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



105th Congress                                            Rept. 105-625
                        HOUSE OF REPRESENTATIVES

 2d Session                                                      Part 2
_______________________________________________________________________


 
              FEDERAL RETIREMENT COVERAGE CORRECTIONS ACT

                                _______
                                

 July 20, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


    Mr. Archer, from the Committee on Ways and Means, 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 Ways and Means, 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 and Background...........................................22
        A. Purpose and Summary...................................    22
        B. Background and Need for Legislation...................    23
        C. Legislative History...................................    23
II. Explanation of Social Security and Tax Provisions................24
        A. General Provisions (Title II).........................    24
        B. Tax Provisions (Title IV).............................    25
III.Vote of the Committee............................................26

IV. Budget Effects of the Bill.......................................27
        A. Committee Estimates...................................    27
        B. Budget Authority and Tax Expenditures.................    27
        C. Cost Estimate Prepared by the Congressional Budget 
            Office...............................................    27
 V. Other Matters to be Discussed Under the Rules of the House.......37
         A. Committee Oversight Findings and Recommendations.....    37
         B. Summary of Findings and Recommendations of the 
            Committee on Government Reform and Oversight.........    37
         C. Constitutional Authority Statement...................    38
         D. Information Relating to Unfunded Mandates............    38
         E. Applicability of House Rule XXI5(c)..................    38
VI. Changes in Existing Law Made by the Bill, as Reported............38

    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).
Sec. 106. Effect of election to remain FERS covered 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 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. Provisions to prevent reductions in force and any unfunded 
liability in the 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 an employee as 
        defined by section 8331 or 8401 of title 5, United States Code, 
        and any other individual (not satisfying either of those 
        definitions) serving in an appointive or elective office or 
        position in the executive, legislative, or judicial branch 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) under this Act by an 
employee or any other individual 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 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.
                  (B) Rule if there are excess csrdf contributions.--
                          (i) In general.--Any excess amount described 
                        in clause (ii) that is attributable to an 
                        employee described in subsection (a) shall be 
                        forfeited.
                          (ii) Excess amount defined.--The excess 
                        amount described in this clause is, in the case 
                        of an employee, the amount by which--
                                  (I) that portion of the employee's 
                                lump-sum credit that is attributable to 
                                the period of erroneous coverage 
                                involved, exceeds (if at all)
                                  (II) the total of the amount 
                                described in subparagraph (A) plus the 
                                amount that should have been deducted 
                                under section 8422 of title 5, United 
                                States Code, from the pay of the 
                                employee for the period of erroneous 
                                coverage involved.
                  (C) Rule if lump-sum credit is less than total 
                employee contributions to oasdi and csrdf that should 
                have been made.--
                          (i) In general.--
                                  (I) Shortfall to be made up by 
                                agency.--If the amount described in 
                                subparagraph (B)(ii)(I) is less than 
                                the total amount described in 
                                subparagraph (B)(ii)(II), an amount 
                                equal to the shortfall shall be made up 
                                (in such manner as the Commissioner of 
                                Social Security shall 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, except as 
                                provided in subclause (II) or clause 
                                (iii)(I).
                                  (II) Reduction for deposit due.--In 
                                any case in which a deposit is required 
                                under clause (ii), the amount required 
                                to be made up under subclause (I) shall 
                                be reduced by the amount of the deposit 
                                so required (but not below zero).
                          (ii) Deposit requirement.--
                                  (I) In general.--To the extent that 
                                the shortfall under clause (i) is due 
                                to the any lump-sum credit received by 
                                the employee (for which an appropriate 
                                deposit under section 8334(d)(1) of 
                                title 5, United States Code, has not 
                                been made), the employee shall be 
                                required to repay an amount equal to 
                                the amount of such deposit, except as 
                                provided in clause (iii)(I).
                                  (II) Treatment as a debt due.--If an 
                                employee fails to pay the amount 
                                required under subclause (I), that 
                                amount shall be recoverable by the 
                                CSRDF under the same authorities 
                                (including to waive a right of 
                                recovery) as described in section 
                                114(b)(2). For purposes of any exercise 
                                of authority under the preceding 
                                sentence, the Director of the Office of 
                                Personnel Management shall be 
                                considered the head of the agency 
                                concerned.
                          (iii) Special rules.--
                                  (I) Deposit for fers deductions not 
                                mandatory.--Nothing in this 
                                subparagraph shall, in any situation 
                                described in clause (ii), be considered 
                                to require any agency make-up payment 
                                (or employee repayment) of any portion 
                                of the lump-sum credit (beyond any 
                                amount necessary in order to permit the 
                                transfer described in paragraph (1)(A)) 
                                which would be assignable to amounts 
                                that should have been deducted under 
                                section 8422 of title 5, United States 
                                Code, from pay of the employee 
                                involved.
                                  (II) Authority to make fers 
                                deposit.--An employee under this 
                                section who has received a lump-sum 
                                credit (described in clause (ii)(I)) 
                                may not be credited, under chapter 84 
                                of title 5, United States Code, with 
                                any period of service to which that 
                                lump-sum credit relates unless the 
                                employee deposits into the CSRDF an 
                                amount equal to the percentage of such 
                                employee's basic pay (for such period 
                                of service) that should have been 
                                deducted under section 8422 of such 
                                title 5.
                  (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, except as the context may otherwise 
                indicate.
                  (E) Provisions relating to the application of this 
                paragraph in other situations.--
                          (i) General authority.--To the extent 
                        necessary to permit the operation of this 
                        paragraph in any situation covered by any other 
                        provisions of this Act (which incorporate this 
                        paragraph by reference), any necessary 
                        technical and conforming amendments to this 
                        paragraph not otherwise specifically provided 
                        for (such as citations to appropriate 
                        provisions of law corresponding to provisions 
                        cited in this paragraph) shall be made under 
                        regulations which the Office of Personnel 
                        Management shall prescribe.
                          (ii) Special rule.--
                                  (I) Deposits not precluded by fers 
                                restriction.--Nothing in section 
                                8424(a) of title 5, United States Code, 
                                shall, in any situation covered by this 
                                Act, prevent the making of any deposit 
                                (and crediting, for retirement 
                                purposes, of service for the 
                                corresponding period of time) to the 
                                extent that the deposit relates to the 
                                period of erroneous coverage involved.
                                  (II) Exception.--The preceding 
                                sentence shall not apply in any 
                                situation in which the employee 
                                involved was erroneously FERS covered, 
                                and remained FERS covered after the 
                                rectification provided for under this 
                                Act.
          (2) Government contributions.--
                  (A) Transfer to oasdi trust funds.--There shall be 
                transferred from the CSRDF to the OASDI trust funds the 
                excess of--
                          (i) the amount of the OASDI employer tax that 
                        should have been paid with respect to the 
                        employee for the period of erroneous coverage 
                        involved, over
                          (ii) the amount of the OASDI employer tax 
                        that may be assessed under section 6501 of the 
                        Internal Revenue Code of 1986 in connection 
                        with such employee,
                determined in such manner as the Secretary of the 
                Treasury shall by regulation prescribe.
                  (B) Rule if csrdf contributions actually made are 
                less than total government contributions to oasdi and 
                csrdf that should have been made.--
                          (i) In general.--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 
                        amount described in clause (ii), an amount 
                        equal to the shortfall shall be made up (in 
                        such manner as the Commissioner of Social 
                        Security shall prescribe) by the agency in or 
                        under which the employee is then employed.
                          (ii) Description of amount.--The amount 
                        described in this clause is the total 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.
                          (iii) Source of payments.--Any amount 
                        required to be paid by an agency under clause 
                        (i) shall be payable out of any appropriation, 
                        fund, or account available to such agency for 
                        making Government contributions to the CSRDF or 
                        the OASDI trust funds (as appropriate).
  (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) and (2)(A)(i) 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.--The 
                appropriate lump-sum credit to be used under this 
                subsection shall be determined in accordance with 
                regulations to be prescribed by the Office of Personnel 
                Management.
                  (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.

