Text: H.R.6500 — 110th Congress (2007-2008)All Information (Except Text)

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Introduced in House (07/15/2008)


110th CONGRESS
2d Session
H. R. 6500


To amend title 5, United States Code, to provide for the automatic enrollment of new participants in the Thrift Savings Plan, and for other purposes.


IN THE HOUSE OF REPRESENTATIVES

July 15, 2008

Mr. Waxman (for himself, Mr. Tom Davis of Virginia, and Mr. Davis of Illinois) introduced the following bill; which was referred to the Committee on Oversight and Government Reform


A BILL

To amend title 5, United States Code, to provide for the automatic enrollment of new participants in the Thrift Savings Plan, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title; table of contents.

(a) Short title.—This Act may be cited as the “Thrift Savings Plan Enhancement Act of 2008”.

(b) Table of contents.—The table of contents of this Act is as follows:


Sec. 1. Short title; table of contents.

Sec. 2. Automatic enrollments.

Sec. 3. Qualified Roth contribution program.

Sec. 4. Authority to establish self-directed investment options.

Sec. 5. Reporting requirements.

Sec. 6. Acknowledgement of risk.

SEC. 2. Automatic enrollments.

(a) Automatic enrollment of new participants.—

(1) IN GENERAL.—Section 8432(b) of title 5, United States Code, is amended by striking paragraphs (2) through (4) and inserting the following:

“(2)(A) The Board shall by regulation provide for new participants to be automatically enrolled to make contributions under subsection (a) at the default percentage of basic pay.

“(B) For purposes of this paragraph, the default percentage shall be equal to 3 percent or such other percentage, not less than 2 percent nor more than 5 percent, as the Board may by regulation prescribe.

“(C) The regulations shall include provisions under which any individual who would otherwise be automatically enrolled in accordance with subparagraph (A) may—

“(i) modify the percentage or amount to be contributed pursuant to automatic enrollment, effective from the start of such enrollment; or

“(ii) decline automatic enrollment altogether.

“(D) For purposes of this paragraph, the term ‘new participant’ means any individual participating in the Thrift Savings Plan pursuant to an appointment or election which occurs after any regulations under subparagraph (A) first take effect.

“(E) Sections 8351(a)(1), 8440a(a)(1), 8440b(a)(1), 8440c(a)(1), 8440d(a)(1), and 8440e(a)(1) shall be applied in a manner consistent with the purposes of this paragraph.”.

(2) TECHNICAL AMENDMENT.—Section 8432(b)(1) of title 5, United States Code, is amended by striking the parenthetical matter in subparagraph (B).

(b) Default investments.—Section 8438(c)(2) of title 5, United States Code, is amended to read as follows:

“(2) If an election has not been made with respect to any sums in the Thrift Savings Fund which are available for investment, the Executive Director shall invest such sums in—

“(A) the Government Securities Investment Fund; or

“(B) such alternative fund or funds (in lieu of the fund under subparagraph (A)) as the Board may designate in regulations.

The designation of an alternative fund by regulations under subparagraph (B) may be made only if, in the judgment of the Board, such designation would be in the best interests of participants. Any decision under the preceding sentence shall be made after consultation with the Employee Thrift Advisory Council (established under section 8473).”.

SEC. 3. Qualified Roth contribution program.

(a) In general.—Subchapter III of chapter 84 of title 5, United States Code, is amended by inserting after section 8432c the following:

§ 8432d. Qualified Roth contribution program

“(a) Definitions.—For purposes of this section—

“(1) the term ‘qualified Roth contribution program’ means a program described in paragraph (1) of section 402A(b) of the Internal Revenue Code of 1986 which meets the requirements of paragraph (2) of such section; and

“(2) the terms ‘designated Roth contribution’ and ‘elective deferral’ have the meanings given such terms in section 402A of the Internal Revenue Code of 1986.

“(b) Authority To establish.—The Board shall by regulation provide for the inclusion in the Thrift Savings Plan of a qualified Roth contribution program, under such terms and conditions as the Board may prescribe.

“(c) Required provisions.—The regulations under subsection (b) shall include—

“(1) provisions under which an election to make designated Roth contributions may be made—

“(A) by any individual who is eligible to make contributions under section 8351, 8432(a), 8440a, 8440b, 8440c, 8440d, or 8440e; and

“(B) by any individual, not described in subparagraph (A), who is otherwise eligible to make elective deferrals under the Thrift Savings Plan;

“(2) any provisions which may, as a result of the enactment of this section, be necessary in order to clarify the meaning of any reference to an ‘account’ made in section 8432(f), 8433, 8434(d), 8435, 8437, or any other provision of law; and

“(3) any other provisions which may be necessary to carry out this section.”.

(b) Clerical amendment.—The analysis for chapter 84 of title 5, United States Code, is amended by inserting after the item relating to section 8432c the following:


“8432d. Qualified Roth contribution program.”.

