[House Report 106-87]
[From the U.S. Government Publishing Office]





106th Congress                                                   Report
  1st Session           HOUSE OF REPRESENTATIVES                 106-87

=======================================================================



 
     ROLLOVER DISTRIBUTIONS TO ACCOUNTS IN THE THRIFT SAVINGS PLAN

                                _______
                                

 April 13, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


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

                              R E P O R T

                        [To accompany H.R. 208]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Government Reform, to whom was referred the 
bill (H.R. 208) to amend title 5, United States Code, to allow 
for the contribution of certain rollover distributions to 
accounts in the Thrift Savings Plan, to eliminate certain 
waiting-period requirements for participating in the Thrift 
Savings Plan, and for other purposes, having considered the 
same, report favorably thereon with an amendment and recommend 
that the bill as amended do pass.

                                CONTENTS

                                                                   Page
   I. Summary of Legislation........................................   3
  II. Background and Need for the Legislation.......................   3
 III. Legislative Hearings and Committee Actions....................   4
  IV. Committee Hearings and Written Testimony......................   4
   V. Explanation of the Bill.......................................   5
  VI. Compliance with Rule XIII.....................................   5
 VII. Budget Analysis and Projections...............................   5
VIII. Cost Estimate of the Congressional Budget Office..............   6
  IX. Specific Constitutional Authority for this Legislation........   8
   X. Committee Recommendation......................................   8
  XI. Congressional Accountability Act; Public Law 104-1............   8
 XII. Unfunded Mandates Reform Act; Public Law 104-4, Sect. 423.....   8
XIII. Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b)...   9
 XIV. Changes in Existing Law.......................................   9

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

SECTION 1. ELIGIBLE ROLLOVER DISTRIBUTIONS.

  (a) In General.--Section 8432 of title 5, United States Code, is 
amended by adding at the end the following:
  ``(j)(1) For the purpose of this subsection--
          ``(A) the term `eligible rollover distribution' has the 
        meaning given such term by section 402(c)(4) of the Internal 
        Revenue Code of 1986; and
          ``(B) the term `qualified trust' has the meaning given such 
        term by section 402(c)(8) of the Internal Revenue Code of 1986.
  ``(2) An employee or Member may contribute to the Thrift Savings Fund 
an eligible rollover distribution from a qualified trust. A 
contribution made under this subsection shall be made in the form 
described in section 401(a)(31) of the Internal Revenue Code of 1986. 
In the case of an eligible rollover distribution, the maximum amount 
transferred to the Thrift Savings Fund shall not exceed the amount 
whichwould otherwise have been included in the employee's or Member's 
gross income for Federal income tax purposes.
  ``(3) The Executive Director shall prescribe regulations to carry out 
this subsection.''.
  (b) Effective Date.--The amendment made by this section shall take 
effect on October 1, 2000, or such earlier date as the Executive 
Director (as defined by section 8401 of title 5, United States Code) 
may by regulation prescribe, but not before September 1, 2000.

SEC. 2. IMMEDIATE PARTICIPATION IN THE THRIFT SAVINGS PLAN.

