Offset

    This section applies when an employee who should have been 
in the CSRS-Offset system, but was wrongly placed in FERS, 
elects to be restored to FERS after having been previously 
corrected to CSRS-Offset. The effect of this election is 
substantially similar to the effect of an election under 
section 103.

   Section 136. Disqualification Of Certain Individuals To Whom Same 
                   Election Was Previously Available

    An employee who previously had an opportunity to make an 
election under 5 C.F.R. Sec. 846.204 (1997) shall not be 
permitted to make an election under this subtitle.

Subtitle E--Employee Who Should Have Been CSRS-Offset Covered, But Who 
                  Was Erroneously CSRS Covered Instead

             Section 141. Automatic Transfer To CSRS-Offset

    This section applies when an employee who should have been 
in the CSRS-Offset was erroneously placed in CSRS instead. If 
the error has not been corrected, the employee shall be 
automatically transferred to CSRS-Offset retroactive to the 
date of the retirement coverage error. If the error has already 
been corrected, the correction shall be made retroactive to the 
date of the retirement coverage error.

                    Section 142. Effect Of Transfer

    Under regulations prescribed by OPM, the effect of this 
transfer shall be consistent with section 104.

  Subtitle F--Employee Who Should Have Been CSRS Covered, But Who Was 
                Erroneously CSRS-Offset Covered Instead

                         Section 151. Elections

    This section applies when an employee who should have been 
in CSRS was erroneously placed in CSRS-Offset instead. The 
employee will be entitled to elect to transfer to CSRS or to 
remain in CSRS-Offset. If the employee does not make an 
election under this section, the status quo shall be 
maintained.

 Section 152. Effect Of An Election To Be Transferred From CSRS-Offset 
            To CSRS To Correct The Retirement Coverage Error

    This section applies when an employee who should have been 
in CSRS elects to become (or remain) CSRS covered. The agency 
shall pay to the CSRDF a lump sum equal to the amount by which 
employee CSRS contributions that should have been withheld 
exceed any nonrefunded amounts actually deducted from the 
employee under CSRS-Offset.
    The agency is entitled to be reimbursed for the amount of 
employee OASDI taxes refundable to the employee (up to the 
amount described in the preceding sentence). If the employee 
does not reimburse the agency as required by this section, the 
agency may collect the amount due by setoff against accrued 
pay, compensation, amount of retirement credit, or any other 
amount due the employee from the government. The agency may 
also collect the debt by any other method provided by law for 
recovering amounts owing to the government.

   Subtitle G--Additional Provisions Relating To Government Agencies

  Section 161. Repayment Of Amounts Previously Paid By The Government

    Employees who received a payment from the government 
pursuant to a court award or settlement agreement relating to a 
retirement coverage error must repay any part of that payment 
that is not waived by OPM.

   Section 162. Equitable Sharing Of Amounts Payable To Or From The 
              Government If More Than One Agency Involved

    When an employee has been employed by more than one agency 
since the date of the retirement coverage error, amounts 
required to be paid or received by the current employing agency 
(other than lost earnings on TSP accounts) under this Act shall 
be apportioned equitably among such agencies under regulations 
prescribed by OPM.

  Section 163. Provisions Relating To The Original Responsible Agency

    The agency originally responsible for the retirement 
coverage error will be required to pay (or reimburse) employees 
for reasonable expenses they incur for financial and legal 
advice in connection with an election under this Act and to pay 
lost earnings on TSP accounts.
    The original responsible agency is the agency determined by 
OPM to have made the original retirement coverage error or, 
when the error is attributable to an erroneous OPM regulation, 
OPM itself. If the original responsible agency no longer 
exists, its successor, as determined by OPM, will be the 
original responsible agency. If there is no successor agency, 
payments required from or to the responsible agency shall be 
paid to or from the CSRDF. Likewise, payments shall be made 
from the CSRDF when OPM is the original responsible agency 
because the error was based on an erroneous regulation it 
issued.

                      TITLE II--GENERAL PROVISIONS

       Section 201. Identification And Notification Requirements

    Under regulations prescribed by OPM, individuals affected 
by a retirement coverage error described in this Act shall be 
notified of their rights under this Act. The notice shall 
include all information required to allow the employee to make 
an informed decision. Errors existing on the effective date of 
the regulations prescribed under this Act are to be corrected 
by December 31, 2001.

                 Section 202. Individual Appeal Rights

    An individual aggrieved by a final determination under this 
Act shall be entitled to appeal to the Merit Systems Protection 
Board under 5 U.S.C. Sec. 7701. Under regulations prescribed by 
OPM, individuals may appeal the failure to receive proper 
notice under section 201 to OPM.

  Section 203. Information To Be Furnished By Government Agencies To 
                   Authorities Administering This Act

    Agencies are required to provide The Director of OPM, the 
Commissioner of Social Security, and the Executive Director of 
the Thrift Board any information they need to carry out their 
responsibilities under this Act.

                  Section 204. Social Security Records

    The Commissioner of Social Security shall modify the wage 
records of employees affected by retirement coverage errors 
described in this Act to the extent necessary to carry out the 
purposes of this Act or the Social Security Act.

Section 205. Conforming Amendments Respecting Social Security Coverage 
                            and OASDI Taxes

    This section amends section 210(a)(5)(H) of the Social 
Security Act and section 3121(b)(5)(H) of the Internal Revenue 
Code of 1986 to permit Social Security payments to CSRS-
eligible individuals who elect coverage under FERS, CSRS-
Offset, or to be covered only by Social Security. Current law 
excludes CSRS-eligibles from the Social Security program.

                        Section 206. Regulations

    The Director of OPM, the Executive Director of the Thrift 
Board, the Commissioner of Social Security, and the Secretary 
of the Treasury shall issue such regulations within their 
respective jurisdictions as are necessary to implement this 
Act. These regulations shall permit OPM to collect any amounts 
an individual must pay in order to make an election under this 
Act through actuarially reduced annuities. Such regulations 
shall take effect on the first day of the first month beginning 
more than 6 months after the date of enactment of this Act.
    Regulations prescribed by OPM shall provide former 
employees, annuitants, and survivor annuitants with appropriate 
elections to correct retirement coverage errors affecting them.
    OPM shall consult with the Administrative Office of the 
United States Courts, the Clerk of the House of 
Representatives, the Sergeant at Arms and Doorkeeper of the 
Senate, and other appropriate officials in prescribing 
regulations under this Act.

