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Washington, D.C.—The National Treasury Employees Union (NTEU) supports the idea of allowing federal employees with unused annual leave when they separate from federal service to deposit that money in their federal Thrift Savings Plan (TSP) accounts, the leader of the union told a House subcommittee today.

“Many of our members carry over the maximum amount of annual leave (240 hours) on a yearly basis, so this could significantly boost their TSP accounts,” NTEU President Colleen M. Kelley told a hearing of the House Oversight and Government Reform Subcommittee on the Federal Workforce.

President Obama, in a recent weekly radio address, talked about creating incentives to save including allowing employees to invest employer pay-outs for unused leave in their retirement plan.

“NTEU, on behalf of our members, contacted both the Internal Revenue Service (IRS) and the Thrift Board and inquired whether the unused annual leave that is cashed out at separation of federal service could be deposited in the TSP under the lump-sum provision,” President Kelley said. “Both IRS and the Thrift Board have indicated to NTEU that, in order for federal employees to take advantage of President Obama’s initiative, legislation would have to be passed.” NTEU is continuing to pursue this option, Kelley added, “and we ask the help of you and your subcommittee, Mr. Chairman, in working together to write and achieve passage of such legislation.”

The hearing was called to look into matters being addressed by the Federal Retirement Thrift Investment Board which oversees the TSP, including upgrades to its information technology infrastructure and security capabilities, legislative initiatives impacting the TSA, pending regulatory proposals and a changed financial landscape. NTEU is an active participant in the Employee Thrift Advisory Council to the Board.

More than 4.2 million active and former federal employees hold accounts through the TSP, which is widely-praised for its low administrative costs, good return on investment and an open dialogue with stakeholders. Its assets now are some $234 billion.

Earlier this year, legislation was approved that made significant changes to the TSP. These include immediate agency contributions; an automatic enrollment provision, subject to an opt-out right; creation of a spouse beneficiary account, which allows the spouse of a deceased participant to continue with funds in the TSP; and the addition of a Roth TSP feature.

President Kelley said NTEU “views the Roth option as a welcome addition to the plan,” but said it is vital the board “be prepared to educate the federal workforce on the tax-planning issues inherent in a Roth option.”

Under the Roth plan, contributions are made on an after-tax basis, resulting in withdrawals not being taxed at the time they are taken.

On the matter of helping ensure that all participants understand the impact of the legislative changes, the NTEU president emphasized that “employees need to be able to make informed choices.” She added: “The number one goal is to ensure stability, integrity and cost-efficiency in the TSP so that…the Fund will thrive and our retirees prosper.”

NTEU is the largest independent federal union, representing 150,000 employees in 31 agencies and departments.