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Report No: 522
Date: 11/16/2000

OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS

  1. LAW NUMBER: P.L.106-361 (H.R. 208)

  2. BILL TITLE: Federal Employee Thrift Savings Plan Amendments

  3. BILL PURPOSE: (1) Eliminates the waiting period for Federal employees to contribute to the Thrift Savings Plan (TSP); (2) allows Federal employees to contribute eligible rollover distributions from qualified trusts to the TSP; and (3) requires spousal consent for certain lump-sum retirement credit payments.

  4. OMB ESTIMATE: P.L. 106-361 allows newly hired Federal employees to contribute to the TSP immediately, rather than waiting until the second open season as required under current law. Because taxes on the TSP contributions are deferred, OMB estimates forgone tax revenues of $14 million over the 2001-2005 period. The bill also allows Federal employees to rollover distributions from qualified trusts to TSP. OMB estimates that the tax revenue effect of this provision would be negligible.

    5. P.L. 106-361 also authorizes OPM to withhold payment of retirement lump-sum credit payments to certain former Federal employees involved in divorce proceedings. Retirement credit payments, which are refunds of employee retirement contributions, terminate any right to an annuity based on the service covered by the refund. Under current law, a former employee can circumvent a court's intent to award an annuity to an ex-spouse by taking a lump-sum refund. This bill would close that loophole by requiring spousal consent before OPM could pay a refund in situations where a court has awarded, or wants to preserve its ability to award, an annuity to the prospective former spouse. OMB estimates that the new authority will lower refund payments by $6 million each year.

    (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Net costs............... 0 -6 -5 -5 -1 1

     

  5. CBO ESTIMATE:
    6. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Net costs............... 0 3 7 7 8 9

     

  6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

    7. The difference between OMB and CBO estimates is due to differing assumptions about immediate participation in TSP and the incidence of withheld refunds because of the spousal consent provision.

  7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:
    8. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Outlay effect.............. 34 366 1,162 1,292 1,815 1,757
    Receipt effect............ -8 -620 -699 -747 -786 -775
    Net costs.................... 42 986 1,861 2,039 2,601 2,532

    NOTE: The cumulative effect of direct spending and revenue legislation enacted to date is currently estimated to result in an end-of-session sequester. The Administration looks forward to working with the Congress to ensure that an unintended sequester does not occur.