            Section 207. All Elections To Be Approved By OPM

    To ensure compliance with this Act, OPM must approve in 
writing all elections (other than default elections) under this 
Act.

Section 208. Additional Transfers To OASDI Trust Funds In Certain Cases

    The Commissioner of Social Security shall notify the 
Secretary of the Treasury if the payments of OASDI taxes under 
this Act are not credited to the OASDI trust funds. Upon 
notification, the Secretary of the Treasury shall transfer an 
amount equal to the taxes from the general fund of the Treasury 
to the OASDI trust funds.

            Section 209. Technical And Conforming Amendments

    This section makes technical and conforming amendments to 
sections 8347 and 8348.

                      TITLE III--OTHER PROVISIONS

Section 301. Provisions To Permit Continued Conformity Of Other Federal 
                           Retirement Systems

    This section requires that elections similar to those in 
this Act be provided to individuals covered by retirement 
systems for the Foreign Service and the CIA.

 Section 302. Government Contributions Payable Out Of The General Fund 
                        Of The Treasury or CSRDF

    If the Director of the Office of Management and Budget 
determines that an executive agency's ability to accomplish its 
mission would be substantially impaired by making any payment 
required under this Act, the payment may be made from the 
general fund of the Treasury. A substantial impairment may 
include a reduction in force caused solely by payments required 
under this Act. These rules will not apply to the General 
Accounting Office or to any payments required to correct an 
error of which the employee was not notified before January 1, 
2002. Any additional unfunded liability in the CSRDF created by 
this Act will be amortized over 30 years.

   Section 303. Individual Right Of Action Preserved For Amounts Not 
                 Otherwise Provided For Under This Act

    This section preserves any right of action an individual 
may have under the Federal Tort Claims Act for damages not 
provided in this Act.

Section 304. Extension Of Open Enrollment Period To Employees Under The 
            Foreign Service Retirement And Disability System

    This section amends section 860 of the Foreign Service Act 
of 1980 (22 U.S.C. Sec. 4071i) to provide employees covered by 
the Foreign Service Retirement and Disability System with an 
election to switch to the Foreign Service Pension System. This 
election is comparable to the one provided most other civil 
servants by the Federal Employees' Retirement System Open 
Enrollment Act of 1997.

                        TITLE IV--TAX PROVISIONS

                      Section 401. Tax Provisions

Present law

    Under present law, most civilian employees generally 
participate in one of three retirement plans: CSRS, CSRS-
Offset, FERS. There are also equivalent plans covering the 
Foreign Service and the Central Intelligence Agency. Other 
Federal employees, primarily temporary workers, are covered 
only by Social Security. Participants in CSRS, CSRS-Offset, and 
FERS may participate in the TSP, which is a qualified cash or 
deferred arrangement under section 401(k) of the Internal 
Revenue Code of 1986. The retirement plan in which any person 
participates depends on several factors, including the 
individual's employment status, date of hire, and dates of 
Federal service. The rules governing participation in the TSP 
vary depending upon the Federal retirement plan (i.e., CSRS, 
CSRS-Offset, or FERS) under which the individual is covered. 
The Federal retirement plans are generally subject to the same 
rules applicable to tax-qualified retirement plans maintained 
by private-sector employers. These rules include limits on the 
amount of elective deferrals that may be made on behalf of an 
employee in a tax yearunder a 401(k) plan, such as the TSP, and 
an overall limitation on contributions and benefits that may be 
provided to an employee under the plan.
    The limit on the amount of elective deferrals that an 
employee may make to a 401(k) plan for 1998 is $10,000. The 
overall limit on contributions and benefits for an employee for 
a year is different for defined benefit plans and defined 
contribution plans. The limitation for an annual benefit under 
a defined benefit plan is the lesser of (1) $130,000 (for 
1998), or (2) 100 percent of the participant's average 
compensation for his high three years. The limitation for 
annual contributions and other additions under a defined 
contribution plan is the lesser of (1) $30,000, or (2) 25 
percent of the participant's compensation.
    Distributions from Federal retirement plans are subject to 
the same distribution rules that apply to qualified retirement 
plans. In general, distributions from such plans are taxable to 
the individual (unless the amount distributed is attributable 
to after-tax contributions) and a 10-percent early withdrawal 
penalty may apply unless the distribution qualified for an 
exception.

Tax-related provisions of the Act

    To effectuate the corrections the bill provides for: (1) 
make-up contributions to the plan by the employing agency 
(including contributions to the TSP in lieu of elective 
deferrals the employee would have been eligible to make had the 
employee been properly enrolled); (2) return of after-tax 
employee contributions to CSRS or CSRS-Offset (plus earnings 
thereon); (3) intra-fund or intra-governmental transfer of 
funds; and (4) certain make-up contributions by the employing 
agency for social security taxes. Employees who were mistakenly 
permitted to contribute to the TSP will be able to maintain 
their elective deferrals (plus earnings) in the TSP subject to 
the rules generally applicable to such plan. In some cases, 
employees may forfeit benefits accrued (e.g., matching 
contributions made to an individual mistakenly enrolled in 
FERS). The tax implications of these provisions are addressed 
in section 401.
    Subsection (a) provides that Federal retirement plans will 
not fail to be treated as qualified plans under the Internal 
Revenue Code of 1986 by reason of any action taken pursuant to 
the bill. Thus, for example, the bill permits an employing 
agency to make up contributions on behalf of an employee who 
was entitled to such contributions in prior years without 
violating the applicable overall contribution and benefit 
limitations (section 415) for the year in which the make-up 
contribution is made.
    Subsection (b) provides that no amount is includible in 
income of any individual by reason of any transfer between 
government funds or any government contribution.
    Subsection (c) provides that an individual who receives a 
distribution of after-tax employee contributions (plus 
earnings) pursuant to the bill would be required to include the 
earnings in income (as under present law) but would not be 
subject to the 10-percent early withdrawal tax on those 
amounts. Such amounts could not be rolled over into an 
individual retirement arrangement (IRA) or other tax-qualified 
plan.

Effective Date

    The revenue provisions of the bill are effective on the 
date of enactment.

                      VI. Compliance With Rule XI

    Pursuant to rule XI, clause 2(l)(3)(A) 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 Congressional Budget Office.

