RETIREMENT: SENATE PLANS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M01152R000200160014-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 10
• Document Creation Date: December 22, 2016
• Document Release Date: January 8, 2010
• Sequence Number: 14
• Publication Date: February 20, 1985
• Content Type: MEMO

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OLL 85-0363/3
20 February 1985
MEMORANDUM FOR: See Distribution
VIA: Acting Chief, Liaison Division,,
FROM:
Liaison Division, OLL
SUBJECT: Retirement: Senate Plans
1. Senator Paul S. Trible, Jr. (R., VA) has introduced
a bill (5202) allowing Federal workers to contribute up to 5
percent of their salaries into a tax-sheltered account,
matched by an equal contribution from the government. A
copy of the bill and introductory comments are attached.
2. This bill has been referred to Senator Stevens'
Subcommittee on Post Office/Civil Service where it most
likely will die. Senator Stevens' bill on supplemental
retirement already includes the tax-deferred concept. Also,
Senator Trible's bill would apply to all Federal employees,
including those covered by Civil Service; the cost to the
Federal government of this benefit precludes giving it
serious consideration.
3. As discussed in OLL 85-0363/1 dated 19 February,
Senator Stevens wants to include all special retirement
groups in one piece of legislation. Department of State
representatives will meet with the Senator's Special Counsel
on this question next Tuesday. ,
Distribution:
1 - D/OLL w/att
1 - DD/OLL w/att
1 - D/OP w/att
1 - DD/EB&S/OP w/att
1 - DD/PA&E/OP w/att
1 - DDA w/att
1 - A/C/LD w/att
1 - C OLL LEG w/att
1 Subject w/att
1 Chrono w/o att
OLL Record w/att
1 - OLL Chrono w/o att
OLL:LD aw (20 February 1985)
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99TH CONGRESS
18T SESSION
S*202
To amend title 5, United States Code, to establish a cash or deferred arrangement
permitting Federal employees to save for their retirement, and for other purposes.
IN THE SENATE OF THE UNITED STATES
JANUARY 21, 1985
Mr. TRIBLE (for himself and Mr. Symms) introduced the following bill; which was
read twice and referred to the Committee on Governmental Affairs
A BILL
To amend title 5, United States Code, to establish a cash or
deferred arrangement permitting Federal employees to save
for their retirement, and for other purposes.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That this Act may be cited as the "Federal Employees Cash
4 or Deferred Arrangement Act of 1985".
5 SEC. 2. (a) Section 8343 of title 5, United States Code,
6 is amended to read as follows:
7 "? 8343. Cash or deferred arrangement
8 "(a)(1) The Office of Personnel Management shall estab-
9 lish a cash or deferred arrangement that satisfies the require-
10 ments of paragraph (2) of this subsection.
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1 "(2) A cash or deferred arrangement satisfies the re-
2 quirements of this paragraph if, under the arrangement-
3 "(A) any employee or Member who is subject to
4 this subchapter may elect, in accordance with the pro-
5 visions of this section-
6 "(i) to defer receipt of a designated portion of
7 the employee's or Member's pay,
8 "(ii) to have the deferred portion contributed
9 directly to the Fund to be credited to an account
10 established in the Fund for the employee or
11 Member, and
12 "(iii) to have the employing agency of the
13 employee or Member make contributions with re-
14 spect to the employee or Member as provided in
15 subsection (b) of this section; and
16 "(B) the amounts credited to the account of the
17 employee or Member that are attributable to the con-
18 tributions made by the employing agency as provided
19 in such subsection are not distributable to the employee
20 or Member earlier than the date of the employee's or
21 Member's retirement, death, disability, separation from
22 the service, or attainment of age 591/2 years, or for
23 reasons of hardship, and are not distributable merely
24 by reason of the completion of a stated period of par-
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1 ticipation in the arrangement or by reason of the lapse
2 of a fixed number of years.
3 "(b)(1) In accordance with regulations prescribed by the
4 Office, an employee or Member may designate the portion of
5 pay the employee or Member elects to defer under the cash
6 or deferred arrangement, up to a maximum of 5 percent of
7 employee's or Member's basic pay. The employing agency
8 shall deduct and withhold the designated portion from the
9 pay of the employee or Member and shall deposit the
10 amounts withheld, together with an equal amount contributed
11 by the employing agency, in the Treasury of the United
12 States to the credit of the Fund.
13 "(2)(A) Except as provided in subparagraph (B) of this
14 paragraph, the contribution made with respect to an employ-
15 ee by the employing agency under paragraph (1) of this sub-
16 section shall be paid from the appropriation or fund used to
17 pay the employee.
