Employees

NOTICE

Thrift Savings Plan Policy Changes and PostalEASE

The following information is provided to assist personnel offices in conducting the election opportunity for 2006 tax-deferred Thrift Savings Plan (TSP) contributions. The booklet TSP BK08, Summary of the Thrift Savings Plan, August 2005, provides a good overview of the TSP. Newly eligible career employees receive a copy of TSP BK08 from Headquarters through a direct mailing. Offices can order additional copies from the Material Distribution Center (MDC) and use touch tone order entry (TTOE); call 800-332-0317, option 2. Use the following information to order TSP BK08:

PSIN: TSP BK08
PSN: 7530-03-000-9364
Unit of Measure: EA
Minimum Order Quantity: 1
Bulk Pack Quantity: 225
Quick Pick Number: N/A
Price: $0.00
Edition Date: 08/05

Note: You must be registered to use TTOE. To register, call 800-332-0317, option 1, extension 2925, and follow the

prompts to leave a message. (Wait 48 hours after registering before placing your first order.)

TSP Policy Change — Elimination of TSP Percentage Caps

Public Law 108-469, signed on December 21, 2004, eliminates the TSP percentage limitations and the restrictions on contribution elections tied to them. This means that participants' contribution elections are limited only by the restrictions imposed by the Internal Revenue Service (IRS) Code's elective deferral limit. The IRS deferral limit for 2006 is $15,000. This change is effective pay period (PP) 01-2006. Postal ServiceTM employees will continue to use PostalEASE to make TSP contribution elections.

The law does not affect the waiting period that new employees covered by the Federal Employees Retirement System (FERS) must serve before they become eligible for agency automatic (1 percent) and agency matching contributions to their accounts. In addition, the law does not affect contribution allocations or interfund transfers, which an be made at any time. Furthermore, the law does not affect the TSP Catch-Up Contribution election for employees age 50 and over.

During December 2005, Headquarters will mail a letter of notification about the elimination of TSP percentage limitations along with TSP enrollment information and PostalEASE instructions to career employees at their mailing addresses of record.

For further information regarding the elimination of TSP percentage restrictions, see TSP Bulletin 05-10, Elimination of Percentage Restrictions on Employee Contributions to the Thrift Savings Plan, July 27, 2005.

Effective Dates

PostalEASE automates the processing of TSP elections. The windows of opportunity for employees to make TSP open season elections and the resulting effective dates are as follows:

• The 2006 initial election can be made effective the first pay period in 2006 (PP 01-2006) using PostalEASE, starting on Saturday, December 24, 2005. (PP 01-2006 begins on December 24, 2005, and ends on January 6, 2006, with a pay date of January 13, 2006.)

• Employees must complete an election using PostalEASE by 12 noon Central Time (CT) the second Wednesday (day 12) of each pay period for the election to be effective in that pay period. An election completed after 12 noon CT on the second Wednesday of a pay period will be effective the next pay period.

TSP Basic Pay Contribution Limit

All participants are eligible to contribute up to the IRS Code's annual deferral limit. The contribution per pay period must not exceed 90 percent of the employee's basic pay. FERS and Civil Service Retirement System (CSRS) employees get the same tax break for deferred taxes on their TSP contributions; however, only FERS employees get agency matching contributions (on the first 5 percent of their contributions). That's why FERS employees must ensure that they don't maximize their contributions before the end of the calendar year. FERS employees can avoid losing any matching contributions by dividing the IRS annual deferral limit of $15,000 by 26 (the number of pay periods in 1 year). That equals $577 per pay period (rounded up so employees don't lose any matching money for the last pay period). CSRS employees get the tax advantage but do not receive agency matching money. Therefore, CSRS employees who contribute more than $577 each pay period and reach the maximum before the end of the calendar year don't lose anything.