         VIII. Cost Estimate of the Congressional Budget Office

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 31, 1998.
Hon. Dan Burton,
Chairman, Committee on Government Reform and Oversight, House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3249, the Federal 
Retirement Coverage Corrections Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Eric Rollins.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.R. 3249--Federal Retirement Coverage Corrections Act

    Summary: H.R. 3249 would alter the procedures for 
correcting situations where federal employees have been 
mistakenly placed in the wrong retirement system. Many of these 
retirement coverage errors occurred between 1984, when the 
Civil Service Retirement System (CSRS) was closed to new 
entrants, and 1987, when the Federal Employees' Retirement 
System (FERS) was created. The bill would also direct the 
Secretary of State to provide Foreign Service employees with an 
open season similar to the one scheduled to take place for 
regular federal employees.
    CBO estimates that federal agencies would bear 
discretionary costs totaling $121 million over the 1998-2003 
period, primarily because the bill would also increase the size 
of makeup contributions to the Thrift Savings Plan (TSP). The 
bill would also increase direct spending by $152 million and be 
subject to pay-as-you-go procedures. This additional direct 
spending largely reflects makeup contributions to the TSP and 
agencies' spending of refunded contributions for misplaced 
employees who would be allowed to switch their retirement 
coverage from FERS to the CSRS Offset Plan. The bill would not 
have a significant impact on federal retirement benefits during 
the next several years because affected employees are generally 
still in the middle of their careers.
    Because the District of Columbia and Gallaudet University 
would be required to correct instances where employees have 
been mistakenly enrolled in the wrong retirement system, H.R. 
3249 contains both an intergovernmental and a private-sector 
mandate as defined by the Unfunded Mandates Reform Act of 1995 
(UMRA). However, CBO estimates that the cost of these mandates 
would be minimal.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 3249 is shown in the following table.

                                                        [By fiscal year, in millions of dollars]                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   1998    1999    2000    2001    2002    2003    2004    2005    2006    2007    2008 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            SPENDING SUBJECT TO APPROPRIATION                                                           
                                                                                                                                                        
Budget Authority................................................      -5       2      17      22      54      31       3     -11     -16     -22     -28
Outlays.........................................................      -5       2      17      22      54      31       3     -11     -16     -22     -28
                                                                                                                                                        
                                                               CHANGES IN DIRECT SPENDING                                                               
                                                                                                                                                        
On-budget:                                                                                                                                              
    Budget authority............................................       3      57     166     154      54      33      16      17      22      28      34
    Outlays.....................................................       3      56     163     155      56      33      16      17      22      28      34
Off-budget:                                                                                                                                             
    Budget authority............................................       2     -27     -87     -86     -57     -35     -14      -7      -5      -4      -2
    Outlays.....................................................       2     -27     -87     -86     -57     -35     -14      -7      -5      -4      -2
Total:                                                                                                                                                  
    Budget authority............................................       5      30      79      68      -3      -2       2      10      17      24      32
    Outlays.....................................................       5      29      76      69      -1      -2       2      10      17      24      32
                                                                                                                                                        
                                                                   CHANGES IN REVENUES                                                                  
                                                                                                                                                        
On-budget.......................................................       0      -1      -1       0       1       0       0       0      -1      -1      -1
Off-budget......................................................       0       1       2       5       8       9       9       8       6       4       2
      Total.....................................................       0       0       1       5       9       9       9       8       5       3       1
                                                                                                                                                        
                                                                       TOTAL COST                                                                       
                                                                                                                                                        
Direct spending and revenues....................................       5      29      75      64     -10     -11      -7       2      12      21      31
All spending and revenues.......................................       0      31      92      86      44      20      -4      -9      -4      -1       3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Components may not sum to totals because of funding.                                                                                             

    The mandatory costs of this legislation fall within budget 
functions 600 (Income Security), 650 (Social Security), and 950 
(Undistributed Offsetting Receipts). Additional costs to 
employing agencies are discretionary and are funded through 
appropriations throughout the budget.

Basis of estimate

            Title I
    H.R. 3249 lays out procedures for correcting a wide variety 
of retirement coverage errors. CBO estimates that the 
provisions of Title I would impose discretionary costs on 
agencies totaling $99 million between 1998 and 2003. In 
addition, the bill would increase on-budget direct spending by 
$476 million over the same period. Off-budget direct spending 
would decrease by $285 million, for a net increase in direct 
spending of $191 million. This increase in direct spending is 
partly offset by an increase of $25 million in revenues. These 
estimates assume that the Postal Service would increase postal 
rates to fully offset any costs related to the bill. The 
estimated budgetary impact of Title I is shown in the following 
table.

                                                     [By fiscal year, outlays in million of dollars]                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         1998     1999     2000     2001     2002     2003     2004     2005     2006     2007     2008 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                        
                                                            SPENDING SUBJECT TO APPROPRIATION                                                           
Makeup contributions to TSP..........................       -2        2        6        7       38       24        3       -5       -6       -7       -7
Makeup payment of Social Security contributions......       -1       -4       -4       -4       -4       -5       -5       -5       -5       -5       -6
Makeup payment of retirement contributions...........       -2        0       10       10        6       -1       -7       -9      -10      -10      -11
Agency retirement contributions......................        0       -1        0        3        5        3        2        0       -2       -5       -7
Employer Social Security contributions...............        0        0        1        3        5        5        5        5        3        2        1
                                                      --------------------------------------------------------------------------------------------------
      Total..........................................       -5       -2       13       18       49       26       -2      -15      -20      -25      -30
                                                                                                                                                        
                                                               CHANGES IN DIRECT SPENDING                                                               
On-Budget:                                                                                                                                              
    Makeup contributions to TSP......................        0       19       56       61       11        0        0        0        0        0        0
    Makeup payment of retirement contributions.......        3       -1      -14      -15       -8        2       10       13       14       16       17
    Agency retirement contributions..................        0        1        0       -4       -7       -4       -3        0        3        7       11
    Transfers from CSRDF to Social Security..........        0       32       91       87       55       33       13        7        7        8        9
    Spending of refunds..............................        0        6       32       28        7        4        0       -1       -1       -1       -1
                                                      --------------------------------------------------------------------------------------------------
      Subtotal.......................................        3       58      165      157       58       35       19       19       24       29       35
Off-Budget:                                                                                                                                             
Makeup payment of Social Security contributions......        2        6        6        6        7        7        7        7        8        8        8
Employer Social Security contributions...............        0        0       -1       -4       -7       -8       -8       -7       -5       -3       -1
Transfers from CSRDF to Social Security..............        0      -32      -91      -87      -55      -33      -13       -7       -7       -8       -9
                                                      --------------------------------------------------------------------------------------------------
      Subtotal.......................................        2      -26      -86      -85      -56      -34      -13       -6       -4       -3       -1
                                                      --------------------------------------------------------------------------------------------------
      Total..........................................        5       32       79       71        2        0        6       13       20       26       33
                                                                                                                                                        
