[House Report 115-343]
[From the U.S. Government Publishing Office]
115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-343
======================================================================
TSP MODERNIZATION ACT OF 2017
_______
October 10, 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Gowdy, from the Committee on Oversight and Government Reform,
submitted the following
R E P O R T
[To accompany H.R. 3031]
[Including cost estimate of the Congressional Budget Office]
The Committee on Oversight and Government Reform, to whom
was referred the bill (H.R. 3031) to amend title 5, United
States Code, to provide for flexibility in making withdrawals
from a Thrift Savings Plan account, and for other purposes,
having considered the same, report favorably thereon without
amendment and recommend that the bill do pass.
CONTENTS
Page
Committee Statement and Views.................................... 2
Section-by-Section............................................... 5
Explanation of Amendments........................................ 5
Committee Consideration.......................................... 5
Roll Call Votes.................................................. 6
Application of Law to the Legislative Branch..................... 6
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 6
Statement of General Performance Goals and Objectives............ 6
Duplication of Federal Programs.................................. 6
Disclosure of Directed Rule Makings.............................. 6
Federal Advisory Committee Act................................... 6
Unfunded Mandates Statement...................................... 6
Earmark Identification........................................... 7
Committee Estimate............................................... 7
Budget Authority and Congressional Budget Office Cost Estimate... 7
Changes in Existing Law Made by the Bill, as Reported............ 8
Committee Statement and Views
PURPOSE AND SUMMARY
H.R. 3031, the TSP Modernization Act of 2017, expands
withdrawal options for Thrift Savings Plan (TSP) participants.
The TSP is a 401(k)-equivalent retirement account for Federal
employees. H.R. 3031 increases the flexibility and control
Federal employees have over their accounts to bring the TSP in
line with private sector rules. It allows participants to make
multiple partial withdrawals from their TSP accounts after
separation from Federal service and permits participants, who
are current employees, to make multiple age-based partial
withdrawals. H.R. 3031 also enables separated participants who
previously elected to withdraw their money using periodic
payments to change that election as long as they do not return
any payments already made. Finally, the bill eliminates the
withdrawal election deadline and the default election of an
annuity purchase if a participant does not make a withdrawal
election by the deadline.
BACKGROUND AND NEED FOR LEGISLATION
The Federal Employees' Retirement System Act of 1986
established the TSP.\1\ The TSP is administered by the Federal
Retirement Thrift Investment Board (FRTIB). For employees
covered by the Federal Employees Retirement System (FERS), the
TSP is the defined contribution portion of the tripartite
retirement system that also includes a defined benefit pension
and Social Security.
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\1\Federal Employees' Retirement System Act of 1986, Pub. L. 99-
335.
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Participation in the TSP brings advantages over private
sector defined contribution systems. The design of the system
is simple and allows for passive investment management.\2\
Investors may purchase shares in any of the five core
investment funds, including the Government Securities
Investment Fund (G Fund), the Fixed Income Index Investment
Fund (F Fund), the Common Stock Index Investment Fund (C Fund),
the U.S. Small Capitalization Stock Index Investment Fund (S
Fund), and the International Stock Index Investment Fund (I
Fund).\3\ Investors may also purchase ``lifecycle'' funds that
are comprised of a mix of the core investment funds, allowing
the FRTIB to select an appropriate mix of shares depending on
when the investor is expected to begin withdrawing funds.\4\
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\2\See e.g. the Thrift Savings Plan's lifecycle funds; Thrift
Savings Plan, Lifecycle Funds, https://www.tsp.gov/InvestmentFunds/
FundOptions/index.html (last visited Oct. 3, 2017).
\3\Thrift Savings Plan, Thrift Savings Plan Investment Funds: Fund
Management, https://www.tsp.gov/InvestmentFunds/FundsOverview/
index.html (lasted visited July 28, 2017).
\4\Id.