  (a) Elimination of Certain Waiting Periods for Purposes of Employee 
Contributions.--Paragraph (4) of section 8432(b) of title 5, United 
States Code, is amended to read as follows:
  ``(4) The Executive Director shall prescribe such regulations as may 
be necessary to carry out the following:
          ``(A) Notwithstanding subparagraph (A) of paragraph (2), an 
        employee or Member described in such subparagraph shall be 
        afforded a reasonable opportunity to first make an election 
        under this subsection beginning on the date of commencing 
        service or, if that is not administratively feasible, beginning 
        on the earliest date thereafter that such an election becomes 
        administratively feasible, as determined by the Executive 
        Director.
          ``(B) An employee or Member described in subparagraph (B) of 
        paragraph (2) shall be afforded a reasonable opportunity to 
        first make an election under this subsection (based on the 
        appointment or election described in such subparagraph) 
        beginning on the date of commencing service pursuant to such 
        appointment or election or, if that is not administratively 
        feasible, beginning on the earliest date thereafter that such 
        an election becomes administratively feasible, as determined by 
        the Executive Director.
          ``(C) Notwithstanding the preceding provisions of this 
        paragraph, contributions under paragraphs (1) and (2) of 
        subsection (c) shall not be payable with respect to any pay 
        period before the earliest pay period for which such 
        contributions would otherwise be allowable under this 
        subsection if this paragraph had not been enacted.
          ``(D) Sections 8351(a)(2), 8440a(a)(2), 8440b(a)(2), 
        8440c(a)(2), and 8440d(a)(2) shall be applied in a manner 
        consistent with the purposes of subparagraphs (A) and (B), to 
        the extent those subparagraphs can be applied with respect 
        thereto.
          ``(E) Nothing in this paragraph shall affect paragraph 
        (3).''.
  (b) Technical and Conforming Amendments.--(1) Section 8432(a) of 
title 5, United States Code, is amended--
          (A) in the first sentence by striking ``(b)(1)'' and 
        inserting ``(b)''; and
          (B) by amending the second sentence to read as follows: 
        ``Contributions under this subsection pursuant to such an 
        election shall, with respect to each pay period for which such 
        election remains in effect, be made in accordance with a 
        program of regular contributions provided in regulations 
        prescribed by the Executive Director.''.
  (2) Section 8432(b)(1)(B) of title 5, United States Code, is amended 
by inserting ``(or any election allowable by virtue of paragraph (4))'' 
after ``subparagraph (A)''.
  (3) Section 8432(b)(3) of title 5, United States Code, is amended by 
striking ``Notwithstanding paragraph (2)(A), an'' and inserting ``An''.
  (4) Section 8439(a)(1) of title 5, United States Code, is amended by 
inserting ``who makes contributions or'' after ``for each individual'' 
and by striking ``section 8432(c)(1)'' and inserting ``section 8432''.
  (5) Section 8439(c)(2) of title 5, United States Code, is amended by 
adding at the end the following: ``Nothing in this paragraph shall be 
considered to limit the dissemination of information only to the times 
required under the preceding sentence.''.
  (6) Sections 8440a(a)(2) and 8440d(a)(2) of title 5, United States 
Code, are amended by striking all after ``subject to'' and inserting 
``this chapter.''.
  (c) Effective Date.--
          (1) In general.--The amendments made by this section shall 
        take effect on October 1, 2000, or such earlier date as the 
        Executive Director (as defined by section 8401 of title 5, 
        United States Code) may by regulation prescribe, but not before 
        September 1, 2000.
          (2) Savings provision.--Notwithstanding any other provision 
        of this section, until the amendments made by this section take 
        effect, title 5, United States Code, shall be applied as if 
        this section had not been enacted.

SEC. 3. ADDITIONAL GOVERNMENT CONTRIBUTIONS FOR RETIREMENT.

  (a) Federal Employees' Retirement System.--Section 8423(a) of title 
5, United States Code, is amended by adding at the end the following:
  ``(5) Notwithstanding any other provision of this chapter, effective 
with respect to contributions for pay periods beginning on or after 
October 1, 2000, the normal-cost percentage used for purposes of any 
computation under this subsection shall be equal to--
          ``(A) the percentage that would otherwise apply if this 
        paragraph had not been enacted, plus
          ``(B) .01 of 1 percentage point.''.
  (b) Supplemental Liability.--For purposes of applying section 8423(b) 
of title 5, United States Code, and section 857(b) of the Foreign 
Service Act of 1980 (22 U.S.C. 4071f(b)), all amounts shall be 
determined as if this section had never been enacted.
  (c) Limitation on Source of Additional Contributions.--
Notwithstanding section 8423(a)(3) of title 5, United States Code, or 
any other provision of law, the additional Government contributions 
required to be made by reason of the amendment made by subsection (a) 
shall be made out of any amounts available to the employing agency 
involved, other than any appropriation, fund, or other amounts 
available for the payment of employee salaries or benefits.
  (d) Conforming Amendment.--Section 307 of the Federal Employees' 
Retirement System Act of 1986 (Public Law 99-335; 5 U.S.C. 8401 note) 
is amended by inserting ``, including the additional amount required 
under section 8423(a)(5)(B) of such title 5,'' after ``Federal 
Employees' Retirement System''.