                                                                   CHANGES IN REVENUES                                                                  
On-Budget:                                                                                                                                              
    Employee Retirement contributions................        0        0        0        1        2        1        1        1        0        0        0
Off-Budget:                                                                                                                                             
    Employee Social Security taxes...................        0        0        1        4        7        8        8        7        5        3        1
                                                      --------------------------------------------------------------------------------------------------
      Total..........................................        0        0        1        5        9       10        9        7        5        3        1
                                                                                                                                                        
                                                                  TOTAL COST OF TITLE I                                                                 
Direct spending and revenues.........................        5       33       77       66       -7       -9       -3        6       14       23       33
All Spending and Revenues............................        0       30       90       84       42       17       -4       -9       -5       -2        2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note.--Components may not sum to totals because of rounding.                                                                                            

            Background
    There are two main retirement programs for full-time 
regular federal employees. Most full-time employees hired 
before 1984 are in the Civil Service Retirement System (CSRS), 
a defined benefit plan which does not include Social Security. 
Those hired after 1984 are generally covered by the Federal 
Employees' Retirement System (FERS), which features Social 
Security, a more limited defined benefit, and the defined 
contribution Thrift Savings Plan (TSP). Employees who return to 
government service after 1987 and have five years of prior 
service under CSRS may be covered by a hybrid plan known as 
CSRS Offset that features both CSRS and Social Security 
benefits.
    FERS employees may contribute up to 10 percent of their pay 
to the TSP. They receive an automatic contribution from their 
employing agency equal to 1 percent of their pay and may also 
receive an additional 4 percent in matching contributions. CSRS 
and CSRS Offset employees may also participate in the TSP, but 
they may only contribute up to 5 percent of their pay and do 
not receive any government contributions.
            Assumptions about retirement coverage errors
    CBO estimated the number of retirement coverage errors that 
have been made based on discussions with personnel officials in 
a number of large government agencies, including the Postal 
Service and the Departments of Defense, Veterans Affairs, and 
Agriculture. These agencies comprise approximately 70 percent 
of the federal civilian workforce. On the basis of these 
discussions, CBO estimates that approximately 18,000 coverage 
errors have occurred throughout the government, of which 
approximately 10,000 have already been corrected. The two most 
common types of coverage errors appear to involve employees who 
should be in FERS but were accidentally put in CSRS, and 
employees with prior service who returned to government service 
and were misplaced in either FERS or CSRS Offset.
    H.R. 3249 would also affect the speed with which agencies 
identify and correct retirement coverage errors. CBO assumed 
that, under current law, agencies would correct coverage errors 
at a constant annual rate. H.R. 3249 would direct agencies to 
identify any retirement coverage errors promptly and correct 
them. Under the bill, agencies would have an incentive to move 
quickly; they could apply to the Office of Management and 
Budget (OMB) for assistance for expenses related to correcting 
coverage errors, but only for those errors identified before 
January 1, 2002. CBO assumed that agencies would correct most 
of their retirement coverage errors between 1999 and 2003. 
Agencies would also stop correcting errors for the remainder of 
1998 pending the issuance of final regulations to implement 
H.R. 3249.
    Under current law, coverage errors are usually corrected by 
converting the employee to the proper retirement system, 
retroactive to original date of the error. However, some 
employees who were accidentally placed in FERS are able to 
remain in FERS by making a retroactive election of FERS 
coverage. H.R. 3249 would allow most employees affected by 
coverage errors to choose whether they would like to be placed 
in the proper retirement system or make their current incorrect 
coverage permanent. All elections would be irrevocable, and 
employees who did not make an election would retain their 
current coverage. Coverage errors lasting less than a year 
would not be covered by the bill. CBO assumed that 80 percent 
of the employees whose errors have not yet been corrected would 
choose to be placed in the proper retirement system.
    Most of the employees whose coverage errors have already 
been corrected would also be given the option of returning to 
the retirement system in which they were incorrectly placed. 
However, employees who were mistakenly placed in CSRS and have 
already been placed in FERS would be able to elect only CSRS 
Offset coverage. Because employees affected by these errors 
often have relatively small TSP accounts, CBO assumed that 80 
percent of them would elect to join CSRS Offset. CBO also 
assumed that 20 percent of the employees who were incorrectly 
put in FERS and have already been placed in CSRS or CSRS Offset 
will elect FERS coverage.
            Effects on discretionary spending
    Makeup Contributions to TSP. Employees who are incorrectly 
covered by CSRS rather than FERS are unable to participate 
fully in the TSP. Under current law, when an individual's 
coverage is corrected to FERS, the employing agency makes a 
lump-sum deposit into his TSP account equal to the government 
contributions and related earnings that would have been made to 
the employee's previous TSP contributions under FERS rules. If 
theemployee did not have a TSP account, only a deposit for the 
automatic 1-percent contribution is made. Earnings are calculated using 
the individual's own fund allocation decisions (if he had a TSP 
account) or the G Fund rate (otherwise). Employees may provide makeup 
contributions to their TSP accounts out of future pay. These makeup 
contributions receive agency matching contributions (up to the 5-
percent FERS maximum) and related earnings as if the contributions had 
been made at the proper time. However, back earnings are paid only on 
the agency's matching funds, not the employee's makeup contributions.
    H.R. 3249 would change the way that makeup TSP 
contributions are calculated. Under the bill, agencies would 
make a lump-sum payment to TSP representing past employee 
contributions, automatic 1-percent agency contributions, and 
agency matching contributions. The amount representing employee 
contributions would be calculated using the average 
contribution rate for FERS employees who participated in TSP, 
and would be paid whether or not the employee already has a TSP 