The IRS annual deferral limits for 2000 through 2007 are shown in the following table:

Using PostalEASE for Enrollment

Employees must use the PostalEASE telephone system or the PostalEASE employee Web site to enroll, to make contribution elections, and to cancel enrollment. PostalEASE's toll-free number is 877-4PS-EASE (877-477-3273). For access through the Postal Service Intranet, go to http://blue.usps.gov, click on Employee Self Service, then click on PostalEASE. For Internet access, go to http://liteblue.usps.gov and then click on PostalEASE. You must have your Employee ID (found on your earnings statement) and your USPS® personal identification number (PIN) to use PostalEASE (for information on PINs, see "USPS PIN" and "TSP PIN" below).

Note: TSP-1, Thrift Savings Plan Election Form, is no longer in use. If an employee brings TSP-1 to your personnel office, return the form and tell the employee to use PostalEASE to make contribution elections (per instructions provided in the December 2005 mailing).

Contacting TSP to Make a Fund Investment Election

Employees can use any of these methods to make fund investment elections:

• Web site: Go to the TSP Web site at www.tsp.gov.

• Telephone: Call the TSP ThriftLine toll-free at 877-968-3778; the TDD toll-free number is 877-847-4385.

• Mail: Mail Form TSP-50, Investment Allocation, to the TSP Service Office, P.O. Box 385021, Birmingham, AL 35238.

Employees' elections will take effect more quickly if they use the TSP Web site or ThriftLine than if they mail Form TSP-50. Participants must have a TSP PIN to use the TSP Web site or ThriftLine.

Note: Personnel offices should maintain a supply of Forms TSP-50 for employee use, but they do not process the forms. Instead, personnel offices must instruct employees to send completed Forms TSP-50 to the TSP Service Office at the address listed above.

Use the following information to order TSP-50 (available only from MDC):

PSIN: TSP-50
PSN: 7530-05-000-4305
Unit of Measure: EA
Minimum Order Quantity: 1
Bulk Pack Quantity: 3,800
Quick Pick Number: N/A
Price: $0.00
Edition Date: 08/02

Using PINs to Make TSP Elections

Two PINs are needed to make TSP elections: USPS PIN and TSP PIN.

USPS PIN

The Postal Service maintains USPS PINs. Employees using PostalEASE need USPS PINs to (1) initiate, (2) change, or (3) cancel TSP participation. An employee who does not know his or her USPS PIN should contact PostalEASE at 877-4PS-EASE (877-477-3273) and follow these steps when prompted:

1. Press 1 for PostalEASE.

2. Enter Employee ID number (found on the earnings statement).

3. When prompted to enter the PIN, pause and then press 2.

The USPS PIN will be mailed to the employee's address of record, usually by the next business day.

Note: When an employee requests his or her USPS PIN, the USPS PIN does not change; the employee's old USPS PIN remains valid. (The USPS PIN is the same PIN employees use for telephone bidding and computerized bidding.)

TSP PIN

This PIN is maintained by TSP. Employees need their TSP PIN to make fund investment choices via the TSP Web site or the TSP ThriftLine. TSP participants who do not know their TSP PIN can use either of these methods for having a new TSP PIN mailed to their address of record:

1. Go to the TSP Web site at www.tsp.gov and select Account Access.

2. Call the TSP ThriftLine or TSP Service Office toll-free at 877-968-3778 (TDD, 877-847-4385) and follow the instructions.

When TSP receives a request, TSP gives a new TSP PIN to the employee and the old TSP PIN is no longer valid.

Direct Mailings to Employees

Headquarters will mail the TSP enrollment information letter with PostalEASE instructions to career employees at their mailing address of record during December 2005.

Soon after a newly eligible career employee's PS Form 50, Notification of Personnel Action, is processed, Headquarters sends TSP BK08, Summary of the Thrift Savings Plan, to the employee's mailing address of record along with the TSP enrollment information letter with PostalEASE instructions.

The employing office of record is the return address for undeliverable TSP enrollment information sent to newly eligible employees. The disposition of returned items is at the discretion of the district office or other administering office. An employee who receives an enrollment package forwarded to the employing office of record should submit PS Form 1216, Employee's Current Mailing Address, June 1993. (Employees with access to Web job bidding on the Intranet should use the Web to report address changes; others should submit PS Form 1216 to their personnel office.)