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Another advantage of utilizing the TSP is its low
administrative costs. In 2016, the expense ratio for the TSP
was 3.8 basis points, one of the lowest in the industry.\5\ The
reason for these low costs is the simple plan structure and
passive investment management that result from using low-cost
index funds such as the C and S Funds, which are designed to
track market indices. Economies of scale also enable the TSP to
minimize costs. As of June 2017, approximately 90 percent of
FERS employees participated in the TSP, with over $500 billion
invested.\6\
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\5\Thrift Savings Plan, Expense Ratio, https://www.tsp.gov/
InvestmentFunds/FundsOverview/expenseRatio.html (last visited Oct. 3,
2017).
\6\Fed. Retirement Thrift Investment Bd., Thrift Savings Fund
Statistics--June 2017 (2017).
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Although the TSP offers many advantages, the current
withdrawal rules for TSP accounts can be restrictive. In-
service TSP participants may make only one age-based partial or
full withdrawal after they reach the age of 59\1/2\. Separated
participants are also limited to only one partial withdrawal.
After, only a full-withdrawal option is available to separated
employees. A TSP participant is not allowed to take a partial
withdrawal once separated from federal service if he or she
took an in-service age-based withdrawal. Finally, if a
separated employee elects to withdraw his or her full balance
via periodic payments, the payments cannot be stopped unless a
participant withdraws his or her entire remaining balance. The
separated employee cannot elect to switch to a partial
withdrawal or annuity purchase.\7\
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\7\Memorandum from Greg Long, Exec. Dir., Fed. Retirement Thrift
Investment Bd., to Bd. Members Kennedy, Bilyeu, Jones, McCray, and
Jasien, Fed. Retirement Thrift Investment Bd., TSP Withdrawal Options
4-5 (July 7, 2015) [hereinafter ``FRTIB Memo''].
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The law also requires TSP participants to make a post-
separation withdrawal election by April 1 of the year following
the year in which a participant turn 70\1/2\ and are separated
from federal service. This withdrawal election deadline is
independent of the Internal Revenue Service requirement to
begin annual minimum distributions by April 1 of the year
following the year in which the participant is 70\1/2\ years
old and separated from federal service.\8\ The law requires
that the FRTIB purchase an annuity for a TSP participant if he
or she fails to make an election by the TSP withdrawal election
deadline.\9\
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\8\ Id. at 5.
\9\5 U.S.C. Sec. 8433(f)(2).
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In 2014 and 2015, the FRTIB examined TSP data and
discovered many participants were transferring their plan
balances from the TSP to other financial institutions at age
59\1/2\ and upon separation from federal employment. In 2013
alone, separated participants transferred $9 billion out of the
TSP to other financial institutions, most of which have higher
expenses than the TSP, thereby ``reduc[ing] a participant's net
returns and negatively impact[ing] his/her retirement
readiness.''\10\ Of these participants, 27 percent cited a
desire for additional withdrawal flexibility as a motivating
factor behind these transactions, and 36 percent cited the need
for funds to address life events.\11\ Among those who took age-
based withdrawals, 30 percent desired additional withdrawal
flexibility, and 52 percent needed the funds to address life
events.\12\ Agents for the TSP's customer service phone line
also report significant dissatisfaction with what participants
consider are overly restrictive withdrawal options.\13\
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\10\FRTIB Memo supra note 7, at 1.
\11\Id., at 3.
\12\Written leg. proposal from Fed. Retirement Thrift Investment
Bd. to H. Comm. on Oversight & Gov't Reform, Proposal for Withdrawal
Flexibility from the Thrift Savings Plan 1 (no date).
\13\FRTIB Memo, supra note 7, at 3.
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As part of its study, the FRTIB looked at the reasons for
the current restrictive withdrawal options. According to the
Board, defined contribution systems were still relatively new
at the time of the TSP's creation. A decision was made to model
the withdrawal options based on the defined benefit pension
administered by the U.S. Office of Personnel Management (OPM).