                    I. Short Summary of Legislation

    This bill authorizes Federal employees to begin 
participation in the Thrift Savings Plan immediately upon being 
hired rather than waiting six months to a year as is required 
by current law. This legislation also authorizes new Federal 
hires to contribute eligible rollover distributions from 
qualified trusts, including private sector 401(k) accounts, to 
the Thrift Savings Fund.

              II. Background and Need for the Legislation

    H.R. 208 would bolster a critical component of Federal 
employee retirement benefits, the Thrift Savings Plan. The 
Thrift Savings Plan (TSP) is a retirement saving and investment 
plan for Federal and postal employees. The TSP is a critical 
part of the Federal employee benefits package, and particularly 
important for those employees hired in the last decade who, 
under the Federal Employees Retirement System (FERS), receive 
smaller defined benefits and need to invest greater amounts in 
order to enhance their retirement income. H.R. 208 improves the 
current TSP in two distinct ways. First, it permits newly hired 
Federal employees to begin making tax-advantaged contributions 
toward their own retirement earlier than allowed under current 
law. Under current law, new hires must wait until the second 
open season after they begin working for the government. Many 
new employees have to wait as long as a year. Second, employees 
are allowed to contribute ``rollover'' distributions from 
certain qualified trusts, such as 401(k) plans. These 
contributions are not permitted under current law.
    Too few Americans adequately save for their retirement. 
Data published on the Internet by the American Savings 
Education Council show that since 1992, personal savings as a 
percentage of disposable personal income has dropped steadily 
from 5.7% to 0.5% in 1998.1 Half of all families 
headed by someone between 55 and 64 years old possess less than 
$5,000 in net financial assets.2 With the retirement 
of America's baby-boomers approaching, and in light of all the 
uncertainties surrounding Social Security, Congress should 
encourage everyone, including Federal employees, to assume more 
responsibility for their own retirement.
---------------------------------------------------------------------------
    \1\ American Savings Education Council, www.asec.org/
perssav.htm#def.
    \2\ Joseph M. Anderson, The Wealth of U.S. Families in 1995 
(Capital Research Associates 1998), p. 3. Net financial assets are 
gross financial assets minus unsecured debt.
---------------------------------------------------------------------------
    H.R. 208 provides a partial solution. Employees will be 
able to make contributions as much as one year earlier than 
they otherwise would have. Agencies will not make government 
contributions during this period. Nevertheless, the opportunity 
to participate in this tax-deferred savings program for this 
additional period should be particularly helpful to employees 
who are beginning their careers. Because of the effects of 
compounding, even modest contributions in the early years of a 
savings plan can yield substantial benefits over time. 
According to the Congressional Research Service, employees will 
add almost $19,000 more to their TSP accounts after a 30 year 
career for each $1,000 they contribute during their first year, 
assuming a 10% rate of return. That is an excellent incentive 
to save. H.R. 208 will also make it more convenient for 
employees to manage their retirement investments by permitting 
them to roll the amounts in their private 401(k) plans and 
other qualified trusts into the TSP.

            III. Legislative Hearings and Committee Actions

    The Committee held no legislative hearings on H.R. 208. 
Rep. Constance A. Morella introduced H.R. 208 on January 6, 
1999. The bill was referred to the Committee on Government 
Reform on January 6, 1999, and, on January 25, 1999, to the 
Subcommittee on the Civil Service. On February 25, 1999, the 
Subcommittee considered the bill, and forwarded the bill to the 
Committee on Government Reform by voice vote. The Committee on 
Government Reform considered the bill on March 17, 1999. Mrs. 
Morella offered an amendment in the nature of a substitute, 
which offset the loss of tax revenues that accompanies earlier 
participation in the TSP by increasing agency contributions to 
the Civil Service Retirement and Disability Fund. The Committee 
adopted the amendment in the nature of a substitute by voice 
vote and, also by voice vote, ordered the bill, as amended, to 
be reported to the House.