18 "(B) The contribution made by an employing agency
19 under such paragraph-
20 "(i) with respect to a Member, shall be paid from
21 an appropriation or fund available for payment of other
22 salaries of the Member's office or establishment; or
23 "(ii) with respect to a congressional employee
24 who is paid by the Clerk of the House of Representa-
S 202 IS
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1 tives, shall be paid from the contingent fund of the
2 House.
3 "(c) Except as provided in subsection (g) of this section
4 and subject to section 8348(c) of this title (relating to invest-
5 ment of sums in the Fund) and subsection (e) of this section
6 (relating to loans of sums in the Fund), the amounts credited
7 to the account of an employee or Member as contributions
8 under subsection (b) of this section and the earnings from
9 investment of such amounts under such section 8348(c) or
10 from loans made from such amounts under such subsection (e)
11 shall be held in the Fund as the property of the employee or
12 Member until distributed to the employee or Member, or to a
13 survivor under subsection (d) of this section, upon application
14 made in accordance with regulations issued by the Office.
15 "(d) In the event of the death of the employee or
16 Member, the amount held in the Fund to the credit of the
17 employee or Member under this section shall be paid in the
18 same manner as a lump-sum benefit under section 8342(c) of
19 this title.
20 "(e) The Office may by regulation permit loans bearing
21 reasonable rates of interest to be made to employees or Mem-
22 bers from amounts contributed under this section, to the
23 extent that such loans would not be-
24 "(1) prohibited transactions under section 4975 of
25 the Internal Revenue Code of 1954 if the cash or de-
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5
1 ferred arrangement under this section were a plan as
2 defined in subsection (e)(1) of such section 4975; or
3 "(2) creditable as distributions under section 72(p)
4 of the Internal Revenue Code of 1954 if the cash or
5 deferred arrangement under this section were a quali-
6 fied employer plan referred to in such section 72(p).
7 "(f) The Office may, by regulation, permit an employee
8 or Member, or the survivor of an employee or Member, at the
9 time of eligibility for an annuity under this subchapter, to
10 purchase an additional annuity with the amount then held in
11 the Fund to the credit of the employee or Member under this
12 section or a designated portion of such amount. The amount
13 of the additional annuity shall be determined actuarially on
14 the basis of the employee's, Member's, or survivor's age, but
15 without regard to sex. The additional annuity shall include
16 actuarially determined survivor benefits for survivors of an
17 employee or Member in accordance with regulations that are
18 prescribed by the Office and are consistent with the other
19 provisions of this subchapter, including section 8339(k).
20 "(g) The Office shall determine the amounts necessary
21 to defray the expenses incurred by the Office in the adminis-
22 tration of this section and shall deduct from the amount cred-
23 ited to the account of each employee or Member in the Fund
24 a pro rata share of such administrative expenses. The amount
S 202 Is
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1 of the pro rata share shall not exceed 1 percent of the
2 amount credited to such account.
3 "(h) The Office may contract for administrative services
4 to administer the provisions of this section, without regard to
5 the provisions of title III of the Federal Property and Admin-
6 istrative Services Act of 1949 (41 U.S.C. 251 et seq.) or of
7 any other law requiring competitive bidding.
8 "(i) For purposes of the Internal Revenue Code of
9 1954-
10 "(1) any amount of the employee's or Member's
11 pay which is deferred and contributed to the Fund and
12 the amount of the employing agency's matching contri-
13 butions shall not be included in the gross income of the
14 employee or Member, and
15 "(2) any account established in the Fund under
16 this section on behalf of any employee or Member shall
17 be treated, for purposes of determining when amounts
18 in the account are included in income, in the same
19 manner as other amounts in the Fund.".
20 (b) The item relating to section 8343 in the table of
21 sections at the beginning of chapter 83 of title 5, United
22 States Code, is amended to read as follows:
"8343. Cash or deferred arrangement.".
23 (c) Section 8340(d) of title 5, United States Code, is
24 amended by striking out "by voluntary contributions" and
25 inserting in lieu thereof "under section 8343(f) of this title".
S 202 IS
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1 (d) Section 8342(h) of title 5, United States Code, is
2 amended by striking out "a voluntary contribution for the
3 purpose of" and inserting in lieu thereof "an amount contrib-
4 uted under".
