[Federal Register Volume 60, Number 169 (Thursday, August 31, 1995)]
[Rules and Regulations]
[Pages 45624-45626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21588]



      

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Part VIII





Federal Retirement Thrift Investment Board





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5 CFR Part 1653



Legal Process for the Enforcement of a Participant's Legal Obligations 
to Provide Child Support or Make Alimony Payments; Interim Rule

  Federal Register / Vol. 60, No. 169 / Thursday, August 31, 1995 / 
Rules and Regulations  

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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Part 1653


Legal Process for the Enforcement of a Participant's Legal 
Obligations to Provide Child Support or Make Alimony Payments

AGENCY: Federal Retirement Thrift Investment Board.

ACTION: Interim rule with request for comment.

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SUMMARY: The Executive Director of the Federal Retirement Thrift 
Investment Board (Board) is publishing interim regulations which 
explain the Board's procedures for responding to legal process for the 
enforcement of a participant's legal obligations to provide child 
support or make alimony payments.

DATES: This interim rule is effective August 31, 1995. Comments must be 
received on or before October 30, 1995.

ADDRESSES: Comments may be sent to: Patrick J. Forrest, Federal 
Retirement Thrift Investment Board, 1250 H Street, NW., Washington, DC 
20005.

FOR FURTHER INFORMATION CONTACT:
Patrick J. Forrest (202) 942-1662.

SUPPLEMENTARY INFORMATION: The Board administers the Thrift Savings 
Plan (TSP), which was established by the Federal Employees' Retirement 
System Act of 1986 (FERSA), Pub. L. No. 99-335, 101 Stat. 514, which 
has been codified, as amended, largely at 5 U.S.C. 8401-8479. The TSP 
is a tax-deferred retirement savings plan for Federal employees that is 
similar to cash or deferred arrangements established under section 
401(k) of the Internal Revenue Code. Sums in a TSP participant's 
account are held in trust for that participant. 5 U.S.C. 8437(g).
    Under 5 U.S.C. 8437(e)(3), payments from the TSP that would 
otherwise be made to any participant ``shall be subject to legal 
process for the enforcement of the individual's legal obligations to 
provide child support or make alimony payments as provided in section 
459 of the Social Security Act (42 U.S.C. 659).'' These regulations 
explain the Board's procedures for responding to legal process for the 
enforcement of a participant's legal obligations to make alimony or 
child support payments.
    These regulations address only legal process for the enforcement of 
a participant's legal obligations to provide child support or make 
alimony payments. The Board also must honor a court decree of divorce, 
annulment, or legal separation or a court order or court-approved 
property settlement agreement incident to such decree that expressly 
awards a portion of a participant's TSP account to a spouse, former 
spouse, child or other dependent of the participant, or to the attorney 
for the spouse, former spouse, child or other dependent of the 
participant for attorney fees. 5 U.S.C. 8467 and 8435(C). The Board 
refers to these documents as ``retirement benefits court orders,'' and 
regulations governing them can be found at 60 FR 13604 (to be codified 
at 5 CFR part 1653, subpart A).

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities. They will 
affect only internal Board procedures relating to the processing of and 
payment pursuant to legal process for the enforcement of a 
participant's legal obligations to make alimony or child support 
payments.

Paperwork Reduction Act

    I certify that these regulations do not require additional 
reporting under the criteria of the Paperwork Reduction Act of 1980.

Waiver of Notice of Proposed Rulemaking and 30-Day Delay of 
Effective Date

    Under 5 U.S.C. 553 (b)(3)(B) and (d)(3), I find that good cause 
exists for waiving the general notice of proposed rulemaking and for 
making these regulations effective in less than 30 days. The Board 
wishes to have these procedures in effect at the earliest possible date 
in order to provide guidance to persons submitting an increasing volume 
of alimony and child support garnishment orders.

Unfunded Mandates Reform Act of 1995

    Pursuant to the Unfunded Mandates Reform Act of 1995, Pub. L. No. 
104-4, section 201, 109 Stat. 48, 64, the effects of this regulation on 
State, local and tribal governments, and the private sector have been 
assessed. This regulation will not compel the expenditure in any one 
year of $100 million or more by any State, local and tribal 
governments, in the aggregate, or by the private sector. Therefore, a 
statement under section 202, 109 Stat. 48, 64-65, is not required.