SEC. 106. EFFECT OF ELECTION TO REMAIN FERS COVERED 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)(2).
  (b) Disposition of Contributions to the CSRDF.--The provisions of 
section 102(b) shall apply in the case of an employee described in 
subsection (a), subject to the same condition as set forth in section 
105(b)(2)(A).
  (c) Makeup Contributions to the Thrift Savings Fund.--Section 102(c) 
shall apply, except that an agency shall receive credit for any 
automatic or matching Government contributions and any lost earnings 
paid by such agency as part of any corrections process previously 
carried out with respect to the employee involved.

  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 Employee Contributions to the CSRDF.--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.
  (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 Employee Contributions to the CSRDF.--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.
  (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 the 
        provisions of paragraphs (1)(B)(ii)(II) (to the extent they 
        relate to amounts that should have been deducted under section 
        8422 of title 5, United States Code) and (2)(B)(ii)(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 the employee has (by the date as of 
which the determination is made) 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 being 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 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.
          (3) Deposit to be based on amount of refund actually 
        received.--For purposes of applying sections 8334(d)(1) and 
        8339(i) of title 5, United States Code, in the case of an 
        employee described in subsection (a) who has received a refund 
        of deductions that are attributable to a period when the 
        employee was erroneously CSRS-Offset covered, nothing in either 
        of those sections shall be considered to require that, in order 
        to receive credit for that period as a CSRS-covered employee, a 
        deposit be made in excess of the refund actually received for 
        such period, plus interest.

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)(II) 
        thereof; and
          (2) ``the applicable provisions of section 8334'' shall be 
        substituted for ``section 8423'' in paragraph (2)(B)(ii)(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 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 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 rule.--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 shall pay (or 
        reimburse any other agency that pays) any amounts to the Thrift 
        Savings Fund representing lost earnings 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 
from the Office under this section shall be payable 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 trust funds 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.--The Secretary of State shall issue regulations 
to provide for the application of the provisions of this Act in a like 
manner with respect to participants, annuitants, or survivors under the 
Foreign Service Retirement and Disability System or the Foreign Service 
Pension System (as applicable), except that--
          (1) any individual aggrieved by a final determination shall 
        appeal such determination to the Foreign Service Grievance 
        Board instead of the Merit Systems Protection Board under 
        section 202; and
          (2) the Secretary of State shall perform the functions and 
        exercise the authority vested in the Office of Personnel 
        Management or the Director of the Office of Personnel 
        Management under this Act.
  (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. PROVISIONS TO PREVENT REDUCTIONS IN FORCE AND ANY UNFUNDED 
                    LIABILITY IN THE CSRDF.