The TSP initially had a withdrawal scheme that was
designed to mimic a participant's eligibility for the
OPM defined benefit annuity. Effectively, only
participants that reached the age and service
requirements that qualified them for a defined benefit
payout could execute a TSP withdrawal that would result
in a direct payment to the participant.
All other separated participants were required to
transfer their accounts to an [individual retirement
account] or another qualified plan. This structure
proved confusing to participants and was modified
several times through legislative changes. . . . Each
change brought the TSP's withdrawal options more in-
line with those commonly found in ERISA [Employee
Retirement Income Security Act] governed 401(k)
plans.\14\
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\14\ Id. at 2.
Despite these past changes, the FRTIB study found the TSP's
current withdrawal options continue to vary from plans found in
the private sector. To bridge this gap, the study recommended
allowing participants to take multiple partial distributions
once separated and allowing participants who take in-service,
age-based withdrawals to take partial distributions once
separated, both of which are options found in many private
sector plans.\15\ The FRTIB also reviewed a Vanguard 2013 study
of private sector defined contribution plans that looked at the
effects of allowing multiple partial withdrawals as one nears
retirement and after separating from service. The study found
increased withdrawal flexibilities for participants produced a
50 percent increase in plan retention of participants and
assets.\16\
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\15\ Id. at 3.
\16\Vanguard, Retirement Distribution Decisions Among DC
Participants 10 (2013).
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H.R. 3031 addresses these problems by providing additional
withdrawal flexibility to TSP participants. The bill allows TSP
participants to make multiple partial withdrawals post-
separation, and it eliminates the prohibition on making a post-
separation partial withdrawal if a participant has taken an in-
service, age-based withdrawal. It allows separated employees to
stop periodic payments of their account balance as long as they
do not return any money that was already dispensed. The
participants may then elect for a partial withdrawal or
purchase an annuity. The bill removes the requirement that TSP
participants make a withdrawal election by the withdrawal
election deadline--the year following the year in which they
turn 70\1/2\--and removes the requirement that the FRTIB
purchase an annuity for any employee who has not made an
election by the withdrawal deadline. Finally, the bill allows
in-service employees to make multiple age-based withdrawals.
LEGISLATIVE HISTORY
On June 23, 2017, Representative Elijah Cummings (D-MD),
the Ranking Minority Member of the Committee, introduced H.R.
3031, the TSP Modernization Act of 2017, with Representative
Mark Meadows (R-NC). H.R. 3031 was referred to the Committee on
Oversight and Government Reform. The Committee considered H.R.
3031 at a business meeting on July 19, 2017, and ordered the
bill reported favorably by voice vote.
Senator Rob Portman (R-OH) and Senator Thomas Carper (D-DE)
introduced S. 873, the Senate companion to H.R. 3031, on April
6, 2017. The Senate Committee on Homeland Security and
Governmental Affairs considered S. 873 at a business meeting on
July 26, 2017 and ordered the bill reported favorably by voice
vote.
Section-by-Section
Section 1. Short title
The short title is the ``TSP Modernization Act of 2017''.
Sec. 2. Thrift Savings Plan Account Withdrawal Flexibility
This section amends section 8433 of title 5, United States
Code, and includes related stand-alone provisions and
conforming changes. The amendments include removing a
prohibition on Thrift Savings Plan (TSP) participants who have
separated from government service making a partial post-
separation withdrawal from their TSP account if they made a
partial withdrawal during their in-service period. It also
allows separated TSP participants to make more than one partial
withdrawal.
This section would prohibit a TSP participant who has
elected to withdraw money from the participant's TSP account by
purchasing an annuity, from changing that election on or after
the date on which such annuity contract is purchased. A TSP
participant who has separated from service may not return a
payment that was made pursuant to a withdrawal election. The
revised section will allow separated employees to change their
withdrawal elections, even after receiving periodic payments
from their TSP account, as long as they do not return any money
already dispensed from their TSP accounts. Separated employees
will be allowed to change from periodic payments to partial
withdrawals or annuity contracts.