Personnel offices should maintain a supply of PS Forms 1216, which they can obtain from the Postal Service Web site, http://blue.usps.gov; under "Essential Links," click Forms. Or they can order PS Form 1216 from MDC using the following information:

PSIN: PS 1216
PSN: 7530-02-000-7354
Unit of Measure: SE
Minimum Order Quantity: 1
Bulk Pack Quantity: 4,000
Quick Pick Number: 118
Price: $0.0187
Edition Date: 06/05

Eligibility

All career employees are eligible to make employee contribution elections at any time (subject to financial hardship withdrawal exclusions).

FERS employees are eligible to receive agency automatic contributions (1 percent) and matching contributions (as appropriate) as shown in the table below:

Determining Eligibility for Agency Contributions for FERS employees

TSP Publications and Forms

Most TSP publications and forms have been revised for TSP's new record-keeping system implemented in June 2003.

The MDC automatically distributes all new and revised TSP items it receives to Human Resources at district offices, area offices, PDC/Fs, BMCs, AMC/Fs, remote encoding centers, the Office of Inspector General, Postal Inspection Service divisions, Headquarters, and selected Headquarters field units.

Ordering TSP Items

Offices may order TSP forms and publications from the MDC as needed. However, it is not necessary to maintain a large stock of TSP BK08 because Headquarters mails this booklet to each newly eligible and newly hired career employee. In addition, offices can check the TSP Web site for new or revised items.

Note: Form TSP-50 is available only from MDC, not from TSP.

Participant Statements

Employees with TSP accounts may view their statements online. The TSP Service Office mails quarterly statements to participants who have elected to receive paper copies.

Publicity

MDC regularly sends TSP posters to Human Resources at district offices, area offices, PDC/Fs, BMCs, AMC/Fs, remote encoding centers, the Office of Inspector General, Postal Inspection Service divisions, Headquarters, and selected Headquarters field units. Installations that receive the posters must distribute them widely and post them on bulletin boards.

To assist in publicizing the 2006 TSP enrollment opportunity, all offices must post the following on bulletin boards through December 31, 2006:

• The 2006 TSP enrollment information notice provided.

• The current TSP fact sheet.

— Compensation,
Human Resources, 12-8-05

2006 Thrift Savings Plan Enrollment Information and PostalEASE

Please post on all bulletin boards through December 31, 2006.

NOTICE

2006 Thrift Savings Plan Catch-Up Contributions for Participants Age 50 and Older, and PostalEASE

The following information is provided to assist personnel offices in conducting the election opportunity for 2006 tax- deferred Thrift Savings Plan (TSP) Catch-Up Contributions. These contributions, available to TSP participants who are at least age 50 during 2006, supplement regular TSP contributions and do not count against the statutory contribution percentage limitations or the Internal Revenue Service (IRS) Code's elective deferral limit. However, the Catch-Up Contributions have their own annual limit (the "annual Catch-Up limit") and eligibility criteria.

2006 Initial Election

The 2006 initial election can be made effective no earlier than the first pay period (PP) in 2006 (PP 01-2006) using PostalEASE. Employees will have access on Saturday, December 24, 2005. PP 01-2006 begins on December 24, 2005, and ends on January 6, 2006, with a pay date of January 13, 2006. After that, employees can elect their 2006 Catch-Up Contributions at any time.

Employees must complete their election using PostalEASE by 12:00 noon Central Time (CT) the second Wednesday (day 12) of each pay period in order for the election to be effective in that pay period. Any elections completed after 12:00 noon CT on the second Wednesday of each pay period will be effective the next pay period.

Annual Catch-Up Contribution Limit

For 2006, the maximum Catch-Up Contribution is $5,000. This contribution election is in addition to the IRS annual deferral limit for 2006, which is $15,000. See the following table for contribution limits.

TSP Basic Pay Contribution Limits

Eligibility for Catch-Up Contributions

Catch-Up Contributions are supplemental contributions available to TSP participants who are age 50 or older. There is no "lookback" provision to see what the participant could have contributed but did not. Eligible participants simply have the right to contribute additional funds up to the annual Catch-Up Contribution limit.