              IV. Committee Hearings and Written Testimony

    The Committee did not hold any hearings related to this 
legislation.

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


               Section 1. Eligible Rollover Distributions

    This section amends 5 U.S.C. 8432 to permit employees and 
Members to transfer to the TSP his or her account balance from 
a plan qualified under section 401(a) or 408(b) of the Internal 
Revenue Code or an Individual Retirement Arrangement (IRA) 
qualified under sections 408(a) or 408(b) to the TSP. Such 
transfers are not permitted under current law.

     Section 2. Immediate Participation in the Thrift Savings Plan

    This section amends 5 U.S.C. 8432(b) to eliminate 
statutorily required waiting periods before employees and 
Members may contribute to the TSP. Under this section, such 
individuals shall be eligible to contribute on the day they 
began service or, if that is not administratively feasible, on 
the earliest date thereafter that the Executive Director 
determines to be feasible. This section takes effect 6 months 
after the date of enactment or on such earlier date as the 
Executive Director of the Federal Retirement Thrift Investment 
Board may prescribe by regulation.

     Section 3. Additional Government Contributions for Retirement

    This section amends 5 U.S.C. 8432(a) to require agencies to 
contribute an additional one one-hundredth of one percent of 
FERS payroll to the Civil Service Retirement and Disability 
Fund. These additional contributions will not reduce the amount 
of supplemental contributions required under section 8423(b) of 
title 5, United States Code or section 857(b) of the Foreign 
Service Act of 1980 (22 U.S.C. Sec. 4071f(b)). Agencies may not 
take the additional contributions required under this section 
from accounts used to pay employee salaries or benefits.

                     VI. Compliance With Rule XIII

    Pursuant to rule XIII, clause 3(c)(1) of the Rules of the 
House of Representatives, under the authority of rule X, clause 
2(b)(1) and clause 3(e), the results and findings from 
Committee oversight activities are incorporated in the bill and 
this report.

                  VII. Budget Analysis and Projections

    The budget analysis and projections required by section 
308(a) of the Congressional Budget Act of 1974 are contained in 
the estimate of the Congressional Budget Office.

         VIII. Cost Estimate of the Congressional Budget Office

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 26, 1999.
Hon. Dan Burton,
Chairman, Committee on Government Reform,
U.S. House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 208, a bill 
amending the Thrift Savings Plan for federal employees.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Eric Rollins.
            Sincerely,
                                       Steven M. Lieberman,
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 208--To amend title 5, United States Code, to allow for the 
        contribution of certain rollover distributions to accounts in 
        the Thrift Savings Plan, to eliminate certain waiting-period 
        requirements for participating in the Thrift Savings Plan, and 
        for other purposes

    Summary: H.R. 208 would make two changes to the Thrift 
Savings Plan (TSP), the defined contribution component of the 
federal government's major civilian retirement programs. The 
bill would let newly hired federal employees make contributions 
to the TSP sooner than allowed under current law and let 
federal employees transfer balances from other tax-deferred 
savings plans to their TSP accounts. The bill would also raise 
the amount that federal agencies contribute to the Civil 
Service trust fund for employees covered by the Federal 
Employees' Retirement System (FERS) by \1/100\ of a percentage 
point. All changes would become effective on October 1, 2000.
    CBO estimates that H.R. 208 would increase discretionary 
spending by $35 million over the 2000-2004 period because of 
higher agency contributions to the Civil Service Retirement 
Trust Fund. The bill would have no net impact on direct 
spending and revenues over the same period. The receipt of the 
additional retirement contributions would lower direct spending 
by $35 million, and the bill's TSP-related provisions would 
decrease revenues by $35 million over the 2000-2004 period. 
Because this bill would affect direct spending and receipts, 
pay-as-you-go procedures would apply.
    H.R. 208 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not have a significant effect on the budgets of state, 
local, or tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 208 is shown in the following table.