Section 2 also removes a withdrawal election deadline and
the requirement for FRTIB to purchase an annuity for a TSP
participant if a participant has not made a withdrawal election
by April 1 of the year after the participant reaches the age of
70\1/2\. This gives TSP participants additional time to
consider their withdrawal options, while not changing the
Internal Revenue Service required minimum distribution rules.
Finally, the section removes a limitation allowing a TSP
participant who is still employed by the federal government to
make a withdrawal after reaching the age of 59\1/2\ only one
time while still employed by the Federal Government.
Explanation of Amendments
There were no amendments to H.R. 3031 offered or agreed to
during Committee consideration of the bill.
Committee Consideration
On July 19, 2017, the Committee met in open session and,
with a quorum being present, ordered the bill favorably
reported by voice vote.
Roll Call Votes
There were no roll call votes during consideration of H.R.
3031.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch where the bill relates to the terms and conditions of
employment or access to public services and accommodations.
This bill expands withdrawal options for TSP participants. As
such, this bill does not relate to employment or access to
public services and accommodations.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
(2)(b)(1) of rule X of the Rules of the House of
Representatives, the Committee's oversight findings and
recommendations are reflected in the descriptive portions of
this report.
Statement of General Performance Goals and Objectives
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goal or objective of this bill is to provide for flexibility in
making withdrawals from a Thrift Savings Plan account.
Duplication of Federal Programs
In accordance with clause 2(c)(5) of rule XIII no provision
of this bill establishes or reauthorizes a program of the
Federal Government known to be duplicative of another Federal
program, a program that was included in any report from the
Government Accountability Office to Congress pursuant to
section 21 of Public Law 111-139, or a program related to a
program identified in the most recent Catalog of Federal
Domestic Assistance.
Disclosure of Directed Rule Makings
The legislation requires the Executive Director of the
FRTIB to prescribe such regulations as are necessary to carry
out the amendments made by the bill.
Federal Advisory Committee Act
The Committee finds the legislation does not establish or
authorize the establishment of an advisory committee within the
definition of Section 5(b) of the appendix to title 5, United
States Code.
Unfunded Mandates Statement
Pursuant to section 423 of the Congressional Budget and
Impoundment Control Act (Pub. L. 113-67) the Committee has
included a letter received from the Congressional Budget Office
below.
Earmark Identification
This bill does not include any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI of the House of Representatives.
Committee Estimate
Pursuant to clause 3(d)(2)(B) of rule XIII of the Rules of
the House of Representatives, the Committee includes below a
cost estimate of the bill prepared by the Director of the
Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974.
New Budget Authority and Congressional Budget Office Cost Estimate
Pursuant to clause 3(c)(3) of rule XIII of the House of
Representatives, the cost estimate prepared by the
Congressional Budget Office and submitted pursuant to section
402 of the Congressional Budget Act of 1974 is as follows:
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 16, 2017.
Hon. Trey Gowdy,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3031, the TSP
Modernization Act of 2017.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Dan Ready.
Sincerely,
Keith Hall.
Enclosure.
H.R. 3031--TSP Modernization Act of 2017
H.R. 3031 would expand the withdrawal options for
participants in the Thrift Savings Plan (TSP), the federal
government's defined-contribution retirement plan. Currently,
employees may only make one partial withdrawal after they turn
59\1/2\ while employed or one such withdrawal after they
retire. Enacting H.R. 3031 would allow an unlimited number of
such withdrawals.
The staff of the Joint Committee on Taxation estimate that
enacting H.R. 3031 would affect revenues because TSP
participants would be able to withdraw funds differently than
under current law and those withdrawals could affect the timing
of taxes paid on the amounts withdrawn; those effects, however,
would be negligible. Because the bill would affect revenues,
pay-as-you-go procedures apply. Enacting the bill would not
affect direct spending.
