Participation of non-Federal employees and self-employed individuals in FERS

(a) Definitions Section 8401 of title 5, United States Code, is amended— (1) by striking paragraph (2) and inserting the following: (2) the term basic pay — (A) except as provided in subparagraph (B), has the meaning given such term by section 8331(3); and (B) with respect to a covered self-employed individual, means the annual income of the covered self-employed individual that is attributable to the activities of the individual as a covered self-employed individual;; (2) in paragraph (11)— (A) in subparagraph (B), by striking and at the end; (B) in subparagraph (C), by adding and at the end; (C) by inserting after subparagraph (C) the following: (D) an individual who is— (i) an covered non-Federal employee; or (ii) a covered self-employed individual;; and (D) in the matter following subparagraph (C), by striking civilian service and inserting service in a position described in subparagraph (A), (B), (C), or (D); (3) in paragraph (12), by striking civilian; (4) in paragraph (31), in the matter following subparagraph (C), by striking civilian service and inserting service as an employee or Member; (5) in paragraph (38)(B), by striking and at the end; (6) in paragraph (39), by striking the period at the end and inserting a semicolon; and (7) by adding at the end the following: (40) the term covered non-Federal employer means an employer that is not a department, agency, or other instrumentality of the Federal Government and does not have in effect for all employees of the employer a retirement plan that the Secretary of Labor has determined provides benefits that are comparable to the benefits provided under the retirement program under this chapter; (41) the term covered non-Federal employee means an individual employed by a covered non-Federal employer; and (42) the term covered self-employed individual means a self-employed individual who is not enrolled in a retirement plan other than the Federal Employees Retirement System that the Secretary of Labor has determined provides benefits that are comparable to the benefits provided under the retirement program under this chapter.. (b) Eligibility for annuity Section 8410 of title 5, United States Code, is amended by striking civilian service and inserting service as an employee or a Member. (c) Creditable service Section 8411(b) of title 5, United States Code, is amended— (1) in paragraph (1), by inserting subject to paragraphs (7) and (8), before employment; (2) in paragraph (5), by striking and at the end; (3) in paragraph (6), by striking the period at the end and inserting a semicolon; and (4) by inserting after paragraph (6) the following: (7) a period of service as a covered non-Federal employee performed after the date of enactment of this paragraph; and (8) a period during which an individual is a covered self-employed individual that occurs after the date of enactment of this paragraph.; (d) Phased retirement Section 8412a(c)(5)(A) of title 5, United States Code, is amended by striking creditable civilian service and inserting other service that is creditable under this chapter. (e) Employee contributions Section 8422 of title 5, United States Code, is amended— (1) in subsection (a)— (A) in paragraph (1), by striking The employing agency and inserting Subject to paragraph (4), the employing agency; (B) in paragraph (3), by striking civilian each place it appears; and (C) by adding at the end the following: (4) (A) A covered non-Federal employer shall deduct and withhold from the basic pay of each covered non-Federal employee of the covered non-Federal employer the percentage of basic pay that would be deducted and withheld from basic pay if the covered non-Federal employee were an employee of the Federal Government, as determined in accordance with paragraphs (2) and (3). (B) For a covered self-employed individual, an amount equal to the percentage of basic pay of the covered self-employed individual that would be deducted and withheld from basic pay if the covered non-Federal employee were an employee of the Federal Government, as determined in accordance with paragraphs (2) and (3), shall be deemed to be deducted and withheld from the basic pay of the covered self-employed individual for purposes of subsection (c), and the covered self-employed individual shall deposit such amount in the Treasury of the United States in accordance with such subsection.; and (2) in subsection (e)(1)(B), by striking civilian each place it appears. (f) Employer contributions Section 8423(a) of title 5, United States Code, is amended— (1) in paragraph (1), in the matter preceding subparagraph (A), by inserting, and, subject to paragraph (4), each covered non-Federal employer and each covered self-employed individual, after section 8422(a); (2) by redesignating paragraph (4) as paragraph (5); and (3) by inserting after paragraph (3) the following: (4) (A) In this paragraph— (i) the term additional employer percentage, with respect to a covered non-Federal employer, means 50 percent of the percentage obtained by dividing— (I) the amount of the annual revenue of the covered non-Federal employer that is in excess of $25,000,000; by (II) $75,000,000; and (ii) the term additional self-employed percentage, with respect to a covered self-employed individual, means 50 percent of the percentage obtained by dividing— (I) the amount of the basic pay of the covered self-employed individual that is in excess of $75,000; by (II) $50,000. (B) Subject to subparagraphs (D) and (E), the amount contributed to the Fund under paragraph (1) by a covered non-Federal employer shall be reduced as follows: (i) For a covered non-Federal employer with annual revenue of not more than $25,000,000, the amount required to be contributed shall be the amount equal to 50 percent of the otherwise applicable amount. (ii) For a covered non-Federal employer with annual revenue