------------------------------------------------------------------------
                                      By fiscal years, in millions of
                                                 dollars--
                                 ---------------------------------------
                                   2000    2001    2002    2003    2004
------------------------------------------------------------------------
                    SPENDING SUBJECT TO APPROPRIATION

Agency retirement contributions.       0       8       8       9      10

                       CHANGES IN DIRECT SPENDING
 Agency retirement contributions.       0      -8      -8      -9     -10

                           CHANGES IN REVENUES

Estimated revenues..............       0      -8      -9      -9      -9

                         TOTAL COST OF H.R. 208

Direct spending and revenues....       0       0       1       0      -1
All spending and revenues.......       0       8       9       9      9
------------------------------------------------------------------------
Note:--The Joint Committee on Taxation prepared the estimates of the
  changes in revenues.

    The costs of this legislation fall within budget function 
950 (Undistributed Offsetting Receipts).

Basis of Estimate

            Raise Agency Retirement Contributions Under FERS
    Under FERS, total employee and agency retirement 
contributions equal the normal cost of providing retirement 
benefits. The current normal cost for most FERS employees is 
11.5 percent of basic pay. Employees typically contribute 0.8 
percent of their basic pay, and agencies pay the remaining 10.7 
percent. H.R. 208 would add \1/100\ of a percentage point to 
the amount that agencies contribute. For most FERS employees, 
agency contributions would rise to 10.71 percent of basic pay.
    This provision would increase agency retirement 
contributions under FERS by $35 million over the 2000-2004 
period. This increase in agency contributions would be 
reflected in the budget both as additional agency outlays and 
as an increase in offsetting receipts to the Civil Service 
Retirement Trust Fund.
            Allow New Hires to Participate in TSP Sooner
    Newly hired Federal employees must now wait two open 
seasons (6 to 12 months) before they can begin making 
contributions to the TSP. H.R. 208 would allow new hires to 
begin making TSP contributions immediately, although government 
contributions would still not begin until the second open 
season.
    The Joint Committee on Taxation (JCT) estimates that the 
Federal Government would forgo tax revenues of about $35 
million over the 2000-2004 period as a result of this 
provision. Based on recent experience, JCT assumed that between 
90,000 and 95,000 eligible new employees would be hired each 
year, and that most of these new hires would participate in the 
TSP. Under the bill, employees would contribute more money to 
their TSP accounts than under current law. This increase in 
contributions would decrease federal income tax revenues 
because TSP contributions are not taxed until withdrawn from 
the plan.
            Allow Rollovers from Other Tax-Deferred Savings Plans
    H.R. 208 would allow employees to transfer funds from 
certain tax-deferred savings plans, such as a 401(k) plan from 
a previous job, to their TSP accounts. JCT estimates that this 
provision would not have a significant budgetary impact.
    Pay-as-you-go considerations: The provisions of H.R. 208 
would affect direct spending and revenues and therefore be 
subject to pay-as-you-go procedures. The pay-as-you-go effects 
of the bill are shown in the following table. For the purposes 
of enforcing pay-as-you-go procedures, only the effects in the 
current year, the budget year, and the succeeding four years 
are counted.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         By fiscal years, in millions of dollars--
                                                                 ---------------------------------------------------------------------------------------
                                                                   1999    2000    2001    2002    2003    2004    2005    2006    2007    2008    2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays..............................................       0       0      -8      -8      -9     -10     -10     -11     -12     -13     -13
Changes in receipts.............................................       0       0      -8      -9      -9      -9      -9     -10     -10     -10     -11
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: H.R. 208 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act and would not have 
a significant effect on the budgets of state, local, or tribal 
governments.
    Estimate prepared by: Federal Costs: Eric Rollins. Impact 
on State, Local, and Tribal Governments: Leo Lex. Impact on the 
Private Sector: John Harris.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

       IX. Specific Constitutional Authority for This Legislation

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

                      X. Committee Recommendation

    On March 17, 1999, a quorum being present, the Committee 
ordered the bill favorably reported.

Committee on Government Reform--106th Congress. Record Vote

    Date: March 17, 1999. Amendment Offered by: Hon. Constance 
A. Morella. Adopted by voice vote. Final Passage of H.R. 208. 
Offered by: Hon. Constance A. Morella. Adopted by voice vote.

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

    H.R. 208 affects employees of the legislative branch who 
participate in the Thrift Savings Plan.