CBO estimates that enacting H.R. 3031 would not increase
net direct spending or significantly increase on-budget
deficits in any of the four consecutive 10-year periods
beginning in 2028.
This bill contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Dan Ready. The
estimate was approved by H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
TITLE 5, UNITED STATES CODE
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
SUBPART G--INSURANCE AND ANNUITIES
* * * * * * *
CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
* * * * * * *
SUBCHAPTER III--THRIFT SAVINGS PLAN
* * * * * * *
Sec. 8432b. Contributions of persons who perform military service
(a) This section applies to any employee who--
(1) separates or enters leave-without-pay status in
order to perform military service; and
(2) is subsequently restored to or reemployed in a
position which is subject to this chapter, pursuant to
chapter 43 of title 38.
(b)(1) Each employee to whom this section applies may
contribute to the Thrift Savings Fund, in accordance with this
subsection, an amount not to exceed the amount described in
paragraph (2).
(2) The maximum amount which an employee may
contribute under this subsection is equal to--
(A) the contributions under section 8432(a)
which would have been made, over the period
beginning on date of separation or commencement
of leave-without-pay status (as applicable) and
ending on the day before the date of
restoration or reemployment (as applicable);
reduced by
(B) any contributions under section 8432(a)
or 8440e actually made by such employee over
the period described in subparagraph (A).
(3) Contributions under this subsection--
(A) shall be made at the same time and in the
same manner as would any contributions under
section 8432(a);
(B) shall be made over the period of time
specified by the employee under paragraph
(4)(B); and
(C) shall be in addition to any contributions
then actually being made under section 8432(a).
(4) The Executive Director shall prescribe the time,
form, and manner in which an employee may specify--
(A) the total amount such employee wishes to
contribute under this subsection with respect
to any particular period referred to in
paragraph (2)(B); and
(B) the period of time over which the
employee wishes to make contributions under
this subsection.
The employing agency may place a maximum limit on the
period of time referred to in subparagraph (B), which
cannot be shorter than two times the period referred to
in paragraph (2)(B) and not longer than four times such
period.
(c)(1) If an employee makes contributions under subsection
(b), the employing agency shall make contributions to the
Thrift Savings Fund on such employee's behalf--
(A) in the same manner as would be required
under section 8432(c)(2) if the employee
contributions were being made under section
8432(a); and
(B) disregarding any contributions then
actually being made under section 8432(a) and
any agency contributions relating thereto.
(2) An employee to whom this section applies is
entitled to have contributed to the Thrift Savings Fund
on such employee's behalf an amount equal to--
(A) the total contributions to which that
individual would have been entitled under
section 8432(c)(2), based on the amounts
contributed by such individual under section
8440e (other than under subsection (d)(2)
thereof) with respect to the period referred to
in subsection (b)(2)(B), if those amounts had
been contributed by such individual under
section 8432(a); reduced by
(B) any contributions actually made on such
employee's behalf under section 8432(c)(2)
(including pursuant to an agreement under
section 211(d) of title 37) with respect to the
period referred to in subsection (b)(2)(B).
(d) An employee to whom this section applies is entitled to
have contributed to the Thrift Savings Fund on such employee's
behalf an amount equal to--
(1) 1 percent of such employee's basic pay (as
determined under subsection (e)) for the period
referred to in subsection (b)(2)(B); reduced by
(2) any contributions actually made on such
employee's behalf under section 8432(c)(1) with respect
to the period referred to in subsection (b)(2)(B).
(e) For purposes of any computation under this section, an
employee shall, with respect to the period referred to in
subsection (b)(2)(B), be considered to have been paid at the
rate which would have been payable over such period had such
employee remained continuously employed in the position which
such employee last held before separating or entering leave-
without-pay status to perform military service.
