- The Washington Times - Tuesday, June 11, 2002

Some banks or mutual fund firms that manage private 401(k) plans are making it tough for feds attempting to transfer their money to the federal Thrift Savings Plan (TSP).

It's costing many of the feds money in lost interest and in security for their funds.

Some feds say outfits holding the private 401(k) or IRA balances either foul up the paperwork (which is very, very simple), or otherwise stall in moving the money.

Whether they are doing it because they don't understand the transfer rules or are playing hardball to keep the money, what they are doing is dumb. And illegal.

They are depriving people of the chance to move money into the TSP with its super-safe G-fund invested in guaranteed U.S. Treasury securities. It isn't available anywhere else.

The law says that people with TSP accounts can move money from outside retirement accounts into the federal 401(k) plan without compromising its tax-deferred status. Last April, as reported here, a government worker moved more than $1 million from his/her private retirement plan account into the TSP.

So far, feds and retirees who had TSP accounts when they retired have moved more than $100 million in outside retirement funds into the TSP. You can, too. Unless you are unlucky enough to have it with an outfit that is either playing dumb to be difficult or really doesn't understand the law.

Cafeteria health plans

Want to design your own health plan? One that perhaps offers better dental benefits as a trade-off for reduced or zero maternity benefits?

Well, don't hold your breath. Some congressional Republicans want to offer it, but suspicious federal and postal unions are against the idea.

Backers say designer health plans would cut costs and reduce premiums.

Opponents say it would lure employees and retirees into settling for reduced benefits and could mean higher out-of-pocket costs for individuals. It also could reduce the guaranteed 72 percent share that the government pays for individual and family coverage.

Pay raise/TSP contributions

Federal workers will probably get a higher pay raise (4.1 percent instead of 2.6 percent) in 2003, and Congress is likely to OK catchup contributions from $1,000 to $5,000 per year to the Thrift Savings Plan for federal, postal and military personnel who are 50 years or older.

One would put more money in your pocket; the other would reduce your taxable income. Odds are that both will be made part of appropriations bills that will be passed this fall.

Premium tax break

Insiders believe there's a good chance Congress will give last-minute approval to a bill that would provide retired federal workers a tax break already available to working civil servants: The option to pay health premiums with pre-tax dollars.

This reduces taxable income, saving government workers several hundred dollars per year in taxes.

President Clinton extended the so-called "premium conversion" break to federal workers, but couldn't because of the tax code do it for federal retirees. An unanswered question is whether the legislation will set the stage for a similar tax break for private-sector retirees, too.

It would cost the Treasury money, in lost tax revenue, but it would or could encourage more seniors to get health insurance or to improve their coverage.

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