account (subject to the 10-percent annual limit on FERS 
contributions and the Internal Revenue Service's annual dollar 
limit on contributions to tax-deferred savings plans). Agencies 
would also pay past earnings on all three amounts. These 
earnings would be calculated using the employee's own TSP fund 
allocation choices. If the employee did not have a TSP account, 
a composite rate representing the average allocation of all 
FERS employees contributing to TSP would be used. Based on 
historical data provided by the Fedeal Retirement Thrift 
Investment Board, CBO estimates that these provisions would 
increase the average TSP makeup payment by $70,000 in 1999. 
This amount would be higher in later years due to additional 
foregone returns and contributions.
    These makeup TSP contributions could be paid either from 
agencies' discretionary appropriations or from a new permanent 
indefinite appropriation. H.R. 3249 would make agencies 
responsible for the TSP makeup contributions, but would allow 
agencies to appeal to the OMB Director if these makeup payments 
would ``substantially impair'' the agency's operations. If the 
OMB Director agreed with the agency, some of all of the 
agency's payments would be made instead from a permanent 
appropriation. Based on discussions with OMB, CBO has assumed 
that 90 percent of nonpostal makeup payments prior to the 
January 2002 deadline would be paid for from the permanent 
appropriation. CBO estimates that the total cost of TSP makeup 
contributions will be $222 million, with agencies paying for 
$75 million from their discretionary appropraitions and the 
remaining $147 million coming from the general fund as direct 
spending.
    Makeup Payment of Social Security Contributions. Agencies 
are currently responsible for makeup payments of Social 
Security payroll taxes for employees whose coverage is changed 
from CSRS to FERS or CSRS Offset. H.R. 3249 would transfer 
responsibility for past Social Security taxes from agencies to 
the Civil Service trust fund. As a result, agency spending on 
makeup Social Security taxes would fall by $22 million during 
tghe 1998-2003 period.
    Makeup Payment of Retirement Contributions. Under H.R. 
3249, any necessary adjustments to past agency contributions to 
the Civil Service Retirement and Disability Fund (CSRDF) would 
be completely retroactive, as under current law. CBO estimates 
that agency makeup payments to the CSRDF would increase by $23 
million between 1998 and 2003 under the bill. This increase 
primarily reflects the impact that the bill would have on 
speeding up the correction of coverage errots. After 2002, 
agency makeup payments would be lower than under current law.
    Agency Retirment Contributions. The amount that agencies 
currently contribute towards their employees' retirement would 
change under H.R. 3249 for two reasons. First, the speeding up 
of retirement corrections would increase agency contributions 
in the near term. Second, the decision of many employees whose 
errors have already been corrected to switch from FERS to CSRS 
Offset would decrease agency retirement contributions, 
particularly in later years. These changes would increase 
agency spending on retirement contributions by $10 million 
during the 1998-2003 period.
    Employer Social Security Contributions. Employer 
contributions to Social Security would increase by $14 million 
between 1998 to 2003 due to the speeding up of retirement 
corrections. These contributions would not be affected by the 
decision of some employees to switch from FERS to CSRS Offset 
since both types of coverage include Social Security.
            Effects on direct spending (on-budget)
    Makeup Contributions to TSP. H.R. 3249 would allow some 
agency makeup payments to TSP to be made from a new permanent 
appropriation. CBO estimates that the portion of makeup 
contributions to the TSP that would be funded from the 
permanent appropriation would be $147 million during the 1998-
2003 period.
    Makeup Payment of Retirement Contributions. The increase in 
agency makeup payments to the CSRDF would be reflected in the 
budget both as additional agency outlays and as offsetting 
receipts to the CSRDF. As a result, reciepts to the trust fund 
would increase by $33 million between 1998 and 2003.
    Agency Retirement Contributions. The increase in agency 
retirement contributions under the bill would increase CSRDF 
receipts by $14 million during the 1998-2003 period.
    Tranfers from the Civil Service Trust Fund to Social 
Security. Under H.R. 3249, the CSRDF would be responsible for 
the payment of back Social Security payroll taxes for any 
future retirment corrections. Unlike current law, these 
corrections would be completely retroactive and would not be 
affected by the current limit of 3 years, 3 months, and 15 
days.CBO estimates that transfers from the CSRDF to the Social 
Security trust fund would total $298 million during the 1998-2003 
period. Although these transfers are intragovernmental, the payments 
would be on-budget and the receipt of these transfers of funds by 
Social Security would be off-budget.
    Refunds from CSRDF to Agencies. Agencies would receive a 
partial refund of their retirement contributions for employees 
who have already been restored to FERS but elect to be covered 
by CSRS Offset under H.R. 3249. Agencies currently contribute 
10.7 percent of employee pay for retirement under FERS rules 
but only 8.51 percent under CSRS Offset. The difference of 2.2 
percent would be refunded to the agency. These refunds from the 
CSRDF to the agencies would amount to $77 million over the 
1998-2003 period and would be available to the agencies to be 
spent for future CSRDF contributions.
            Effects on direct spending (off-budget)
    H.R. 3249 would affect offsetting receipts to the Social 
Security trust fund in three ways. First, agencies would no 
longer be responsible for making back payments of Social 
Security payroll taxes when correcting coverage errors. This 
change would reduce receipts by $34 million between 1998 and 
2003. Second, transfers from the Civil Service trust fund for 
back taxes on future corrections of coverage errors will 
increase receipts by $298 million between 1998 and 2003. These 
transfers would include the $34 million that agencies would be 
responsible for under current law. Finally, receipts from 
ongoing employer Social Security taxes would increase by $20 
million over the same period.
            Effects on revenues
    Employee Retirement Contributions. As with current agency 
retirement contributions, current employee retirement 
contributions would also be affected by the speeding up of 
retirement coverage errors corrections and the new retirement 
coverage elections under H.R. 3249. The net impact of these 
effects will decrease employee contributions to the CSRDF, 
which are considered receipts, by $4 million during the 1998-
2003 period.
    Employee Social Security Taxes. Primarily due to the 
speeding up of retirement coverage corrections under H.R. 3249, 
receipts from employee Social Security taxes would increase by 
$20 million between 1998 and 2003.
            Title III
    Section 304 of H.R. 3249 would direct the Secretary of 
State to provide employees in the Foreign Service Retirement 
and Disability System (FSRDS) with an opportunity to switch 
into the newer Foreign Service Pension System (FSPS). This open 
season would be similar to that currently scheduled to take 
place starting in July 1998 for employees in CSRS who would 
like to join FERS. The estimated budgetary impact of Section 
304 is shown in the table below.