  (a) Provisions to Prevent Reductions in Force.--
          (1) Limitation.--An agency required to make any payments 
        under this Act may not conduct any reduction in force solely by 
        reason of any current or anticipated lack of funds attributable 
        to such payments.
          (2) Alternative required.--In the circumstance described in 
        paragraph (1), any cost savings that (but for this subsection) 
        would otherwise be sought through reductions in force shall 
        instead be achieved through attrition and limitations on 
        hiring.
  (b) Provisions to Prevent Unfunded Liability.--
          (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, and no 
amount shall be subject to tax under subtitle C of such Code by reason 
of any such transfer or contribution.

                       I. SUMMARY AND BACKGROUND

                         A. Purpose and Summary

    H.R. 3249, as amended, provides a method to correct errors 
in misclassification of Federal employees which resulted in 
thousands of Federal employees being erroneously placed in the 
wrong Federal retirement system. These retirement systems 
include: (1) the Civil Service Retirement System (``CSRS''); 
(2) the Federal Employees Retirement System (``FERS''); (3) the 
Civil Service Retirement System Social Security Offset Plan 
(``CSRS Offset''); or (4) Social Security only. The bill 
applies to all Federal employees, including former employees, 
annuitants and survivors. The bill extends the same correction 
options to employees of the foreign service and intelligence 
agencies.
    The bill provides a comprehensive solution to these 
retirement coverage errors. In general, employees may choose 
between the retirement system they were mistakenly placed in or 
the system they should have been placed in retroactive to the 
date of the error. Two exceptions apply to this general rule. 
The first exception does not permit an employee who was 
erroneously placed in CSRS to elect to remain in it; the 
employee may elect instead to be enrolled in the CSRS Offset 
system. The second exception applies to employees who should 
have been enrolled in Social Security only. Unless such 
employees are vested in the system in which they were 
mistakenly placed, they may not elect to remain in such system.
    The bill requires the employing agencies to take certain 
steps to make the employee whole with respect to retirement 
plan benefits under the correct plan. Depending on the precise 
circumstances of the individual, these steps may include: (1) 
make-up contributions to the plan by the employing agency 
(including contributions to the Thrift Savings Plan (``TSP'') 
in lieu of elective deferrals the employee would have been 
eligible to make had the employee been properly enrolled); (2) 
intra-fund or intra-Governmental transfers of funds; and (3) 
certain make-up contributions by the employing agency for 
social security taxes. The employing agencies will make all 
necessary payments from appropriated funds. Employees who were 
mistakenly permitted to contribute to the TSP would 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 could forfeit benefits previously accrued 
(e.g., matching contributions made to an individual mistakenly 
enrolled in FERS). The bill amends the Social Security Act so 
CSRS-eligible employees who choose FERS or Social Security 
coverage may receive Social Security benefits.

                 B. Background and Need for Legislation

    The Committee believes that legislation should be enacted 
in a timely fashion in order to correct errors in 
misclassification of Federal employees into the wrong Federal 
retirement system. The bill provides that individuals entitled 
to Social Security coverage who were erroneously placed in the 
wrong Federal retirement system receive credit for the period 
of retirement coverage error. The bill also provides that no 
Federal retirement plan involved in the correction under the 
bill shall fail the retirement plan tax qualification rules by 
reason of such correction. Further, the bill provides that no 
Federal employee involved in the correction shall be subject to 
additional Federal tax consequences as a result of such 
correction.

                         C. Legislative History

    The Committee on Ways and Means marked up the revenue and 
social security provisions of H.R. 3249 (``The Federal 
Retirement Coverage Corrections Act'') on June 25, 1998. The 
Committee adopted the Chairman's amendment in the nature of a 
substitute by a voice vote. The bill, as amended, was ordered 
favorably reported by a voice vote, with a quorum present.
    H.R. 3249 was ordered favorably reported by the House 
Committee on Government Reform and Oversight on March 5, 1998, 
and was reported by that committee on July 14, 1998 (H. Rept. 
105-625, Part 1).\1\
---------------------------------------------------------------------------
    \1\ H.R. 3249, as introduced on February 24, 1998, was referred to 
the Committee on Government Reform and Oversight and, in addition, to 
the Committee on Ways and Means for consideration of provisions in 
their respective jurisdictions. (See also letter from the Committee on 
Government Reform and Oversight to the Committee on Ways and Means 
relating to the bill, dated June 23, 1998, which is included in Part 
V.B. of this report.)
---------------------------------------------------------------------------

         II. EXPLANATION OF SOCIAL SECURITY AND TAX PROVISIONS

                    A. General Provisions (Title II)

               (Secs. 203, 204, 205, and 208 of the bill)