List of Subjects in 5 CFR Part 1653

    Alimony, Child support, Employment benefit plans, Government 
employees, Retirement, Pensions.

Federal Retirement Thrift Investment Board.

    Dated: August 24, 1995.
Roger W. Mehle,
Executive Director.
    For the reasons set out in the preamble, 5 CFR Chapter VI is to be 
amended as set forth below:

PART 1653--DOMESTIC RELATIONS ORDERS AFFECTING THRIFT SAVINGS PLAN 
ACCOUNTS

    1. The authority citation for part 1653 is revised to read as 
follows:

    Authority: 5 U.S.C. 8435, 8436(b), 8437(e)(3), 8467, 8474(b)(5) 
and 8474(c)(1).

    2. Subpart B is added to part 1653 to read as follows:
Subpart B--Legal Process for the Enforcement of a Participant's Legal 
Obligations to Provide Child Support or Make Alimony Payments
Sec.
1653.20 Purpose and scope.
1653.21 Definitions.
1653.22 Service of legal process.
1653.23 Requirements for ``qualifying'' legal process.
1653.24 Processing legal process.
1653.25 Payment pursuant to qualifying legal process.

Subpart B--Legal Process for the Enforcement of a Participant's 
Legal Obligations to Provide Child Support or Make Alimony Payments


Sec. 1653.20  Purpose and scope.

    This subpart contains regulations prescribing the Board's 
procedures for responding to legal process for the enforcement of a 
participant's legal obligations to make alimony or child support 
payments, as required by 5 U.S.C. 8437(e)(3).


Sec. 1653.21  Definitions.

    As used in this subpart:
    Alimony means the payment of funds for the support and maintenance 
of a spouse or former spouse. Alimony includes separate maintenance, 
alimony pendente lite, maintenance, and spousal support. Alimony also 
can include attorney's fees, interest, and court costs, but only if 
these items are expressly made recoverable by qualifying legal process 
as described in Sec. 1653.23.
    Child support means payment of funds for the support and 
maintenance of a child or children. Child support includes payments to 
provide for health care, education, recreation, clothing, or to meet 
other specific needs of such a child or children. Child support also 
can include attorney's fees, interest, and court costs, but only if 
these items are expressly made recoverable by qualifying legal process 
as described in Sec. 1653.23.

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    Legal obligation means an obligation to pay alimony or child 
support, or both, that is currently enforceable under appropriate State 
or local law. A ``legal obligation'' may include currently payable, as 
well as past due, alimony or child support. However, ``legal 
obligation'' does not mean any future obligation to make alimony or 
child support payments.


Sec. 1653.22  Service of legal process.

    The Thrift Savings Plan will only review legal process for the 
enforcement of a participant's legal obligations to provide child 
support or make alimony payments upon receipt of that process. Receipt 
by an employing agency or any other office of the government shall not 
constitute receipt by the Thrift Savings Plan. Legal process should be 
submitted to the Thrift Savings Plan Recordkeeper at the following 
address: TSP Service Office, National Finance Center, P.O. Box 61500, 
New Orleans, LA 70161-1500. Receipt by the recordkeeper will be 
considered receipt by the Thrift Savings Plan.


Sec. 1653.23  Requirements for ``qualifying'' legal process.