SEC. 4. Authority to establish self-directed investment options.

(a) In general.—Section 8438(b)(1) of title 5, United States Code, is amended—

(1) in subparagraph (D), by striking “and” at the end;

(2) in subparagraph (E), by striking the period and inserting “; and”; and

(3) by adding after subparagraph (E) the following:

“(F) self-directed investment options, if the Board authorizes such options under paragraph (5).”.

(b) Requirements.—Section 8438(b) of title 5, United States Code, is amended by adding at the end the following:

“(5)(A) The Board may authorize the addition of self-directed investment options under the Thrift Savings Plan if the Board determines that the addition of such options would be in the best interests of participants.

“(B) The self-directed investment options shall be limited to—

“(i) low-cost, passively-managed index funds that offer diversification benefits; and

“(ii) other investment options, if the Board determines the options to be appropriate retirement investment vehicles for participants.

“(C) The Board shall ensure that any administrative expenses related to self-directed investment options are borne solely by the participants who use such options.

“(D) The Board may establish such other terms and conditions for self-directed investment options as the Board considers appropriate to protect the interests of participants, including requirements relating to risk disclosure.

“(E) The Board shall consult with the Employee Thrift Advisory Council (established under section 8473) before establishing any self-directed investment option.”.

SEC. 5. Reporting requirements.

(a) Annual report.—The Board shall, not later than March 31 of each year, submit to Congress an annual report on the operations of the Thrift Savings Plan. Such report shall include, for the prior calendar year, information on the number of participants as of the last day of such prior calendar year, the median balance in participants’ accounts as of such last day, demographic information on participants, the percentage allocation of amounts among investment funds or options, the status of the development and implementation of self-directed investment options, and such other information as the Board considers appropriate. A copy of each annual report under this subsection shall be made available to the public through an Internet website.

(b) Reporting of fees and other information.—

(1) IN GENERAL.—The Board shall include in the periodic statements provided to participants under section 8439(c) the amount of the investment management fees, administrative expenses, and any other fees or expenses paid with respect to each investment fund and option under the Thrift Savings Plan. Any such statement shall also provide—

(A) information on the employee’s estimated income replacement rate, as determined by the Executive Director based on the employee’s most recent account balance and rates of contributions; and

(B) a statement notifying participants as to how they may access the annual report described in subsection (a) as well as any other information concerning the Thrift Savings Plan that might be useful.

(2) USE OF ESTIMATES.—For purposes of providing the information required under this subsection, the Executive Director may provide a reasonable and representative estimate of any fees or expenses described in paragraph (1) and shall indicate any such estimate as being such an estimate. Any such estimate shall be based on the previous year’s experience.

(c) Definitions.—For purposes of this section—

(1) the term “Board” has the meaning given such term by 8401(5) of title 5, United States Code;

(2) the term “participant” has the meaning given such term by section 8471(3) of title 5, United States Code; and

(3) the term “account” means an account established under section 8439 of title 5, United States Code.

SEC. 6. Acknowledgement of risk.

(a) In general.—Section 8439(d) of title 5, United States Code, is amended—

(1) by striking the matter after “who elects to invest in” and before “shall sign an acknowledgement” and inserting “any investment fund or option under this chapter, other than the Government Securities Investment Fund,”; and

(2) by striking “either such Fund” and inserting “any such fund or option”.

(b) Coordination with provisions relating to investments in the absence of an election.—Subsection (d) of section 8439 of title 5, United States Code (as amended by subsection (a)) is further amended—

(1) by redesignating subsection (d) as subsection (d)(1); and

(2) by adding at the end the following:

“(2)(A) In the case of an investment made under section 8438(c)(2) in any fund or option to which paragraph (1) would otherwise apply, the participant involved shall, for purposes of this subsection, be deemed—

“(i) to have elected to invest in such fund or option; and

“(ii) to have executed the acknowledgement required under paragraph (1).

“(B)(i) The Executive Director shall prescribe regulations under which written notice shall be provided to a participant whenever an investment is made under section 8438(c)(2)(B) on behalf of such particpant in the absence of an affirmative election described in section 8438(c)(1).

“(ii) The regulations shall ensure that any such notice shall be provided to the participant within 7 calendar days after the effective date of the default election.

“(C) For purposes of this paragraph, the term ‘participant’ has the meaning given such term by section 8471(3).”.

(c) Coordination with provisions relating to fiduciary responsibilities, liabilities, and penalties.—Section 8477(e)(1)(C) is amended—

(1) by redesignating subparagraph (C) as subparagraph (C)(i); and

(2) by adding at the end the following:

“(ii) A fiduciary shall not be liable under subparagraph (A), and no civil action may be brought against a fiduciary—

“(I) for providing for the automatic enrollment of a participant in accordance with section 8432(b)(2)(A); or

“(II) for enrolling a participant in a default investment fund in accordance with section 8438(c)(2)(B).”.


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