                                [By fiscal year, outlays in millions of dollars]                                
----------------------------------------------------------------------------------------------------------------
                                             1999   2000   2001   2002   2003   2004   2005   2006   2007   2008
----------------------------------------------------------------------------------------------------------------
                                       SPENDING SUBJECT TO APPROPRIATIONS                                       
                                                                                                                
Agency retirement contributions...........      3      3      3      3      4      4      3      3      2      2
Agency Thrift Savings Plan contributions..      1      1      1      1      1      1      1      1      1      1
                                           ---------------------------------------------------------------------
      Total...............................      4      4      4      5      5      5      4      4      3      2
                                                                                                                
                                           CHANGES IN DIRECT SPENDING                                           
                                                                                                                
On-budget:                                                                                                      
    Agency retirement contributions.......     -2     -2     -2     -2     -2     -3     -2     -2     -1     -1
Off-budget:                                                                                                     
    Employer Social Security taxes........     -1     -1     -1     -1     -1     -1     -1     -1     -1     -1
                                           ---------------------------------------------------------------------
      Total...............................     -3     -3     -3     -3     -4     -4     -3     -3     -2     -2
                                                                                                                
                                               CHANGES IN REVENUES                                              
                                                                                                                
On-budget:                                                                                                      
    Employee retirement contributions.....     -1     -1     -1     -1     -1     -1     -1     -1     -1     -1
Off-budget:                                                                                                     
    Employee Social Security taxes........      1      1      1      1      1      1      1      1      1      1
                                           ---------------------------------------------------------------------
      Total...............................      0      0      0      0      0      0      0      0      0      0
                                                                                                                
                                             TOTAL COST OF TITLE III                                            
                                                                                                                
Direct spending and revenues..............     -3     -3     -3     -3     -4     -4     -3     -3     -2     -2
All spending and revenues.................      1      1      1      1      1      1      1      1      1      1
----------------------------------------------------------------------------------------------------------------
Note.--Components may not sum to totals because of rounding.                                                    

    FSRDS employees had a previous opportunity to switch to 
FSPS during a six-month open season in 1987. About 17 percent 
of the FSRDS employees switched to FSPS during this first open 
season. CBO estimates that approximately 325 people--between 
eight and nine percent of all FSRDS employees--would switch to 
FSPS during a second open season. This estimate reflects the 
assumptions that those employees most interested in switching 
to FSRDS did so during the 1987 open season, and that current 
FSRDS employees switch at half the rate seen in 1987.
    Discretionary Spending. Employer contributions would 
increase for those employees who switch to FSPS. Agencies' 
retirement contributions for Foreign Service employees are 
currently 8.51 percent for FSRDS workers and 18 percent for 
FSPS workers, so agencies would contribute an additional 9.5 
percent of pay to the Foreign Service trust fund for employees 
who switch. In addition, employees who switch to FSPS would 
become covered by Social Security, so agencies would have to 
contribute 6.2 percent of an employee's pay (up to the maximum 
taxable salary) to the Social Security trust funds. Overall, 
employer retirement contributions would increase by $16 million 
between 1998 and 2003.
    Like FERS employees, FSPS workers may contribute up to 10 
percent of their pay to TSP and receive up to 5 percent in 
matching government contributions. CBO assumed that employees 
would switch to FSPS in part to take fuller advantage of TSP 
and that their average TSP contribution would rise from 4 
percent (the current average for employees in the similar CSRS 
system) to 7 percent. As a result, switching employees would 
receive the full 5-percent government match. These matching 
contributions would cost $5 million during the 1998-2003 
period.
    Direct Spending. The increases in agency retirement 
contributions--with the exception of TSP contributions--would 
be reflected in the budget both as additional agency outlays 
and as offsetting receipts to the retirement trust funds. CBO 
estimates that receipts to the Foreign Service Retirement and 
Disability Fund would increase $10 million over the next five 
years, and that receipts to the Social Security trust funds 
would rise by $5 million over the same period. CBO estimated 
that the impact of switching employees on Foreign Service and 
Social Security benefit outlays would be insignificant between 
1998 and 2003.
    Revenues. FSRDS employees who switch to FSPS would 
contribute 7.5 percent of their pay towards retirement on 
earnings up to the Social Security maximum wage level ($68,400 
in 1998) and 1.3 percent on earnings over that level. This rate 
is slightly higher than the rate for FSRDS, where employees 
contribute 7 percent of pay. The allocation of contributions 
would also change since 6.2 percentage points (of the 7.5) 
would go to Social Security instead of the Foreign Service 
trust fund. This change would shift revenues from one fund to 
the other but would have no significant net budgetary impact.
    Pay-as-you-go considerations: The provisions of H.R. 3249 
would affect on-budget direct spending and revenues and 
therefore be subject to pay-as-you-go procedures. The pay-as-
you-go procedures cover only the current year, budget year, and 
the succeeding four years. The pay-as-you-go effects of the 
bill are shown in the following table.

                                        SUMMARY OF PAY-AS-YOU-GO EFFECTS                                        
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                      1998   1999   2000   2001   2002   2003   2004   2005   2006   2007   2008
----------------------------------------------------------------------------------------------------------------
Change in outlays..................      3     56    163    155     56     33     16     17     22     28     34
Change in receipts.................      0     -1     -1      0      1      0      0      0     -1     -1     -1
----------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 3249 
would require the government of the District of Columbia and 
Gallaudet University to correct errors associated with the 
incorrect enrollment of employees in certain retirement plans. 
This requirement is both an intergovernmental and a private-
sector mandate as defined by UMRA. However, costs associated 
with those corrections would be minimal, and only a small 
number of employees of the District of Columbia and Gallaudet 
University have been affected by the errors addressed by the 
bill. Consequently, CBO estimates that the total cost of the 
mandates would be minimal.
    Comparison with other estimates: In October 1997, CBO 
issued a pay-as-you-go estimate of the open season provision 
for CSRS employees contained in the Treasury and General 
Government Appropriations Act for 1998. CBO's estimate of the 
effects of the proposed open season for Foreign Service 
employees is based on assumptions similar to the ones used in 
that estimate. Specifically, CBO assumed in each instance that 
employees would switch retirement systems at half the rate seen 
in the 1987 open season and that switching employees would 
increase their TSP participation by similar amounts.
    Estimate prepared by: Federal cost: Eric Rollins; impact on 
State, local, and tribal governments: Leo Lex; impact on the 
private sector: Matthew Eyles.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

       IX. Specific Constitutional Authority for This Legislation

    Clauses 1 and 18 of Article 1, Sec. 8 of the Constitution 
grant Congress the power to enact this law.