5 (e) Section 8348(a)(1)(B) of title 5, United States Code,
6 is amended by striking out "section 8340 of this title" and
7 inserting in lieu thereof "section 8340 of this title, in admin-
8 istering section 8343 of this title (including expenses con-
9 tracted for under section 8343(h)),".
10 SEC. 3. (a) The amendments made by section 2 shall
11 take effect on such date as the Director of the Office of Per-
12 sonnel Management may determine, but not later than 1 year
13 after the date of enactment of this Act.
14 (b)(1) Except as provided in paragraph (2), any volun-
15 tary contributions made under section 8343 of title 5, United
16 States Code, as in effect before the effective date of the
17 amendments made by section 2, and any additional annuities
18 purchased under such section before such effective date, shall
19 not be affected by such amendments.
20 (2) An employee or Member of Congress who has made
21 voluntary contributions under section 8343 of such title as in
22 effect before the effective date of the amendments made by
23 section 2, and has not yet purchased an additional annuity
24 under such section may elect to have the amount of such
25 voluntary contributions credited to the employee's or Mem-
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1 ber's account in the Civil Service Retirement and Disability
2 Fund as if the employee or Member had contributed such
3 amount (on the date of the election) under section 8343 of
4 title 5, United States Code, as amended by section 2. Such
5 deposit to the employee's or Member's credit shall not be
6 deemed a distribution for the purposes of the Internal Reve-
7 nue Code of 1954. Amounts designated by an election under
8 this paragraph shall be credited and administered in accord-
9 ance with the election.
0
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XGRESSIONAL RECORD -= 561'B January 21, 1985
united states code. Is amended by inserting
", and changes in railroad productivity,
volume and output mix" after "labor" in the
Sac. 5. (a) Section 10709(dX2) of title 49,
United States Code, is amended to read as
"(2) In making a determination under this'
section. the Commission shall find that the
rail carrier establishing the challenged rate
has market dominance over the transporta-
tion to which the rate applies if-
"(A) the rate charged results in a revenue-
variable cost percentage for such transpor-
tation that to more than the cost recovery
percentage during each 12-month period be-
ginning on or after October 1, 1984; and
either
"(B) within the 12-month period immedi-
ately preceding the beginning of such deter-
mination process, more than 70 percent of
the transportation to which the challenged
rate applies was by'railroad; or
"(C) a shipper, with respect to the trans-?
portation of whose property the challenged
rate applies, has made a substantial invest-
ment in railroad equipment or rail-related
plant which prevents or makes impractica-
ble the use of a mode-of another rail carrier
or transportation other than railroads.
For purposes of subparagraph (A) of this
paragraph, the cost recovery percentage
shall in no event be less than a revenue-vari-
able cost percentage of 170 percent or more
than a revenue-variable cost percentage of
180 percent".
(b) Section 10709(d) of such title to amend-
ed by adding the following new paragraph
at the and thereof:
"(6) No person, class of persons, transac-
tion. or service may be exempted by the
Commission under section 10605 of this title
from the application of a provision of this
subtitle with respect to any transportation
unless a rail carrier Is determined under this
section not to have market dominance over
such transportation, unless such transporta-
tion Is pursuant to a' contract entered into
under section 10712 of this title.".
(c) Section 10709 of such title is amended
by adding the following new subsection at
the end thereof:
NO In determining the existence or ab-
sence of effective competition for purposes
of this section, the Commission shall consid-
er only transporation competition for move-
ment of the same commodity from the same
point of origin to the same destination."..
Sac. S. Except as otherwise provided, the
Commission shall conclude a proceeding to
establish procedures for the implementation
of the amendments made by this Act within
180 days after the date of enactment of this
By -Mr. TRIBLE (for himself and
Mr. Symms):
8. 202, A bill to amend title 5, United
States Code, to establish a cash or de-
ferred arrangement permitting Feder-
al employees to save for their retire-
ment, and for other purposes: to the
Committee on Governmental Affairs.
MORAL IMPLOYW CUR OR DaFZ(*ZD
asaAaanrssT see or lass
Mr. TRIBLE. Mr. President, one of
the most important issues confronting
the 99th Congress Is deficit reduction.
This Congress faces the enormous re-
sponsibility of finding ways to reduce
the $200 billion Federal deficit, and all
areas of the Federal budget will be ex-
am inbd ftr ways to restrain Federal
spending t Ad reduce the deficit.
Already. proposals have been offered
to reduce federal spending by drasti-
cally reducing civil service retirement
benefits for federal workers. Lower
annuities and higher employee contri-
butions are among the suggestions.