of more than $25,000,000 and not more than $100,000,000, the amount required to be contributed shall be the sum of— (I) the amount equal to 50 percent of the otherwise applicable amount; and (II) the amount equal to the additional employer percentage of the otherwise applicable amount. (C) Subject to subparagraph (E), the amount contributed to the Fund under paragraph (1) by a covered self-employed individual shall be reduced as follows: (i) For a covered self-employed individual with basic pay of not more than $75,000, the amount required to be contributed shall be the amount equal to 50 percent of the otherwise applicable amount. (ii) For a covered self-employed individual with basic pay of more than $75,000 and not more than $125,000, the amount required to be contributed shall be the sum of— (I) the amount equal to 50 percent of the otherwise applicable amount; and (II) the amount equal to the additional self-employed percentage of the otherwise applicable amount. (D) The amount of the reduction under subparagraph (B) with respect to a covered non-Federal employer shall be reduced or eliminated based on the proportion of highly compensated employees of the covered non-Federal employer, in accordance with regulations promulgated by the Secretary of Labor. (E) (i) A covered non-Federal employer may elect to have both the reduction under subparagraph (B) of this paragraph and the reduction under section 8432(c)(2)(B) not apply for any year. (ii) A covered self-employed individual may elect to have the reduction under subparagraph (C) of this paragraph and the reduction under section 8432(c)(2)(C) not apply for any year.. (g) Thrift savings plan (1) Transfers treated as a separation Section 8431(a) of title 5, United States Code, is amended by inserting or employment at a covered non-Federal employer after Government employment. (2) Contributions Section 8432 of title 5, United States Code, is amended— (A) in subsection (a)— (i) in paragraph (1), by striking An employee or Member and inserting Subject to paragraph (4), an employee or Member; and (ii) by adding at the end the following: (4) For a covered self-employed individual, the covered self-employed individual may contribute to the Thrift Savings Fund in such manner, and at such frequency, as the Secretary of Labor shall establish.; (B) in subsection (c)— (i) in paragraph (1)— (I) in subparagraph (A), by inserting and each covered non-Federal employer after the employing agency; (II) in subparagraph (C)(iii), by striking civilian; and (III) by adding at the end the following: (D) (i) A covered self-employed individual shall make contributions to the Thrift Savings Fund for the benefit of the self-employed individual in the same amount as would be contributed by a covered non-Federal employer if the self-employed individual were an employee of the covered non-Federal employer. (ii) The Secretary of Labor shall establish the manner and frequency with which a covered self-employed individual shall make contributions to the Thrift Savings Fund under this subparagraph.; (ii) in paragraph (2)— (I) in subparagraph (A)— (aa) by inserting, and, subject to paragraph (4), each covered non-Federal employer and covered self-employed individual, after the employing agency; and (bb) by striking employing agency's contribution and inserting contribution of the employing agency, covered non-Federal employer; and (II) in subparagraph (B), in the matter preceding clause (i), by inserting or, subject to paragraph (4), covered non-Federal employer, or covered self-employed individual after employing agency; and (iii) by adding at the end the following: (4) (A) In this paragraph— (i) the term additional employer percentage, with respect to a covered non-Federal employer, means 50 percent of the percentage obtained by dividing— (I) the amount of the annual revenue of the covered non-Federal employer that is in excess of $25,000,000; by (II) $75,000,000; and (ii) the term additional self-employed percentage, with respect to a covered self-employed individual, means 50 percent of the percentage obtained by dividing— (I) the amount of the basic pay of the covered self-employed individual that is in excess of $75,000; by (II) $50,000. (B) Subject to subparagraphs (D) and (E), the amount contributed to the Thrift Savings Fund under paragraphs (1) and (2) by a covered non-Federal employer shall be reduced as follows: (i) For a covered non-Federal employer with annual revenue of not more than $25,000,000, the amount required to be contributed shall be the amount equal to 50 percent of the otherwise applicable amount. (ii) For a covered non-Federal employer with annual revenue of more than $25,000,000 and not more than $100,000,000, the amount required to be contributed shall be the sum of— (I) the amount equal to 50 percent of the otherwise applicable amount; and (II) the amount equal to the additional employer percentage of the otherwise applicable amount. (C) Subject to subparagraph (E), the amount contributed to the Thrift Savings Fund under paragraphs (1) and (2) by a covered self-employed individual shall be reduced as follows: (i) For a covered self-employed individual with basic pay of not more than $75,000, the amount required to be contributed shall be the amount equal to 50 percent of the otherwise applicable amount. (ii) For a covered self-employed individual with basic pay of more than $75,000 and not more than $125,000, the amount required to be contributed shall be the sum of— (I) the amount equal to 50 percent of the otherwise applicable amount; and (II) the amount equal to the additional self-employed percentage of the otherwise applicable amount. (D) The amount of the reduction under subparagraph (B) with respect to a covered non-Federal employer shall be reduced or eliminated based on the proportion of highly compensated employees of the covered non-Federal employer, in accordance with regulations promulgated