Present law

    Under present law, Federal employees participate in one of 
four retirement systems: CSRS, CSRS Offset, Social Security 
only, and FERS. Individuals who are eligible for CSRS Offset, 
Social Security only, or FERS receive Social Security coverage. 
Individuals who are eligible for CSRS do not receive Social 
Security coverage. Under the CSRS, CSRS Offset, and FERS 
retirement systems, both the employee and the employing agency 
make contributions to the Civil Service Retirement and 
Disability Fund (``CSRDF'').
    For those employees enrolled in one of the retirement 
systems with Social Security coverage, Social Security taxes 
are paid into the general fund of the Treasury and transferred 
to the Social Security Trust Funds. If Social Security taxes 
should have been, but were not paid with respect to an 
individual's employment, the taxes may be assessed subject to 
the statute of limitations of three years. Similarly, 
improperly paid Social Security taxes may be refunded for the 
period within the statute of limitations.
    Previously unrecorded earnings may be added to an 
individual's Social Security earnings record at any time. 
Improperly recorded earnings may only be removed from an 
individual's earnings record for the period within the statute 
of limitations.

Reasons for change

    The Committee believes it is appropriate to ensure that 
individuals entitled to Social Security coverage who were 
erroneously placed in the wrong Federal retirement system 
receive credit for the period of retirement coverage error.

Explanation of provisions

    The bill provides that when an individual who was 
incorrectly enrolled in CSRS changes to one of the retirement 
systems that provides for Social Security coverage, the 
individual will receive credit on his or her Social Security 
earnings record for earnings retroactive to the date of the 
retirement coverage error. Under the bill, the Social Security 
Trust Funds are made whole for any contributions that should 
have been made on behalf of the individual.
    The bill provides that all of the amounts that should have 
been paid into the Social Security Trust Funds from the time of 
the incorrect enrollment shall be transferred to the Trust 
Funds. The amounts will be transferred to the Trust Funds from 
the individual's account in CSRDF and, if that amount is not 
sufficient, from the appropriated accounts of the agency. The 
bill provides conforming changes to the coverage provisions of 
the Social Security Act and the Internal Revenue Code if an 
individual elects to remain in the retirement system to which 
such individual was incorrectly enrolled.
    If an individual who was incorrectly enrolled in a 
retirement system that has Social Security coverage elects to 
become enrolled in CSRS, then, as under present law, Social 
Security taxes paid on behalf of the individual for the period 
subject to the statute of limitation (i.e., within the last 3 
years) would be refunded to the agency and to the employee. The 
bill provides that the agency shall deposit in the CSRDF an 
amount equal to the shortfall in CSRS contributions that should 
have been made on behalf of the individual and that the 
individual shall reimburse the agency for such deposits up to 
the amount of Social Security taxes refundable to the 
individual. As under present law, earnings on the individual's 
Social Security earnings record for the period subject to the 
statute of limitations would be deleted, but earnings for prior 
periods would not.
    The bill also provides authority for the Commissioner of 
Social Security to obtain necessary information from agencies 
to notify the Secretary of the Treasury to transfer into the 
Social Security Trust Funds those Social Security taxes paid as 
a result of elections under the bill, and to correct earnings 
records.

Effective date

    The Social Security provisions are effective on the date of 
enactment.

                      B. Tax Provisions (Title IV)

                         (Sec. 401 of the bill)

Present law

    Under present law, Federal employees generally participate 
in one of four retirement plans: CSRS, FERS, CSRS Offset, or 
Social Security only. Participants in CSRS, CSRS Offset, and 
FERS may participate in the Federal Thrift Savings Plan 
(``TSP''), which is similar to a qualified cash or deferred 
arrangement under section 401(k) of the Internal Revenue Code. 
The Federal retirement plan in which any person participates 
depends on a number of factors, including the individual's 
employment status and date of hire. The rules governing 
participation in the TSP vary depending on 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 year under a 
section 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 section 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.

Reasons for change

    The Committee believes it is appropriate to correct errors 
in the misclassification of Federal employees resulting in such 
employees being erroneously placed in the wrong retirement 
system. The Committee believes that no Federal retirement plan 
involved in the correction should fail the retirement plan tax 
qualification rules by reason of such correction. The Committee 
also believes that no Federal employee involved in the 
correction should be subject to additional tax consequences as 
a result of such correction.

Explanation of provisions

    The bill provides that the Federal retirement plans will 
not fail to be treated as qualified retirement plans under the 
Internal Revenue Code 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, or 
former employee, who was entitled to such contributions in 
prior years without violating the applicable overall 
contribution and benefit limitations (sec. 415) for the year in 
which the make-up contribution is made. However, the amount 
contributed may not violate section 415 for the year for which 
the contribution is made.
    The bill provides that no amount is includible in the 
income of any individual for Federal tax purposes by reason of 
fund transfers or government contributions made pursuant to the 
bill. In addition, the bill provides that no amount shall be 
subject to employment taxes under Subtitle C of the Internal 
Revenue Code by reason of such transfers or contributions.

Effective date

    The tax provisions are effective on the date of enactment.