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

    H.R. 208 does not impose any Federal mandates on state, 
local, or tribal governments, or the private sector, and it 
does not preempt any state or local law.

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

    The Committee finds that H.R. 208 does not establish or 
authorize establishment of an advisory committee within the 
definition of 5 U.S.C. App., Section 5(b).

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

  In compliance with clause 3(e) 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):

TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *



PART III--EMPLOYEES

           *       *       *       *       *       *       *


Subpart G--Insurance and Annuities

           *       *       *       *       *       *       *


CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM

           *       *       *       *       *       *       *



SUBCHAPTER II--BASIC ANNUITY

           *       *       *       *       *       *       *



Sec. 8423. Government contributions

  (a)(1)  * * *

           *       *       *       *       *       *       *

  (5) Notwithstanding any other provision of this chapter, 
effective with respect to contributions for pay periods 
beginning on or after October 1, 2000, the normal-cost 
percentage used for purposes of any computation under this 
subsection shall be equal to--
          (A) the percentage that would otherwise apply if this 
        paragraph had not been enacted, plus
          (B) .01 of 1 percentage point.

           *       *       *       *       *       *       *


SUBCHAPTER III--THRIFT SAVINGS PLAN

           *       *       *       *       *       *       *


Sec. 8432. Contributions

  (a) An employee or Member may contribute to the Thrift 
Savings Fund in any pay period, pursuant to an election under 
subsection (b)[(1)], an amount not to exceed 10 percent of such 
individual's basic pay for such period. [Contributions made 
under this subsection during any 6-month period for which an 
election period is provided under subsection (b)(1) shall be 
made each pay periodduring such 6-month period pursuant to a 
program of regular contributions provided in regulations prescribed by 
the Executive Director.] Contributions under this subsection pursuant 
to such an election shall, with respect to each pay period for which 
such election remains in effect, be made in accordance with a program 
of regular contributions provided in regulations prescribed by the 
Executive Director.
  (b)(1)(A)  * * *
  (B) The amount to be contributed pursuant to an election 
under subparagraph (A) (or any election allowable by virtue of 
paragraph (4)) shall be the percentage of basic pay or amount 
designated by the employee or Member.

           *       *       *       *       *       *       *

  (3) [Notwithstanding paragraph (2)(A), an] An employee or 
Member who elects to become subject to this chapter under 
section 301 of the Federal Employees' Retirement System Act of 
1986 may make the first election for the purpose of subsection 
(a) during the period prescribed for such purpose by the 
Executive Director. The period prescribed by the Executive 
Director shall commence on the date on which the employee or 
Member makes the election to become subject to this chapter.
  [(4)(A) Notwithstanding paragraph (2)(A), an employee or 
Member who is an employee or Member on January 1, 1987, and 
continues as an employee or Member without a break in service 
through April 1, 1987, may make the first election for the 
purpose of subsection (a) during the election period prescribed 
for such purpose by the Executive Director. The Executive 
Director shall prescribe an election period for such purpose 
which shall commence on April 1, 1987. An election by such an 
employee or Member during that election period shall be 
effective on the first day of the employee's or Member's first 
pay period which begins after the date on which the employee or 
Member makes that election.
  [(B) Notwithstanding subsection (a), the maximum amount that 
an employee or Member may contribute during any pay period 
which begins on or after April 1, 1987, and before October 1, 
1987, pursuant to an election made during the election period 
provided under subparagraph (A) is the amount equal to 15 
percent of such individual's basic pay for such period.]
  (4) The Executive Director shall prescribe such regulations 
as may be necessary to carry out the following:
          (A) Notwithstanding subparagraph (A) of paragraph 
        (2), an employee or Member described in such 
        subparagraph shall be afforded a reasonable opportunity 
        to first make an election under this subsection 
        beginning on the date of commencing service or, if that 
        is not administratively feasible, beginning on the 
        earliest date thereafter that such an election becomes 
        administratively feasible, as determined by the 
        Executive Director.
          (B) An employee or Member described in subparagraph 
        (B) of paragraph (2) shall be afforded a reasonable 
        opportunity to first make an election under this 
        subsection (based on the appointment or election 
        described in such subparagraph) beginning on the date 
        of commencing service pursuant to such appointment or 
        election or, if that is not administratively feasible, 
        beginning on the earliest date thereafter that such an 
        electionbecomes administratively feasible, as 
determined by the Executive Director.
          (C) Notwithstanding the preceding provisions of this 
        paragraph, contributions under paragraphs (1) and (2) 
        of subsection (c) shall not be payable with respect to 
        any pay period before the earliest pay period for which 
        such contributions would otherwise be allowable under 
        this subsection if this paragraph had not been enacted.
          (D) Sections 8351(a)(2), 8440a(a)(2), 8440b(a)(2), 
        8440c(a)(2), and 8440d(a)(2) shall be applied in a 
        manner consistent with the purposes of subparagraphs 
        (A) and (B), to the extent those subparagraphs can be 
        applied with respect thereto.
          (E) Nothing in this paragraph shall affect paragraph 
        (3).