To elect Catch-Up Contributions, employees must:

• Be in a pay status. Make contributions from basic pay through payroll deductions only.

• Have on file either (1) a regular election to contribute the maximum percentage of basic pay, or (2) an election where the maximum IRS elective deferral limit will be reached during the calendar year.

• Be age 50 or older, or turn age 50 in the calendar year the election is submitted and processed.

• Not be in the 6-month noncontribution period following the receipt of a financial hardship in-service withdrawal.

• Self-certify that they are contributing (in all equivalent employer plans) the maximum amount that will result in reaching the IRS elective deferral limit by the end of the relevant calendar year.

In addition, the following rules will apply to the 50 and older Catch-Up Contributions:

• Once the plan is implemented, participants can start, change the amount, or stop at any time. Termination of Catch-Up Contributions does not affect a participant's regular contributions.

• A new election must be submitted each year (deductions will not continue into the next calendar year).

• The annual amount of the contribution will be combined with regular tax-deferred contributions in the deferral block of Form W-2 as follows:

- If the amount shown exceeds the IRS limit, the IRS will check the date of birth with the Social Security Administration and assume any amount over the limit is attributable to the Catch-Up Contributions.

- If the participant exceeds the Catch-Up limit (usually by contributing to more than one plan), the participant may contact the TSP and request a refund of the excess Catch-Up Contributions.

- If applicable, the participant is eligible to make up missed Catch-Up Contributions under the Uniformed Services Employment and Reemployment Rights Act (USERRA).

Other Catch-Up Contributions Information

Participants can make more than one election in any given calendar year (as long as the annual catch-up limit is not exceeded). Beginning with the initial election period for the calendar year, participants can make Catch-Up Contribution elections at any time during the calendar year via payroll deductions.

Employees will need to make a new election for each calendar year in which they wish to participate in the Catch- Up Contribution election.

Catch-Up Contributions will be invested in an employee's account based on the most current contribution allocation on file with the TSP. Remind employees that contribution allocations must be made using one of these methods: (1) TSP Web site; (2) TSP ThriftLine; or (3) Form TSP-50, Investment Allocation.

There are no Postal ServiceTM matching contributions associated with TSP Catch-Up Contributions.

Termination of Catch-Up Contributions

Employees can stop or restart Catch-Up Contributions at any time without penalty. Termination of Catch-Up Contributions does not affect the employee's regular contributions.

If a participant receives a financial hardship in-service withdrawal, then the participant's Catch-Up Contributions and regular employee contributions must stop for 6 months.

The Catch-Up Contribution election terminates automatically with the last pay date of the calendar year to which it applies (PP 26 in 2006) unless the employee has previously terminated the election or has reached the annual Catch-Up Contribution limit.

Using PostalEASE for Enrollment

Employees who wish to start, stop, or change a TSP Catch-Up Contribution must use the PostalEASE telephone system or the PostalEASE employee Web site to make an election. PostalEase's toll-free number is 877-4PS-EASE (877-477-3273). For access through the Postal Service Intranet, go to http://blue.usps.gov; click on Employee Self Service, and then click on PostalEASE. Employees must have Employee IDs (found on earnings statements) and USPS® personal identification numbers (PINs) to use PostalEASE (for information on PINs, see "USPS PIN" and "TSP PIN" below).

Note: Form TSP-1-C, Catch-Up Contribution Election, is no longer in use. If an employee brings Form TSP-1-C to your personnel office, return the form and tell the employee to use PostalEASE to make a 2006 Catch-Up Contribution election (per instructions provided in the December 2005 mailing).

Contacting TSP to Make a Fund Investment Election

Employees can use any of these methods to make fund investment elections:

• Web site: Go to the TSP Web site at www.tsp.gov.

• Telephone: Call the TSP ThriftLine at 877-968-3778; the TDD toll-free number is 877-847-4385.

• Mail: Mail Form TSP-50, Investment Allocation, to the TSP Service Office, P.O. Box 385021, Birmingham, AL 35238.