                       III. VOTE OF THE COMMITTEE

    In compliance with clause 2(l)(2)(B) of rule XI of the 
Rules of the House of Representatives, the following statement 
is made concerning the vote of the Committee on Ways and Means 
in its consideration of the bill, H.R. 3249.

Motion to report the bill

    The bill, H.R. 3249, as amended, was ordered favorably 
reported by a voice vote (with a quorum present).

                     IV. BUDGET EFFECTS OF THE BILL

                         A. Committee Estimates

    In compliance with clause 7(a) of rule XIII of the Rules of 
the House of Representatives, the following statements are made 
concerning the estimated budget effects of H.R. 3249 as 
reported by the Committee on Ways and Means.
    The bill, as reported, is estimated to have the following 
revenue effect:

 ESTIMATED REVENUE EFFECTS OF AN AMENDMENT IN THE NATURE OF A SUBSTITUTE TO H.R. 3249, THE ``FEDERAL RETIREMENT 
                   COVERAGE CORRECTIONS ACT,'' AS APPROVED BY THE COMMITTEE ON WAYS AND MEANS                   
                                [Fiscal years 1998-2002, in millions of dollars]                                
----------------------------------------------------------------------------------------------------------------
                                                                                                           1998-
                Provision                         Effective         1998    1999    2000    2001    2002    2002
----------------------------------------------------------------------------------------------------------------
Correction of Certain Retirement Coverage  DOE...................                                               
 Errors Affecting Federal Employees.                                                                            
(5)Negligible Revenue Effect                                                                                    
----------------------------------------------------------------------------------------------------------------
Note.--Details may not add to totals due to rounding.                                                           
                                                                                                                
Legend for ``Effective'' Column: DOE=date of enactment.                                                         
                                                                                                                
Source: Joint Committee on Taxation.                                                                            

    The Committee agrees with the Congressional Budget Office 
estimate of the spending effects of the bill, as amended. (See 
Part IV.C., below.)

                B. Budget Authority and Tax Expenditures

Budget authority

     In compliance with subdivision (B) of clause 2(l)(3) of 
rule XI of the Rules of the House of Representatives, the 
Committee states that the provisions of the bill as reported 
involve changes in budget authority. (See statement of the 
Congressional Budget Office in Part IV.C., below.)

Tax expenditures

    In compliance with subdivision (B) of clause 2(l)(3) of 
rule XI of the Rules of the House of Representatives, the 
Committee states that the revenue provisions of the bill as 
reported may have a negligible effect on tax expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with subdivision (C) of clause 2(l)(3) of 
rule XI of the Rules of the House of Representative, requiring 
a cost estimate prepared by the Congressional Budget Office, 
the Committee advises that the Congressional Budget Office has 
submitted the following statement on this bill.

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 20, 1998.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
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, as ordered reported by the 
Committee on Ways and Means on June 25.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Eric Rollins.
            Sincerely,
                                              James L. Blum
                                   (For 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 now taking place for regular 
federal employees.
    CBO estimates that federal agencies would bear 
discretionary costs totaling $443 million over the 1999-2003 
period, primarily because the bill would increase the size of 
makeup contributions to the Thrift Savings Plan (TSP). The bill 
would also decrease direct spending by $135 million; this drop 
in direct spending largely reflects makeup contributions to the 
Social Security trust funds, which are off-budget. 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 bill would affect direct spending and receipts, 
pay-as-you-go procedures would apply.
    The bill would require the District of Columbia and 
Gallaudet University to correct instances where employees have 
been mistakenly enrolled in the wrong retirement system. This 
requirement represents 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.

                               TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 3249                               
----------------------------------------------------------------------------------------------------------------
                                                     By fiscal year, in millions of dollars--                   
                                 -------------------------------------------------------------------------------
                                   1999    2000    2001    2002    2003    2004    2005    2006    2007    2008 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
      Total.....................      42     155     129      56      61      50      53      57     -14     -17
                                                                                                                
                                           CHANGES IN DIRECT SPENDING                                           
                                                                                                                
On-Budget.......................      -1   (\1\)   (\1\)       1       1       2       2       3       1       2
Off-Budget......................     -12     -46     -36     -21     -23     -22     -23     -25      13      16
                                 -------------------------------------------------------------------------------
      Total.....................     -12     -46     -36     -20     -21     -20     -21     -22      14      18
                                                                                                                
                                               CHANGES IN REVENUES                                              
                                                                                                                
On-Budget.......................      -?      -2      -2      -2      -3      -3      -3      -3      -2      -1
Off-Budget......................      -?       2       2       2       3       3       3       3       3       1
                                 -------------------------------------------------------------------------------
      Total.....................      -1   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)
                                                                                                                
                                                   TOTAL COST                                                   
                                                                                                                
Direct Spending and Revenues....     -12     -46     -36     -20     -21     -20     -21     -22      14      18
All Spending and Revenues.......      30     108      93      36      39      29      32      35   (\1\)       1
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.                                                                                         
                                                                                                                
Note.--Components may not sum to totals because of rounding.                                                    

    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 $422 million over the 1999-2003 period. In 
addition, Title I would increase on-budget direct spending by 
$12 million over the same period. Off-budget direct spending 
would decrease by $132 million, for a net decrease in direct 
spending of $120 million. Title I would have little impact on 
net revenues; on-budget revenues would decrease by $3 million, 
while off-budget revenues would increase by $3 million. These 
estimates assume that the Postal Service would increase postal 
rates to fully offset its own costs related to the bill. The 
estimated budgetary impact of Title I is shown in Table 2.