(f)(1) The employing agency may be required to pay lost
earnings on contributions made pursuant to subsections (c) and
(d). Such earnings, if required, shall be calculated
retroactively to the date the contribution would have been made
had the employee not separated or entered leave without pay
status to perform military service.
(2) Procedures for calculating and crediting the
earnings payable pursuant to paragraph (1) shall be
prescribed by the Executive Director.
(g) Amounts paid under subsection (c), (d), or (f) shall be
paid--
(1) by the agency to which the employee is restored
or in which such employee is reemployed;
(2) from the same source as would be the case under
section 8432(e) with respect to sums required under
section 8432(c); and
(3) within the time prescribed by the Executive
Director.
(h)(1) For purposes of section 8432(g), in the case of an
employee to whom this section applies--
(A) a separation from civilian service in
order to perform the military service on which
the employee's restoration or reemployment
rights are based shall be disregarded; and
(B) such employee shall be credited with a
period of civilian service equal to the period
referred to in subsection (b)(2)(B).
(2)(A) An employee to whom this section applies may
elect, for purposes of [section 8433(d), or paragraph
(1) or (2) of section 8433(h)] subsection (d) or (f) of
section 8433, as the case may be, to have such
employee's separation (described in subsection (a)(1))
treated as if it had never occurred.
(B) An election under this paragraph shall be
made within such period of time after
restoration or reemployment (as the case may
be) and otherwise in such manner as the
Executive Director prescribes.
(i) The Executive Director shall prescribe regulations to
carry out this section.
* * * * * * *
Sec. 8433. Benefits and election of benefits
(a) An employee or Member who separates from Government
employment is entitled to the amount of the balance in the
employee's or Member's account (except for the portion of such
amount forfeited under section 8432(g) of this title, if any)
as provided in this section.
(b) Subject to section 8435 of this title, any employee or
Member who separates from Government employment is entitled and
may elect to withdraw from the Thrift Savings Fund the balance
of the employee's or Member's account as--
(1) an annuity;
(2) a single payment;
(3) 2 or more substantially equal payments to be made
not less frequently than annually; or
(4) any combination of payments as provided under
paragraphs (1) through (3) as the Executive Director
may prescribe by regulation.
(c)(1) In addition to the right provided under subsection (b)
to withdraw the balance of the account, an employee or Member
who separates from Government service [and who has not made a
withdrawal under subsection (h)(1)(A) may make one withdrawal]
may make one or more withdrawals of any amount [as a single
payment] in the same manner as a single payment is made in
accordance with subsection (b)(2) from the employee's or
Member's account.
(2) An employee or Member may request that the amount
withdrawn from the Thrift Savings Fund in accordance with
subsection (b)(2) be transferred to an eligible retirement
plan.
(3) The Executive Director shall make each transfer elected
under paragraph (2) directly to an eligible retirement plan or
plans (as defined in section 402(c)(8) of the Internal Revenue
Code of 1986) identified by the employee, Member, former
employee, or former Member for whom the transfer is made.
(4) A transfer may not be made for an employee, Member,
former employee, or former Member under paragraph (2) until the
Executive Director receives from that individual the
information required by the Executive Director specifically to
identify the eligible retirement plan or plans to which the
transfer is to be made.
(5) Withdrawals under this subsection shall be subject to
such other limitations or conditions as the Executive Director
may prescribe by regulation.
(d)(1) Subject to paragraph (2) and subsections (a) and (c)
of section 8435 of this title, an employee or Member may change
an election previously made under this subchapter, except that
in the case of an election to receive an annuity, a former
employee or Member may not change an election under this
section on or after the date on which an annuity contract is
purchased to provide for the annuity elected by the former
employee or Member.
(2) A former employee or Member may not [change an]
return a payment that was made pursuant to an election
under this section [on or after the date on which a
payment is made in accordance with such election or, in
the case of an election to receive an annuity, the date
on which an annuity contract is purchased to provide
for the annuity elected by the former employee or
Member].