                      X. Committee Recommendation

    On March 5, 1998, a quorum being present, the Committee 
ordered the bill, as amended, favorably reported.

 committee on government reform and oversight--105th Congress--Rollcall

    Date: March 5, 1998.
    Amendment No. 1.
    Description: Amendment in the nature of a substitute.
    Offered by: Hon. John L. Mica (FL).
    Adopted by voice vote.
    Final Passage of H.R. 3249, as amended.
    Offered by: Hon. John L. Mica (FL).
    Adopted by voice vote.

    XI. Congressional Accountability Act; Public Law 104-1; Section 
                               102(b)(3)

    The amendments made by H.R. 3249 will apply to employees 
and former employees of the legislative branch who participate 
(or should participate) in the Federal retirement systems to 
the same extent as it applies to other participating employees.

    XII. Unfunded Mandates Reform Act; Public Law 104-4; Section 423

    H.R. 3249, as amended, would require both the government of 
the District of Columbia and Gallaudet University to correct 
retirement coverage errors affecting employees who participate 
in the Federal retirement systems. This is both an 
intergovernmental and a private-sector mandate as defined by 
the Unfunded Mandates Reform Act. CBO estimates that the total 
cost of the mandates would be minimal.

   XIII. Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b)

    The Committee finds that the legislation does not establish 
or authorize establishment of an advisory committee within the 
definition of 5 U.S.C. App., Section 5(b).

       XIV. Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3 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 (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                 SECTION 210 OF THE SOCIAL SECURITY ACT

                        definition of employment

    Sec. 210. For the purposes of this title--

                               Employment

  (a) The term ``employment'' means any service performed after 
1936 and prior to 1951 which was employment for the purposes of 
this title under the law applicable to the period in which such 
service was performed, and any service, of whatever nature, 
performed after 1950 (A) by an employee for the person 
employing him, irrespective of the citizenship or residence of 
either, (i) within the United States, or (ii) on or in 
connection with an American vessel or American aircraft under a 
contract of service which is entered into within the United 
States or during the performance of which and while the 
employee is employed on the vessel or aircraft it touches at a 
port in the United States, if the employee is employed on and 
in connection with such vessel or aircraft when outside the 
United States, or (B) outside the United States by a citizen or 
resident of the United States as an employee (i) of an American 
employer (as defined in subsection (e) of this section), or 
(ii) of a foreign affiliate (as defined in section 3121(l)(6) 
of the Internal Revenue Code of 1986 of an American employer 
during any period for which there is in effect an agreement, 
entered into pursuant to section 3121(l) of such Code, with 
respect to such affiliate, or (C) if it is service, regardless 
of where or by whom performed, which is designated as 
employment or recognized as equivalent to employment under an 
agreement entered into under section 233; except that, in the 
case of service performed after 1950, such term shall not 
include--
    (1) * * *

           *       *       *       *       *       *       *

    (5) Service performed in the employ of the United States or 
any instrumentality of the United States, if such service--
    (A) * * *

           *       *       *       *       *       *       *

                (H) service performed by an individual--
                          (i) on or after the effective date of 
                        an election by such individual, under 
                        section 301 of the Federal Employees' 
                        Retirement System Act of 1986, section 
                        307 of the Central Intelligence Agency 
                        Retirement Act (50 U.S.C. 2157), or the 
                        Federal Employees' Retirement System 
                        Open Enrollment Act of 1997 to become 
                        subject to the Federal Employees' 
                        Retirement System provided in chapter 
                        84 of title 5, United States Code, [or]
                          (ii) on or after the effective date 
                        of an election by such individual, 
                        under regulations issued under section 
                        860 of the Foreign Service Act of 1980, 
                        to become subject to the Foreign 
                        Service Pension System provided in 
                        subchapter II of chapter 8 of title I 
                        of such Act[;], or
                          (iii)(I) described in section 
                        111(a)(3) of the Federal Retirement 
                        Coverage Corrections Act, on or after 
                        the effective date of an election (or 
                        deemed election) by such individual 
                        under section 111(b)(2) of such Act,
                          (II) described in section 131(a)(1) 
                        of such Act, on or after the effective 
                        date of an election (or deemed 
                        election) by such individual under 
                        subsection (b)(2) or (c)(1) of section 
                        131 of such Act, or
                          (III) described in section 151(a) of 
                        such Act, on or after the effective 
                        date of an election (or deemed 
                        election) by such individual under 
                        subsection (b)(2) or (c)(1) of section 
                        151 of such Act;

           *       *       *       *       *       *       *

                              ----------                              


           SECTION 3121 OF THE INTERNAL REVENUE CODE OF 1986

SEC. 3121. DEFINITIONS.

    (a) * * *
    (b) Employment.--For purposes of this chapter, the term 
``employment'' means any service, of whatever nature, performed 
(A) by an employee for the person employing him, irrespective 
of the citizenship or residence of either, (i) within the 
United States, or (ii) on or in connection with an American 
vessel or American aircraft under a contract of service which 
is entered into within the United States or during the 
performance of which and while the employee is employed on the 
vessel or aircraft it touches at a port in the United States, 
if the employee is employed on and in connection with such 
vessel or aircraft when outside the United States, or (B) 
outside the United States by a citizen or resident of the 
United States as an employee for an American employer (as 
defined in subsection (h)), or (C) if it is service, regardless 
of where or by whom performed, which is designated as 
employment or recognized as equivalent to employment under an 
agreement entered into under section 233 of the Social Security 
Act; except that such term shall not include--
          (1) * * *

           *       *       *       *       *       *       *

          (5) service performed in the employ of the United 
        States or any instrumentality of the United States, if 
        such service--
                  (A) * * *

           *       *       *       *       *       *       *

                  (H) service performed by an individual--
                          (i) on or after the effective date of 
                        an election by such individual, under 
                        section 301 of the Federal Employees' 
                        Retirement System Act of 1986, section 
                        307 of the Central Intelligence Agency 
                        Retirement Act (50 U.S.C. 2157), or the 
                        Federal Employees' Retirement System 
                        Open Enrollment Act of 1997 to become 
                        subject to the Federal Employees' 
                        Retirement System provided in chapter 
                        84 of title 5, United States Code, [or]
                          (ii) on or after the effective date 
                        of an election by such individual, 
                        under regulations issued under section 
                        860 of the Foreign Service Act of 1980, 
                        to become subject to the Foreign 
                        Service Pension System provided in 
                        subchapter II of chapter 8 of title I 
                        of such Act[;], or
                          (iii)(I) described in section 
                        111(a)(3) of the Federal Retirement 
                        Coverage Corrections Act, on or after 
                        the effective date of an election (or 
                        deemed election) by such individual 
                        under section 111(b)(2) of such Act,
                          (II) described in section 131(a)(1) 
                        of such Act, on or after the effective 
                        date of an election (or deemed 
                        election) by such individual under 
                        subsection (b)(2) or (c)(1) of section 
                        131 of such Act, or
                          (III) described in section 151(a) of 
                        such Act, on or after the effective 
                        date of an election (or deemed 
                        election) by such individual under 
                        subsection (b)(2) or (c)(1) of section 
                        151 of such Act;