                                TABLE 2.--ESTIMATED BUDGETARY EFFECTS OF TITLE I                                
----------------------------------------------------------------------------------------------------------------
                                                     By fiscal year, in millions of dollars--                   
                                 -------------------------------------------------------------------------------
                                   1999    2000    2001    2002    2003    2004    2005    2006    2007    2008 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
Makeup Contribution to TSP......      32     122     103      40      44      34      37      41      -6      -6
Makeup Payments to Social                                                                                       
 Security.......................       0       1       1       1       1       1       1       1      -2      -2
Makeup Payments to the CSRDF....       7      27      21      11      11      10      11      12      -8      -9
Agency Retirement Contributions.   (\1\)   (\1\)   (\1\)      -1      -1      -1      -1      -2      -2      -2
Employer Social Security                                                                                        
 Contributions..................   (\1\)   (\1\)   (\1\)       1       1       1       1       1       1       1
                                 -------------------------------------------------------------------------------
      Total.....................      39     150     125      52      56      45      49      54     -17     -19
                                                                                                                
                                           CHANGES IN DIRECT SPENDING                                           
                                                                                                                
On-Budget:                                                                                                      
    Makeup Payments to the CSRDF     -10     -41     -32     -16     -17     -16     -17     -18      13      14
    Agency Retirement                                                                                           
     Contributions..............   (\1\)   (\1\)       1       1       2       2       2       2       3       4
    Transfers from CSRDF to                                                                                     
     Social Security............      11      43      33      18      19      18      19      21     -13     -14
                                 -------------------------------------------------------------------------------
      Subtotal..................       1       2       2       3       4       4       4       5       3       4
                                 ===============================================================================
Off-Budget:                                                                                                     
    Makeup Payments to Social                                                                                   
     Security...................   (\1\)      -2      -1      -1      -1      -1      -1      -1       3       3
    Employer Social Security                                                                                    
     Contributions..............   (\1\)   (\1\)      -1      -1      -1      -1      -2      -2      -2      -1
    Transfers from CSRDF to                                                                                     
     Social Security............     -11     -43     -33     -18     -19     -18     -19     -21      13      14
                                 -------------------------------------------------------------------------------
      Subtotal..................     -11     -45     -35     -20     -21     -20     -22     -24      14      16
                                 ===============================================================================
      Total.....................     -10     -43     -33     -17     -17     -16     -18     -19      17      19
                                                                                                                
                                               CHANGES IN REVENUES                                              
                                                                                                                
On-Budget:                                                                                                      
    Employee Retirement                                                                                         
     Contributions..............   (\1\)   (\1\)      -1      -1      -1      -1      -2      -2      -2      -1
Off-Budget:                                                                                                     
    Employee Social Security                                                                                    
     Taxes......................   (\1\)   (\1\)       1       1       1       1       2       2       2       1
                                 -------------------------------------------------------------------------------
      Total.....................   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)   (\1\)
                                                                                                                
                                               TOTAL COST OF TITLE                                              
                                                                                                                
Direct Spending and Revenues....     -10     -43     -33     -17     -18     -16     -18     -20      16      19
All Spending and Revenues.......      29     107      92      35      38      28      31      34   (\1\)   (\1\)
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000                                                                                          
                                                                                                                