(e)(1) If an employee or Member (or former employee or
Member) dies without having made an election under this section
or after having elected an annuity under this section but
before making an election under section 8434 of this title, an
amount equal to the value of that individual's account (as of
death) shall, subject to any decree, order, or agreement
referred to in section 8435(c)(2) of this title be paid in a
manner consistent with section 8424(d) of this title.
(2) Notwithstanding section 8424(d), if an employee,
Member, former employee, or former Member dies and has
designated as sole or partial beneficiary his or her
spouse at the time of death, or, if an employee,
Member, former employee, or former Member, dies with no
designated beneficiary and is survived by a spouse, the
spouse may maintain the portion of the employee's or
Member's account to which the spouse is entitled in
accordance with the following terms:
(A) Subject to the limitations of
subparagraph (B), the spouse shall have the
same withdrawal options under subsection (b) as
the employee or Member were the employee or
Member living.
(B) The spouse may not make withdrawals under
subsection (g) or (h).
(C) The spouse may not make contributions or
transfers to the account.
(D) The account shall be disbursed upon the
death of the surviving spouse. A beneficiary or
surviving spouse of a deceased spouse who has
inherited an account is ineligible to maintain
the inherited spousal account.
(3) The Executive Director shall prescribe
regulations to carry out this subsection.
(f)[(1) Notwithstanding] Notwithstanding subsection (b), if
an employee or Member separates from Government employment, and
such employee's or Member's nonforfeitable account balance is
less than an amount that the Executive Director prescribes by
regulation, the Executive Director shall pay the nonforfeitable
account balance to the participant in a single payment, unless
an election under section 8432b(h)(2) is made to treat such
separation for purposes of [this paragraph] this subsection as
if it had never occurred.
[(2) Unless otherwise elected under this section, and
subject to paragraph (1), benefits under this
subchapter shall be paid as an annuity commencing for
an employee, Member, former employee, or former Member
on April 1 of the year following the latest of the year
in which--
[(A) the employee, Member, former employee,
or former Member becomes 701/2 years of age; or
[(B) the employee, Member, former employee,
or former Member separates from Government
employment.]
(g)(1) At any time before separation, an employee or Member
may apply to the Board for permission to borrow from the
employee's or Member's account an amount not exceeding the
value of that portion of such account which is attributable to
contributions made by the employee or Member. Before a loan is
issued, the Executive Director shall provide in writing the
employee or Member with appropriate information concerning the
cost of the loan relative to other sources of financing, as
well as the lifetime cost of the loan, including the difference
in interest rates between the funds offered by the Thrift
Savings Fund, and any other effect of such loan on the
employee's or Member's final account balance.
(2) Loans under this subsection shall be available to
all employees and Members on a reasonably equivalent
basis, and shall be subject to such other conditions as
the Board may by regulation prescribe. The restrictions
of section 8477(c)(1) of this title shall not apply to
loans made under this subsection.
(3) A loan may not be made under this subsection to
the extent that the loan would be treated as a taxable
distribution under section 72(p) of the Internal
Revenue Code of 1986.
(4) A loan may not be made under this subsection
unless the requirements of section 8435(e) of this
title are satisfied.
(h)(1) An employee or Member may apply, before separation, to
the Board for permission to withdraw an amount from the
employee's or Member's account based upon--
(A) the employee or Member having attained
age 591/2; or
(B) financial hardship.
[(2) A withdrawal under paragraph (1)(A) shall be
available to each eligible participant one time only.]
[(3)] (2) A withdrawal under paragraph (1)(B) shall
be available only for an amount not exceeding the value
of that portion of such account which is attributable
to contributions made by the employee or Member.
[(4)] (3) Withdrawals under paragraph (1) shall be
subject to such other limitations or conditions as the
Executive Director may prescribe by regulation.
[(5)] (4) A withdrawal may not be made under this
subsection unless the requirements of section 8435(e)
of this title are satisfied.
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