A frequent question asked by readers recently has been focused on the status of a bill to allow retiring federal employees to add the value of their unused annual leave to their Thrift Savings Plan (TSP) account.
The answer was simple and straightforward: There was no bill to allow this to happen. It has been discussed in different venues by one or two Congressmen and employee groups but the legislation did not exist.
Now, however, it does exist. HR 4865 was introduced on March 17, 2010. The purpose of the bill is: "To amend title 5, United States Code, to provide that an employee of the Federal Government or member of the uniformed services may contribute to the Thrift Savings Fund any payment that the employee or member receives for accumulated and accrued annual or vacation leave, and for other purposes."
It was introduced by Stephen Lynch (D-MA) and Jason Chaffetz (R-UT) and is now residing in the House Oversight and Government Reform Committee.
The legislation would apply to federal employees who are in CSRS and the FERS retirement system. It would also apply to employees of the Postal Service and the Postal Regulatory Commission.
The extra contributions that an employee could make to the TSP would not be unlimited though. Those unused leave deposits would count toward annual contribution limits set by the Internal Revenue Service. Employees under 50 are currently capped at $16,500 per year; employees who are 50 or older can contribute an additional $5,500 ($22,000 total).
No doubt, some readers are wondering whether the significant recent publicity about the much larger benefits package enjoyed by federal employees over those in the private sector will have an impact on this legislation. (See Federal Pay Gap With Private Sector Growing)
That could happen and, no doubt, the more expensive benefits package given to federal employees will be raised in any debate. But there are two facts that will mitigate this argument.
First, the Internal Revenue Service began allowing private-sector employees to roll the cash value of unused vacation and sick leave time into their 401(k) accounts late last year. This bill would allow TSP participants to do the same for their annual leave. It does not, however, allow federal employee or military personnel to convert sick leave into money going into their TSP.
And, second, the bill has bipartisan support. Only two House Members are sponsoring the bill but as they are from the two major parties, that could help passage of the bill.