    (a) The TSP will only honor legal process if it meets each 
requirement of paragraph (b) of this section and one of the 
requirements of paragraph (c) of this section.
    (b) Legal process must meet each of the following requirements in 
order to be qualifying:
    (1) The legal process must be a writ, order, summons, or other 
similar process in the nature of a garnishment that is issued by:
    (i) a court or competent jurisdiction within any State, the 
District of Columbia, territory, or possession of the United States, or 
an Indian court; or
    (ii) a court of competent jurisdiction in any foreign country with 
which the United States has entered into an agreement which requires 
the United States to honor such process; or
    (iii) an authorized official pursuant to an order of such a court 
of competent jurisdiction or pursuant to State or local law; or
    (iv) A State agency authorized to issue income withholding notices 
pursuant to State or local law or pursuant to the requirements of 42 
U.S.C. 666(b).
    (2) The legal process must ``expressly relate'' to the Thrift 
Savings Plan account of a current participant. This means that it must 
express a clear intent to deal with the TSP as distinct from other 
Federal Government retirement benefits or non-Federal retirement 
benefits.
    (3) The legal process must demonstrate that its purpose is to 
enforce a current legal obligation of the participant to provide child 
support or make alimony payments.
    (c) In addition to the requirements of paragraph (b) of this 
section, legal process also must meet one of the following 
requirements:
    (1) The legal process must require the Board to pay a stated dollar 
amount from a participant's TSP account; or
    (2) The legal process must require the Board to freeze the 
participant's account in anticipation of an order to pay over the 
account.
    (d) The TSP will presume the competence or authority of any of the 
entities described in paragraph (b)(1) of this section if presented 
with a document from that entity that appears regular on its face.
    (e) Notwithstanding paragraphs (a), (b), (c) and (d) of this 
section, the following legal process will be considered nonqualifying:
    (1) Legal process relating to a TSP account that contains only non-
vested money, unless the money will become vested within 90 days of the 
date of receipt of the order if the participant were to remain in 
Federal service;
    (2) Legal process that requires an amount to be paid at the future 
date; or
    (3) Legal process that requires a series of payments.


Sec. 1653.24  Processing legal process.

    (a) Upon receipt of a document which purports to be qualifying 
legal process, the participant's account will be frozen. After an 
account is frozen, no withdrawal or loans will be allowed until the 
account is unfrozen. All other account activity, including 
contributions, adjustments, and interfund transfers, will be permitted.
    (b) The following documents will not be treated as purporting to be 
qualifying legal process. Therefore, accounts of participants to whom 
such orders relate will not be frozen and these documents will not be 
reviewed by the Board:
    (1) A document that pertains to a TSP account that has been closed.
    (2) A document that does not indicate that it relates either to the 
TSP or to the participant's retirement benefits.
    (3) A document that does not appear to have been issued by a proper 
authority as described in Sec. 1653.23(b)(1).
    (c) The Board will review a document that purports to be qualifying 
legal process to determine whether it is complete.
    (d) If the Board determines that the document is incomplete, it 
will request a complete copy of the document from the party that 
submitted the document. If a complete copy is not received by the Board 
within 30 days of the Board's request, the participant's account will 
be unfrozen and no further action will be taken by the Board with 
respect to the document.
    (e) Upon receipt of a complete document, the Board will review it 
to determine whether it is qualifying legal process.
    (f) The Board will advise the submitting party and the TSP 
participant of the determination. The Board's decision letter will 
contain the following information:
    (1) A statement of the applicable statute and regulations.
    (2) A decision regarding whether the document is qualifying legal 
process, as defined in Sec. 1653.23 (b) and (c).
    (3) If the document is determined to be qualifying legal process, 
the effect that compliance with the terms of the document will have on 
the participant's account.
    (4) If the order requires payment, the amount that will be paid 
pursuant to the qualifying legal process; and to whom the payment will 
be made.
    (5) If the order requires payment, tax reporting and withholding 
information will be sent to the party as to whom the payment will be 
reported to the Internal Revenue Service as income.
    (g) The Board's decision constitutes the final administrative 
action by the Board. There is no appeal right within the Board.
    (h) An account frozen under this section will be unfrozen:
    (1) If a complete document has not been received within 30 days 
from the date of a request described in paragraph (d) of this section, 
upon the expiration of the 30-day period;
    (2) If the account was frozen pursuant to legal process requiring 
the Board to Freeze the participant's account in anticipation of an 
order to pay over the account, the account will be unfrozen upon the 
occurrence of any one of the following events:
    (i) As soon as practicable after receipt of a complete copy of an 
order vacating or superseding such order (unless the order vacating or 
superseding the preliminary order itself warrants placing a freeze on 
the account); or
    (ii) Upon payment pursuant to the order to pay over the account, if 
the Board determines that the order is qualifying; or
    (iii) As soon as practicable after the Board issues a decision 
letter informing the parties that the order to pay over the account is 
not qualifying legal process requiring payment from the participant's 
account; or
    (3) If the account was frozen upon receipt of a document that 
purports to 