Federal employees hired after Decem-
ber 31, 1983, have faced uncertain re-
tirement benefits since joining the
Federal work force. These employees
are covered under, Social Security and
a supplemental retirement system
which is still not designed. Congress
must establish this system by the end
of 1985.
Many employers outside the Federal
Government offer their employees the
opportunity to participate in tax-shel-
tered retirement programs. And in-
creasingly, employers are offering de-
ferred compensation plans authorized
by section 401(k) of the Internal Reve-
nue Code.
? These plans allow an employee to
elect to defer a portion of his or her
salary and have the employer deposit
that amount into an investment or
savings account. The amount of the
deferred salary, any employer contri-
butions to the account, and invest-
ment earnings, are tax-exempt until
the employee withdraws the funds.
Funds may be withdrawn from these
accounts only when the employee re-
dies, becomes disabled, separates
rom 4he service, reaches age 5954, or
for reasons of hardship.
These tax-deferred accounts allow
employees to save money for use In
their retirement years. And, employ-
ees have the opportunity to determine,
within a range, the amount of their
salary that they wish to defer.
I believe that Federal employees
should be given the opportunity to
plan for the future and save for their
retirement. That is why I am introduc-
ing legislation which would allow Fed-
eral employees to participate in tax-
sheltered deferred compensation plans
comparable to plans offered to their
non-Federal counterparts.
My legislation would permit an em-
ployee to set aside up to 5 percent of
his or her basic pay under the cash or
deferred arrangement. The employing
agency will be authorized to deduct
and withhold that portion of the em-
ployee's pay and deposit that amount,
along with an equal amount contribut-
ed by the agency, into an account.
Funds may be withdrawn from the
account only in those instances out-
lined in section 401(k) of the Internal
Revenue Code: upon the employee's
retirement, death. disability, separa-
tion from the service, attainment of
ages 5914. or for reasons of hardship.
In addition. employees participating In
the cash or deferred arrangement may
be able to qualify for a loan which can
be repayed through payroll deduc-
tions.
January 81, 1985 C
The Congress must design a new i
tirement program for Federal works
who were hired after December i
1983. 1 believe that this new pl1
should include this deferred eompe
sation plan. A Federal retirement pi
gram consisting of Social Security.
pension plan. and a capital accumu:
tion plan such as the deferred eompe
cation plan authorized by sectiI
401(k) of the Internal Revenue Co
would be consistent with retireme
programs typically available to e
ployees outside the Federal sector.
Mr. President. in the wake of unc!
tainty with future retirement benef
for Federal workers, we should provi
civil servants with the opportunity
elect to defer payment of a portion
their salary In order to set as:
money for use In their retireme
years. I urge my colleagues to Jc
with me in pressing for considerati
of this measure.
IEON-
S. 203. A bill to provide a one-tie
amnesty from criminal and civil t
penalties and 50 percent of the Int
est penalty owed for certain.taxpay-
who pay previous underpayments
Federal tax during the amnea
period, to amend the Internal Rever
Code of 1954 to increase by 50 perc i
all criminal and civil tax penalties, a
for other purposes; to the Commiti
on Finance.
FEDERAL TAX DELINQUENCY Arn!ESTY ACT 0
lees
? Mr. DIXON. Mr. President, the F+
eral budget deficit in fiscal year It
was an appalling $175 billion. The I
eat estimate for the fiscal 1985 deft
prepared by the President's Office
Management and Budget is er
worse-$205 billion. This - onga.
budget crisis, however, seems to d.
the efforts of Congress and the Pr
dent to end it. Budget deficits are
under control in spite of the major
forts to cut spending over the pa
years, and In spite of the passage
two major tax increase bills in the
3 years.
There are a lot of reasons for
budget crisis. One very import
reason that has not received anywh
near the attention it deserves hat
do with tax compliance levels.
In 1981, the moat recent year
which comprehensive data is avails
Federal tax collections were rr
than $81 billion below what t
would have been if every taxpayer
paid his or her legal tax obligati
Individual taxpayers failed to re;
to. the Internal Revenue Ser
almost $250 billion in income t
year.
Unfortunately. 1981 is not an un.
al year. The "tax gap" was more t
$28 billion in 1973. or approxims
double the Federal budget defici
$14 billion that year, and it haz
creased steadily since then. The Tr
ury Department is estimating a
gap of between $89 and 492 billior
1985, and believes that level could
I I
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