Legislation that will make it easier for federal employees to manage their accounts in the Thrift Savings Plan was approved by the Senate yesterday and sent to President Bush for his signature.
The measure will eliminate the TSP's twice-a-year "open seasons," the only time employees can change the amount they contribute from their salaries toward their retirement.
 
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"This is a great achievement for federal employees," Sen. Susan M. Collins (R-Maine), the legislation's chief sponsor, said in a statement after the vote. "Our legislation gives federal employees the same access and flexibility to their retirement savings plan that most workers have in the private sector."
Collins, who chairs the Senate Governmental Affairs Committee, added, "Our hope is that this change attracts more federal employees to save for their future using the TSP."
Rep. Thomas M. Davis III (R-Va.), chairman of the House Government Reform Committee, sponsored the bill on the House floor when it was approved there Nov. 19. During the floor debate, he said the legislation would help participants cope with "changing circumstances" in their personal lives.
TSP, a 401(k)-type program, currently holds open seasons at two times: April 15 through June 30 and Oct. 15 through Dec. 31. Newly hired employees have 60 days to enroll in the TSP, and if they fail to do so must wait until the next open season. Employees who stop their TSP contributions must wait until the second open season, which can mean a delay of close to a year.
Collins, Davis and Andrew M. Saul, chairman of the board that oversees the TSP, agreed that open seasons were no longer necessary after the thrift plan installed a new record-keeping system that permits daily transactions by participants. The previous system operated on a monthly basis and open seasons initially were set up as a way for the TSP to administer enrollments and investment decisions.
After the president signs the bill, the TSP will issue new regulations on enrollment and contributions and phase out the open seasons. The new rules should be in place next year, when the TSP plans to introduce "lifecycle funds" that participants can select to rebalance their accounts to ensure diversification and appropriate risk.
The legislation being sent to Bush does not include a House provision that had called for automatic contributions by agencies to begin as soon as an employee is deemed eligible to join the TSP. Currently, for some employees, it takes from seven months to nearly a year before matching funds begin.
Congressional aides said the agency provision was dropped because of cost considerations. But Davis, in a statement yesterday, said he would introduce legislation to address what he called "this internal inequity."
The legislation also includes a provision, sponsored by Sen. Daniel K. Akaka (D-Hawaii), that promotes efforts to improve the investment and retirement planning skills of TSP participants.
The bill directs the thrift board to "periodically evaluate whether the tools available to participants provide the information needed to understand, evaluate and compare financial products, services and opportunities offered" by the TSP. In addition, it requires the thrift board and Office of Personnel Management to develop a "financial literacy strategy and education strategy" to help prepare federal employees for retirement.
The TSP is open to civil service, postal, military and other uniformed personnel and has been growing by more than $1 billion a month in new contributions. At last count, the TSP had about 3.4 million participants and $143 billion in assets.
Executive Recruitment
The Office of Personnel Management received 2,659 online applications over three weeks for a special government-wide program designed to broaden opportunities for minorities, women and people with disabilities to become federal executives.
Applications for the first class in the Senior Executive Service Federal Candidate Development Program, or Fed CDP, will be accepted through today, OPM said. Information about the program can be found at www.opm.gov/ses/fedcdp.
Diary Live Today
Please join me for a discussion of federal employee and retiree issues at noon today on Federal Diary Live at www.washingtonpost.com.
E-mail: barrs@washpost.com.
