August 3, 2012 – The U.S. House of Representatives has passed legislation (H.R. 4365) to clarify that federal Thrift Savings Plan (TSP) accounts are subject to IRS levy for taxes due, just as are other employer-sponsored retirement plans. Conflicting language in the Internal Revenue Code had put the IRS and the Federal Retirement Thrift Investment Board, which administers the government’s TSP, at odds over whether the accounts of federal workers owing tax debts could be levied against by the IRS.
This legislation clarifies that TSPs are on a footing equal to that of 401(k)s and other employer plans in their availability for satisfying a federal tax levy. At this time there are no reports of planned Senate activity on the legislation.