Note: Personnel offices must maintain a supply of Forms TSP-50 for employee use, but they do not process the forms. Instead, personnel offices must instruct employees to send completed Forms TSP-50 to the TSP Service Office at the address listed above.

Form TSP-50 is available only from the MDC. To use touch tone order entry (TTOE), call 800-332-0317, option 2. Use the following information to order Form TSP-50:

PSIN: TSP-50
PSN: 7530-05-000-4305
Unit of Measure: EA
Minimum Order Quantity: 1
Bulk Pack Quantity: 3,800
Quick Pick Number: N/A
Price: $0.00
Edition Date 08/02

Note: You must be registered to use TTOE. To register, call 800-332-0317, option 1, extension 2925, and follow the prompts to leave a message. (Wait 48 hours after registering before placing your first order.)

Employees' elections will take effect more quickly if they use the TSP Web site or ThriftLine than if they mail Form TSP-50. Participants must have a TSP PIN to use the TSP Web site or ThriftLine.

Using PINs to Make TSP Elections

Two PINs are needed to make TSP elections: USPS PIN and TSP PIN.

USPS PIN

The Postal Service maintains USPS PINs. Employees using PostalEASE need USPS PINs to (1) initiate, (2) change, or (3) cancel TSP participation. An employee who does not know his or her USPS PIN should contact PostalEASE at 877-4PS-EASE (877-477-3273) and follow these steps when prompted:

1. Press 1 for PostalEASE.

2. Enter Employee ID number (found on the earnings statement).

3. When prompted to enter the PIN, pause and then press 2.

The USPS PIN will be mailed to the employee's address of record, usually by the next business day.

Note: When an employee requests his or her USPS PIN, the USPS PIN does not change; the employee's old USPS PIN remains valid. (The USPS PIN is the same PIN employees use for telephone bidding and computerized bidding.)

TSP PIN

This PIN is maintained by TSP. Employees need their TSP PIN to make fund investment choices via the TSP Web site or the TSP ThriftLine. TSP participants who do not know their TSP PIN can use either of these methods for having a new TSP PIN mailed to their address of record:

1. Go to the TSP Web site at www.tsp.gov and select Account Access.

2. Call the TSP ThriftLine or TSP Service Office toll-free at 877-968-3778 (TDD 877-847-4385) and follow the instructions.

When TSP receives a request, TSP gives a new TSP PIN to the employee and the old TSP PIN is no longer valid.

Direct Mailings to Employees

Headquarters will mail a PostalEASE worksheet and enrollment information letter containing TSP Catch-Up Contribution election information to career employees who meet the age requirements at their mailing address of record during December 2005.

Publicity

To assist in publicizing this TSP Catch-Up Contribution election, all offices must post these on bulletin boards through December 31, 2006:

1. "2006 Thrift Savings Plan Catch-Up Contributions for TSP Participants Age 50 and Older, and PostalEASE," provided.

2. The current TSP fact sheet.

— Compensation,
Employee Resource Management, 12-8-05

2006 Thrift Savings Plan Catch-Up Contributions for TSP Participants Age 50 and Older, and PostalEASE

Please post on all bulletin boards through December 31, 2006.

NOTICE

Thrift Savings Plan Address Change

Because of Hurricanes Katrina and Rita, the Thrift Savings Plan (TSP) had to move its data entry and processing center out of New Orleans. Participants should be assured that all TSP operations are continuing to function. The Northern Virginia data center has not been affected, the Web site is functional, and daily processing cycles are continuing without disruption. A few important changes are described below.

New Mailing Address. If you are mailing correspondence, forms, court orders, or other documents to TSP, use this address:

THRIFT SAVINGS PLAN SERVICE OFFICE
PO BOX 385021
BIRMINGHAM AL 35238

Loan Payments. Loan payments should be mailed to the address on the TSP Loan Coupon.

Fax Number. TSP has introduced a toll-free fax number: 866-817-5023.

For more detailed information, go to the TSP Web site at www.tsp.gov and click on Hurricane Relief.

— Compensation,
Human Resources, 12-8-05