[[Page 45626]]
be legal process requiring payment from the participant's account, the 
account will be unfrozen upon the occurrence of any one of the 
following events:
    (i) Upon payment pursuant to the document, if the Board determines 
that the document is qualifying legal process requiring payment from 
the participant's account; or
    (ii) As soon as practicable after the Board issues its decision 
letter informing the parties that the document is not qualifying legal 
process requiring payment from the participant's account.


Sec. 1653.25  Payment pursuant to qualifying legal process.

    (a) Payment will be made pursuant to qualifying legal process no 
sooner than 30 days after the Board's decision has been issued and the 
appropriate tax withholding notification has been provided.
    (b) A payment made pursuant to qualifying legal process will be 
made only to the persons or entities specified in the process. If 
payment is to be made to the spouse or former spouse of the 
participant, he or she may request that the TSP transfer all or a 
portion of his or her payment to an Individual Retirement Arrangement 
(IRA) or other eligible retirement plan. Such a request must be made by 
filing Form TSP-13-S, ``Spouse Election to Transfer to IRA or Other 
Eligible Retirement Plan'', which must be received before payment.
    (c) In no case may a payment made pursuant to qualifying legal 
process exceed the participant's vested account balance, excluding any 
outstanding loan amount as of the end of the month preceding the date 
of payment. If the amount to be paid exceeds the participant's vested 
account balance (excluding any outstanding loan amount), then only the 
vested amount in the account (excluding the outstanding loan balance) 
will be paid.
    (d) The entire amount to be paid pursuant to qualifying legal 
process must be disbursed at one time. A series of payments will not be 
made even if the process provides for such a method of payment. A 
payment made pursuant to qualifying legal process extinguishes all 
further rights to any payment under that legal process even if the 
entire amount specified could not be paid. Any further payment must be 
made pursuant to separate legal process.
    (e) Multiple legal processes pending before the Board will be 
honored as follows:
    (1) As between conflicting legal processes relating to the same 
spouse, same former spouse, or same children of the participant, the 
Board will pay only the legal process bearing the latest date of 
issuance.
    (2) As between conflicting legal processes relating to two or more 
former spouses or to different children of the participant, the Board 
will pay the legal processes in the order of their dates of issuance 
starting with the legal process bearing the earliest date and 
continuing until the account is exhausted.
    (f) Payment cannot be made jointly to more than one person. If 
payment is to be made to more than one person, the legal process must 
separately indicate the amount to be paid to each.
    (g) In order to make payment pursuant to a qualifying legal 
process, the TSP recordkeeper must be provided with the full name and 
mailing address of the payee, even if the payment is being mailed to 
another address. In addition, if the payee is a spouse or former spouse 
of the participant, the payee must provide his or her Social Security 
number.
    (h) If the payee dies before a payment is made pursuant to a 
qualifying legal process, payment will be made to the estate of the 
payee, unless otherwise specified by the legal process. If the 
participant dies before payment is made pursuant to qualifying legal 
process, the process will be honored as long as it is received by the 
TSP before payment of the account, regardless of whether the order was 
received before the participant's death.
    (i) A payment made pursuant to qualifying legal process in 
accordance with this subpart bars recovery by any other person or 
entity pursuant to that qualifying legal process.
    (j) Payments made pursuant to qualifying legal process will be paid 
pro rata from the TSP investment funds in which the participant is 
invested, on the date as of which the payment is made. The TSP will not 
honor provisions of legal process that require payment to be made from 
specific investment funds.
    (k) Unless the qualifying legal process specifically provides, 
interest or earnings will not be paid on the amount paid to a party or 
parties pursuant to the qualifying legal process.

[FR Doc. 95-21588 Filed 8-30-95; 8:45 am]
BILLING CODE 6760-01-M