           *       *       *       *       *       *       *

                              ----------                              


                      TITLE 5--UNITED STATES CODE



           *       *       *       *       *       *       *
PART III--EMPLOYEES

           *       *       *       *       *       *       *


Subpart G--Insurance and Annuities

           *       *       *       *       *       *       *


CHAPTER 83--RETIREMENT

           *       *       *       *       *       *       *


SUBCHAPTER III--CIVIL SERVICE RETIREMENT

           *       *       *       *       *       *       *


Sec. 8348. Civil Service Retirement and Disability Fund

    (a) There is a Civil Service Retirement and Disability 
Fund. The Fund--
          (1) * * *
          (2) is made available, subject to such annual 
        limitation as the Congress may prescribe, for any 
        expenses incurred by the Office in connection with the 
        administration of this chapter, chapter 84 of this 
        title, and other retirement and annuity [statutes;] 
        statutes (including the provisions of the Federal 
        Retirement Coverage Corrections Act that relate to this 
        subchapter); and
          (3) is made available, subject to such annual 
        limitation as the Congress may prescribe, for any 
        expenses incurred by the Merit Systems Protection Board 
        in the administration of appeals authorized under 
        sections 8347(d) and 8461(e) of this [title.] title and 
        the Federal Retirement Coverage Corrections Act.

           *       *       *       *       *       *       *


CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM

           *       *       *       *       *       *       *


SUBCHAPTER III--THRIFT SAVINGS PLAN

           *       *       *       *       *       *       *


Sec. 8432. Contributions

  (a) * * *

           *       *       *       *       *       *       *

  (h) No transfers or contributions may be made to the Thrift 
Savings Fund except as provided in this chapter or section 8351 
of this [title.] title or the Federal Retirement Coverage 
Corrections Act.

           *       *       *       *       *       *       *


Sec. 8437. Thrift Savings Fund

  (a) There is established in the Treasury of the United States 
a Thrift Savings Fund.
  (b) The Thrift Savings Fund consists of the sum of all 
amounts contributed under section 8432 of this title and all 
amounts deposited under section 8479(b) of this title, 
increased by the total net earnings from investments of sums in 
the Thrift Savings Fund or reduced by the total net losses from 
investments of the Thrift Savings Fund, and reduced by the 
total amount of payments made from the Thrift Savings Fund 
(including payments for administrative [expenses).] expenses), 
as well as contributions under the Federal Retirement Coverage 
Corrections Act (and lost earnings made up under such Act).

           *       *       *       *       *       *       *

  (d) Administrative expenses incurred to carry out this 
subchapter (including the provisions of the Federal Retirement 
Coverage Corrections Act that relate to this subchapter) and 
subchapter VII of this chapter shall be paid first out of any 
sums in the Thrift Savings Fund forfeited under section 8432(g) 
of this title and then out of net earnings in such Fund.

           *       *       *       *       *       *       *

                              ----------                              


             SECTION 860 OF THE FOREIGN SERVICE ACT OF 1980

  Sec. 860. Transition Provisions.--The Secretary of State 
shall issue regulations providing for the transition from the 
Foreign Service Retirement and Disability System to the Foreign 
Service Pension System in a manner comparable to the transition 
of employees subject to subchapter III of chapter 83 of title 
5, United States Code (the Civil Service Retirement System), to 
the Federal Employees' Retirement System. The Secretary of 
State shall, in addition, issue regulations providing for an 
election for coverage under the Foreign Service Pension System 
for employees covered under the Foreign Service Retirement and 
Disability System comparable to the election provided for by 
the Federal Employees' Retirement System Open Enrollment Act of 
1997. For this and related purposes, references made to 
participation in subchapter III of chapter 83 of title 5, 
United States Code (the Civil Service Retirement System), the 
Social Security Act, and the Internal Revenue Code of 1986 
shall be deemed to refer to participation in the Foreign 
Service Pension System or the Foreign Service Retirement and 
Disability System, as appropriate.
                              XV. APPENDIX

                              ----------                              

                      Committee on International Relations,
                                     Washington, DC, March 6, 1998.
Hon. Dan Burton,
Chairman, Committee on Government Reform and Oversight, House of 
        Representatives.
    Dear Mr. Chairman: I understand that the Committee on 
Government Reform and Oversight has marked up legislation, H.R. 
3249, relative to the Federal Employee Retirement System.
    This bill contains two items within the jurisdiction of the 
Committee on International Relations under Rule X of the Rules 
of the House of Representatives.
    The first item, section 301, extends the same rights to 
Foreign Service employees as is extended, elsewhere in the 
bill, to Civil Service employees to a correction and ``make-
whole treatment'' if they were placed in an incorrect 
retirement system. This provision was contained in the bill 
upon its introduction.
    The second item, section 304, provides an ``open season'' 
to change from ``old'' to ``new'' retirement systems for 
Foreign Service employees that is comparable to that provided 
for Civil Service employees under the Federal Employees' 
Retirement System Open Enrollment Act of 1997. It was adopted 
during your Committee's consideration of the bill.
    The Committee on International Relations applauds these 
provisions, which provide similar treatment for Foreign Service 
and Civil Service employees where, as here, it is appropriate. 
We appreciate the courtesy extended by the Committee on 
Government Reform and Oversight in our discussions concerning 
this legislation.
    Although our Committee might have sought a referral of this 
legislation, since appropriate language has been included 
already, we see no reason to act, and therefore will not seek a 
sequential referral, without prejudice to our continuing 
jurisdiction over the Foreign Service Act and foreign service 
retirement matters, as provided in the Rules and Precedents of 
the House.
    I respectfully request that you print a copy of this letter 
in the Report of the Committee on Government Reform and 
Oversight on this bill.
    With best wishes,
            Sincerely,
                                      Benjamin A. Gilman, Chairman.


                                