by the Secretary of Labor. (E) (i) A covered non-Federal employer may elect to have both the reduction under subparagraph (B) of this paragraph and the reduction under section 8423(a)(4)(B) not apply for any year. (ii) A covered self-employed individual may elect to have the reduction under subparagraph (C) of this subparagraph and the reduction under section 8423(a)(4)(C) not apply for any year.. (5) (A) The Secretary of Labor shall, at the frequency determined appropriate by the Secretary, compute the amount of the reduction in contributions by— (i) a covered non-Federal employer under paragraph (4) with respect to each covered non-Federal employee of the covered non-Federal employer; and (ii) a covered self-employed individual under paragraph (4) with respect to the covered self-employed individual. (B) The Secretary of the Treasury shall, in such installments as the Secretary determines appropriate, credit to the Thrift Savings Fund— (i) for the benefit of each covered non-Federal employee for whom the contributions by the covered non-Federal employer employing the covered non-Federal employee are reduced under paragraph (4) an amount equal to the amount of the reduction; and (ii) for the benefit of each covered self-employed individual for whom the contributions by the covered self-employed individual are reduced under paragraph (4) an amount equal to the amount of the reduction.; (C) in subsection (e)— (i) by inserting (1) before The sums required; and (ii) by adding at the end the following: (2) The sums required to be contributed to the Thrift Savings Fund by a covered non-Federal employer or covered self-employed individual under subsection (c) for the benefit of a covered non-Federal employee or covered self-employed individual, respectively, shall be paid by the covered non-Federal employer or covered self-employed individual, respectively, in accordance with such procedures as the Secretary of the Treasury may, in consultation with the Executive Director, prescribe in regulations.; (D) in subsection (g)— (i) by inserting or employment at a covered non-Federal employer after Government employment each place it appears; (ii) by striking civilian service each place it appears and inserting creditable service as an employee or Member; and (iii) in paragraph (5), by inserting or by a covered non-Federal employer after the Government; and (E) in subsection (i)(1)(B), by striking civilian service and inserting service as an employee. (3) Payment of lost earnings Section 8432a of title 5, United States Code, is amended— (A) by inserting or covered non-Federal employer after employing agency each place it appears, except the second place it appears in subsection (c); (B) in subsection (a)— (i) in paragraph (1), by inserting or covered non-Federal employer after such agency; and (ii) in paragraph (2)— (I) in the matter preceding subparagraph (A), by striking an employing agency’s failure and inserting a failure by an employing agency or covered non-Federal employer; and (II) in subparagraph (A), by inserting or covered non-Federal employer after the agency; (C) in subsection (b)(3), by inserting, respectively, before errors; and (D) in subsection (c), in the first sentence, by inserting or paid by the covered non-Federal employer in accordance with such procedures as the Secretary of the Treasury may, in consultation with the Executive Director, prescribe in regulations after establishment. (4) Contributions of persons who perform military service Section 8432b of title 5, United States Code, is amended— (A) by inserting or covered non-Federal employer after employing agency each place it appears; (B) in subsection (g)(1), by inserting or covered non-Federal employer after the agency; and (C) in subsection (h)(1), by striking civilian service each place it appears and inserting service as an employee. (5) Contributions of certain persons reemployed after service with international organizations Section 8432c of title 5, United States Code, is amended— (A) in subsection (c), by inserting or covered non-Federal employer after the agency; and (B) in subsection (e), by striking civilian. (6) Benefits and election of benefits Section 8433 of title 5, United States Code, is amended— (A) by striking Government employment each place it appears and inserting service that is creditable under this chapter; and (B) in subsection (c)(1), by striking Government service and inserting service that is creditable under this chapter. (h) Rights of a widow or widower Section 8442(b)(1) of title 5, United States Code, is amended, in the matter preceding subparagraph (A), by striking civilian service and inserting service as an employee. (i) Rights of a child Section 8443(a)(1) of title 5, United States Code, is amended, in the matter preceding subparagraph (A), by striking civilian service and inserting service as an employee. (j) Disability retirement Section 8451(a) of title 5, United States Code, is amended— (1) by striking employee’s agency each place it appears and inserting agency or covered non-Federal employer employing the employee; and (2) in paragraph (1)(A), by striking civilian service and inserting service as an employee. (k) Recovery; restoration of earning capacity Section 8455(a)(1) of title 5, United States Code, is amended by inserting or a covered non-Federal employer or on becoming a covered self-employed individual after reemployment by the Government. (l) Authority of the office of personnel management Section 8461(h)(1) of title 5, United States Code, is amended by inserting, covered non-Federal employer, and covered self-employed individual after Each Government agency. (m) Annuities and pay on reemployment Section 8468 of title 5, United States Code, is amended by adding at the end the following: (k) This section shall not apply to an individual serving in a position as a covered non-Federal employee or who is a covered self-employed individual..