           *       *       *       *       *       *       *

  (j)(1) For the purpose of this subsection--
          (A) the term ``eligible rollover distribution'' has 
        the meaning given such term by section 402(c)(4) of the 
        Internal Revenue Code of 1986; and
          (B) the term ``qualified trust'' has the meaning 
        given such term by section 402(c)(8) of the Internal 
        Revenue Code of 1986.
  (2) An employee or Member may contribute to the Thrift 
Savings Fund an eligible rollover distribution from a qualified 
trust. A contribution made under this subsection shall be made 
in the form described in section 401(a)(31) of the Internal 
Revenue Code of 1986. In the case of an eligible rollover 
distribution, the maximum amount transferred to the Thrift 
Savings Fund shall not exceed the amount which would otherwise 
have been included in the employee's or Member's gross income 
for Federal income tax purposes.
  (3) The Executive Director shall prescribe regulations to 
carry out this subsection.

           *       *       *       *       *       *       *


Sec. 8439. Accounting and information

  (a)(1) The Executive Director shall establish and maintain an 
account for each individual who makes contributions or for whom 
contributions are made under [section 8432(c)(1)] section 8432 
of this title or who makes contributions to the Thrift Savings 
Fund under section 8351 of this title.

           *       *       *       *       *       *       *

  (c)(1)  * * *
  (2) Information under this subsection shall be provided at 
least 30 calendar days before the beginning of each election 
period under section 8432(b)(1)(A) of this title, and in a 
manner designed to facilitate informed decisionmaking with 
respect to elections under sections 8432 and 8438 of this 
title. Nothing in this paragraph shall be considered to limit 
the dissemination of information only to the times required 
under the preceding sentence.

           *       *       *       *       *       *       *


Sec. 8440a. Justices and judges

    (a)(1)  * * *
    (2) An election may be made under paragraph (1) only during 
a period provided under section 8432(b) for individuals subject 
to [chapter 84 of this title: Provided, however, That a justice 
or judge may make the first such election within 60 days of the 
effective date of this section.] this chapter.

           *       *       *       *       *       *       *


Sec. 8440d. Judges of the United States Court of Appeals for Veterans 
                    Claims

  (a)(1)  * * *
  (2) An election may be made under paragraph (1) only during a 
period provided under section 8432(b) of this title for 
individuals subject to [chapter 84 of this title.] this 
chapter.

           *       *       *       *       *       *       *

                              ----------                              


  SECTION 307 OF THE FEDERAL EMPLOYEES' RETIREMENT SYSTEM ACT OF 1986

SEC. 307. USE OF ``NORMAL-COST PERCENTAGE''.

  Notwithstanding any other provision of law, the normal-cost 
percentage (as defined by section 8401(23) of title 5, United 
States Code, as added by this Act) of the Federal Employees' 
Retirement System, including the additional amount required 
under section 8423(a)(5)(B) of such title 5, shall be used to 
value the cost of the System for all purposes in which the cost 
of the System is required to be determined by the Federal 
Government, including any comparisons between the cost of 
performing commercial activities under contract with commercial 
sources and the cost of performing those activities using 
Government facilities and personnel.