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) with government matching 
contributions. 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 
whoshould 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 and correct them by 
December 31, 2001, but would not impose any penalty on agencies 
that miss this deadline. CBO assumed that agencies would 
correct their errors at a 20 percent faster annual rate than 
under current law, but that some errors would remain 
undiscovered until 2008. Agencies would also stop correcting 
errors for the first few months of 1999 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 to 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. CBO assumed that 80 percent of these employees 
would elect to remain in their current 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 an related earnings that would have been made to 
the employee's previous TSP contributions under FERS rules. If 
the employee 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, and would apply to employees 
mistakenly covered by CSRS or CSRS Offset whose coverage is 
changed to FERS. Employees whose coverage was corrected to FERS 
prior to the bill's enactment would also be eligible. 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 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 Federal 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. CBO estimates 
that the additional cost of TSP makeup contributions would be 
$341 million over the 1999-2003 period.
    Makeup Payments to Social Security. Agencies are currently 
responsible for paying makeup Social Security payroll taxes 
covering the last 3 years, 3 months, and 15 days for employees 
whose coverage is changed from CSRS to FERS or CSRS Offset, CBO 
estimates that these makeup payments would increase by $4 
million during the 1999-2003 period. This rise primarily 
reflects the impact that the bill would have on speeding up the 
correction of coverage errors.
    Makeup Payments to the Civil Service Retirement and 
Disability Fund (CSRDF). Under H.R. 3249, any necessary 
adjustments to past agency retirement contributions to the 
CSRDF would be completely retroactive, as under current law. 
Agencies would also have to reimburse the CSRDF for certain 
transfers from the CSRDF to the Social Security trust funds. As 
noted earlier, agencies are responsible for makeup Social 
Security payroll taxes covering the last 3 years, 3 months, and 
15 days. If an employee was erroneously covered for a longer 
period of time, H.R. 3249 would require the CSRDF to transfer 
to the Social Security trust funds an amount equal to the 
agency's payroll taxes for that additional periodthat should 
have gone to Social Security but went instead to the CSRDF. The agency 
would then be required to reimburse the CSRDF for the makeup employer 
taxes transferred to Social Security. CBO estimates that agency makeup 
payments to the CSRDF would increase by $77 million between 1999 and 
2003 under the bill.
    Agency Retirement Contributions. The amount that agencies 
contribute towards their employee's retirement would decrease 
slightly because the bill would speed up retirement corrections 
and shift some employees out of FERS into CFRS Offset, which 
requires lower agency retirement contributions.
    Employer Social Security Contributions. Employer 
contributions to Social Security would increase by $2 million 
between 1999 and 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 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, receipts to the trust fund 
would increase by $116 million between 1999 and 2003. The 
increase in receipts is larger than the increase in agency 
makeup payments because the receipts figure includes payments 
by the Postal Service.
    Agency Retirement Contributions. The increase in agency 
retirement contributions under the bill would decrease CSRDF 
receipts by $4 million over the 1999-2003 period. The decrease 
in receipts is larger than the decrease in agency retirement 
contributions because the receipts figure includes payments by 
the Postal Service.
    Transfers from the Civil Service Trust Fund to Social 
Security. Under H.R. 3249, the CSRDF would make payments to the 
Social Security trust funds for certain back payroll taxes. 
CSRDF would be required to transfer amounts equal to any 
employees payroll taxes and employer payroll taxes beyond the 
current statute of limitations of 3 years, 3 months, and 15 
days that should have gone to Social Security but instead went 
to the CSRDF. As noted above, agencies would reimburse the 
CSRDF for transfers of employer payroll taxes. CBO estimates 
that transfers from the CSRDF to the Social Security trust 
funds would total $124 million over the 1999-2003 period. 
Although these transfers are intragovernmental, the payments 
would be on-budget, and the receipt of these funds by Social 
Security would be off-budget.
            Effects on direct spending (off-budget)
    H.R. 3249 would affect offsetting receipt to the Social 
Security trust funds in three ways. First, agency makeup 
payments would be slightly accelerated, increasing receipts by 
$5 million between 1999 and 2003. Second, receipts from 
employer Social Security contributions would rise by $3 million 
during this period. In both of these instances, the increase in 
receipts is larger than the increase in discretionary spending 
because the receipts figure includes payments by the Postal 
Service. Finally, transfers from the Civil Service trust fund 
for back taxes would increase receipts by $124 million during 
the 1999-2003 period.
            Effects on revenues
    Employee Retirement Contributions. Because of the speeding 
up of retirement corrections, employee retirement contributions 
would decrease by $3 million over the 1999-2003 period. 
Employees would be moved more rapidly out of CSRS, which 
requires 7 percent employee contributions, and into CSRS Offset 
or FERS, which both require 0.8 percent employee contributions.
    Employee Social Security Taxes. By moving from CSRS to CSRS 
Offset or FERS, employees would also become covered by Social 
Security. The speeding up of retirement corrections thus would 
increase receipts of employee Social Security taxes by $3 
million between 1999 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 the one now taking place for 
employees in CSRS who would like to join FERS. The estimated 
budgetary impact of Section 304 is shown in Table 3.
    FSRDS employees has 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 would 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 9.6 
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 $15 million 
between 1999 and 2003.

                               TABLE 3.--ESTIMATED BUDGETARY EFFECTS OF TITLE III                               
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                             1999   2000   2001   2002   2003   2004   2005   2006   2007   2008
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
Agency Retirement Contributions...........      2      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...............................      3      4      4      5      5      5      4      4      3      2
                                                                                                                
                                           CHANGES IN DIRECT SPENDING                                           
                                                                                                                
On-Budget:                                                                                                      
    Agency Retirement Contributions.......     -1     -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...............................     -2     -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...............................  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)  (\1\)
                                                                                                                
                                             TOTAL COST OF TITLE III                                            
Direct Spending and Revenues..............     -2     -3     -3     -3     -4     -4     -3     -3     -2     -2
All Spending and Revenues.................      1      1      1      1      1      1      1      1      1      1
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000.                                                                                         
                                                                                                                
Note.--Components may not sum to totals because of rounding                                                     

    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 a 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 1999-2003 
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 by $9 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 estimates 
that the impact of switching employees on Foreign Service and 
Social Security benefit outlays would be insignificant between 
1999 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 Table 4.

