March 26, 1999
HOUSE PASSES H.R. 416, THE FEDERAL RETIREMENT COVERAGE CORRECTIONS ACT
Changing Retirement Plans
- With two exceptions, would permit employees to choose to remain in the retirement plan in which they were mistakenly placed, or to be placed in the plan in which they should have been placed, retroactive to the date of the error.
- Would provide that employees erroneously placed in the CSRS could not remain in that plan. They could, however, select the CSRS Offset plan, or be placed in the FERS.
- Would provide that employees who should have been placed in Social Security only and were mistakenly placed in a federal retirement system, could not remain in a retirement plan unless they had already vested.
- Would make all elections irrevocable. Employees not making an election would retain their current coverage.
- Would make a lump-sum payment to Thrift Savings Plan (TSP) accounts of affected employees, representing past employee contributions, as well as the automatic 1 percent agency contributions and agency matching contributions.
- Would pay past earnings on all three amounts, calculated using the employee's TSP fund allocation choices.
- Would make all necessary contributions to the Civil Service Retirement and Disability Fund (CSRDF), Social Security trust funds and the TSP for the affected period.
- Would pay the reasonable costs of financial and legal advice employees need to make informed decisions under the bill. In addition, the measure is intended to prevent employees from incurring undue tax burdens as a result of their choices.
Office of Personnel Management Responsibility (OPM)
- Would require OPM to ensure uniform implementation of the bill's provisions and to ensure that employees and retirees are adequately informed as to the status of their retirement accounts in order to make an informed decision. OPM must give final approval to all corrections made under the bill.
Other Social Security ProvisionsThe bill passed by the House does not include certain amendments to the Social Security Act and tax provisions that were in the bill as reported by the Committee on Government Reform. Those provisions were dropped to expedite passage of the bill in the House and to also facilitate the bill's consideration in the Senate. The provisions may be reinserted in the bill during Senate or conference committee consideration. The provisions that were dropped:
- Would permit the Commissioner of Social Security to 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, regardless or any limitation in the Social Security Act.
- Would require the Commissioner to notify the Secretary of the Treasury if the Commissioner determines that the payment of the OASDI taxes described in this Act did not result in an equal credit to the OASDI trust funds. 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.
- Would amend the Social Security Act's coverage provisions and the Internal Revenue Code's employment tax provisions so that individuals who should have been placed in CSRS but who were placed in another system with Social Security participation would have a legal basis for Social Security coverage and tax liability.