                                   TABLE 4.--SUMMARY OF PAY-AS-YOU-GO EFFECTS                                   
                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                   1999    2000    2001    2002    2003    2004    2005    2006    2007    2008 
----------------------------------------------------------------------------------------------------------------
Change in outlays...............       0       0       0       1       1       2       2       3       1       2
Change in receipts..............      -1      -2      -2      -2      -3      -3      -3      -3      -2      -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: On March 31, 1998, CBO 
issued an estimate for H.R. 3249 as reported by the House 
Committee on Government Reform and Oversight. CBO estimated 
that that version of H.R. 3249 would impose discretionary costs 
on agencies totaling $121 million and increase direct spending 
by $152 million over the 1998-2003 period. The bill reported by 
the Committee on Government Reform differs from this bill in 
several respects. First, it would allow some or all of an 
agency's costs associated with the bill to be paid from a 
permanent appropriation, subject to the approval of the Office 
of Management and Budget. Second, employees who were 
incorrectly covered by CSRS or CSRS Offset and whose coverage 
had been corrected to FERS prior to the bill's enactment would 
not be eligible for the more generous TSP makeup contributions. 
Third, 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. These 
refunds would be available to the agency for spending on future 
CSRDF contributions. Each of these provisions involves lower 
discretionary costs and/or higher direct spending relative to 
the Ways and Means version of H.R. 3249.
    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.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

          A. Committee Oversight Findings and Recommendations

    With respect to subdivision (A) of clause 2(l)(3) of rule 
XI of the Rules of the House of Representatives (relating to 
oversight findings), the Committee advises that it was the 
result of the Committee's oversight activities with respect to 
the misclassification of Federal employees into the wrong 
Federal retirement system that the Committee concluded that it 
is appropriate and timely to enact the provisions contained in 
the bill as reported.

    B. Summary of Findings and Recommendations of the Committee on 
                    Government Reform and Oversight

    With respect to subdivision (D) of clause 2(l)(3) of rule 
XI of the Rules of the House of Representatives, the Committee 
on Ways and Means advises that the Committee on Government 
Reform and Oversight ordered H.R. 3249 favorably reported on 
March 5, 1998, and that committee filed a report on the bill on 
July 14, 1998 (H. Rept. 105-625, Part 1). The Committee on 
Government Reform and Oversight submitted the following letter 
regarding H.R. 3249.

              Committee on Government Reform and Oversight,
                                     Washington, DC, June 23, 1998.
Hon. Bill Archer,
Chairman, Committee on Ways and Means,
House of Representatives, Longworth HOB, Washington, DC.
    Dear Mr. Chairman: Thank you for agreeing to mark up the 
provisions of H.R. 3249, the Federal Retirement Coverage 
Correction Act, within your jurisdiction on Thursday, June 25, 
1998. It will bring long overdue relief to the thousands of 
federal employees who, through no fault of their own, have been 
enrolled in the wrong retirement system.
    We appreciate your offer to introduce the June 4, 1998 
draft prepared by the Subcommittee on Civil Service as an 
amendment in the nature of a substitute. It is also our 
understanding that this draft will be further amended to revise 
sections 102(b)(1)(C), 102(b)(2)(A)(ii), and 102(b)(2)(B) to 
incorporate recommendations provided by the Social Security 
Administration in its June 22, 1998 memorandum to the staff 
director of the Subcommittee on Social Security. We have no 
objection to these actions.
    Again, thank you for your assistance and the hard work the 
staffs of the Ways and Means Committee, the Subcommittee on 
Social Security, and the Joint Committee on Taxation have put 
in on this bill. They have provided invaluable technical 
assistance and guidance in the drafting of this legislation.
            Sincerely,
                                   Dan Burton,
                                           Chairman.
                                   Henry A. Waxman,
                                           Ranking Member.
                                   John L. Mica,
                                           Chairman, Subcommittee on 
                                               Civil Service.
                                   Elijah E. Cummings,
                                           Ranking Member, Subcommittee 
                                               on Civil Service.

                 C. Constitutional Authority Statement

    With respect to clause 2(l)(4) of rule XI of the Rules of 
the House of Representatives (relating to Constitutional 
authority), the Committee states that the Committee's action in 
reporting this bill is derived from Article I of the 
Constitution, Section 7 (``All bills for raising revenue shall 
originate in the House of Representatives'') and Section 8 
(``The Congress shall have the power to lay and collect taxes, 
duties, imposts and excises, to pay the debts . . . of the 
United States''), and from the 16th Amendment to the 
Constitution.

              D. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (P.L. 104-4). The 
Committee has determined that the revenue provisions of H.R. 
3249, as amended, contain no private sector mandates or 
intergovernmental mandates within the meaning of the Unfunded 
Mandates Act of 1995.

                 E. Applicability of House Rule XXI5(c)

    Rules XXI5(c) of the Rules of the House of Representatives 
provides, in part, that ``No bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase shall be considered as passed or agreed to unless 
so determined by a vote of not less than three-fifths of the 
Members.'' The Committee has carefully reviewed the provisions 
of the bill, and states that the provisions of the bill as 
reported do not involve any Federal income tax rate increase 
within the meaning of the rule.

       VI. 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 or 
                        section 307 of the Central Intelligence 
                        Agency Retirement Act (50 U.S.C. 2157), 
                        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.

                                
