[Federal Register Volume 61, Number 19 (Monday, January 29, 1996)]
[Rules and Regulations]
[Pages 2872-2874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1492]




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Part II





Federal Retirement Thrift Investment Board





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5 CFR Part 1620



Thrift Savings Plan Participation for Certain Employees of the District 
of Columbia Financial Responsibility and Management Authority; Interim 
Rule

  Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Rules 
and Regulations   

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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Part 1620


Thrift Savings Plan Participation for Certain Employees of the 
District of Columbia Financial Responsibility and Management Authority

AGENCY: Federal Retirement Thrift Investment Board.

ACTION: Interim rule with request for comments.

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SUMMARY: The Executive Director of the Federal Retirement Thrift 
Investment Board is publishing interim regulations to implement section 
102(e) of the District of Columbia Financial Responsibility and 
Management Assistance Act of 1995 (Act). Under this Act, persons who 
separate from Federal employment and who are employed within two months 
by the District of Columbia Financial Responsibility and Management 
Authority may elect to participate in the Federal retirement system in 
which they last participated before separating from Federal service. 
These regulations address participation in the Thrift Savings Plan 
(TSP) by eligible employees who elect Federal retirement coverage. They 
do not apply to eligibility to participate in retirement programs 
administered by the Office of Personnel Management (OPM).

DATES: This interim rule is effective January 29, 1996.Comments must be 
received on or before March 29, 1996.

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

FOR FURTHER INFORMATION CONTACT: Patrick J. Forrest, (202) 942-1662.
SUPPLEMENTARY INFORMATION: The Federal Retirement Thrift Investment 
Board (Board) administers the Thrift Savings Plan (TSP), which was 
established by the Federal Employees' Retirement System Act of 1986 
(FERSA), Pub. L. 99-335, 100 Stat. 514 (1986), which has been codified, 
as amended, largely at 5 U.S.C. 8401-8479 (1994). 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.
    The District of Columbia Financial Responsibility and Management 
Assistance Act of 1995 (Act), Pub. L. 104-8, section 101, 109 Stat. 97, 
100, established the District of Columbia Financial Responsibility and 
Management Assistance Authority (Authority) as an entity within the 
Government of the District of Columbia. The Act provides that 
individuals who commence employment with the Authority within two 
months of separating from Federal service may elect to retain their 
participation in the ``retirement system in which the individual last 
participated before so separating * * *.'' Id., section 102(e)(1)(A), 
109 Stat. at 102. Although this language is not explicit with respect 
to the TSP, the Act contemplates TSP participation because the TSP is a 
component of the Federal Employees' Retirement System (FERS) and the 
Civil Service Retirement System (CSRS).
    Section 1653.113 of these interim regulations provides that the 
Authority must notify an employee of his or her right to participate in 
the TSP at the time the employee is required to be notified of his or 
her right to elect Federal retirement coverage. Because the TSP is an 
important part of the Federal employee's total retirement package, an 
employee should be advised of eligibility for TSP participation in 
order to make an educated decision whether to elect Federal retirement 
coverage.
    Section 1620.114 provides that some employees may be eligible to 
contribute to the TSP immediately upon employment with the Authority, 
while others would be eligible to participate in the TSP during 
subsequent TSP open seasons.
    Section 1620.114(a) pertains to employees who leave Federal service 
and are employed by the Authority with a break in service of less than 
31 full calendar days. These employees are treated as though they 
transferred from one Federal agency to another with no break in 
service. Therefore, if such an employee had a valid TSP contribution 
election in effect on the date the employee separated from the Federal 
service, the employee's contributions to the TSP will continue without 
interruption pursuant to the election that was in effect upon 
separation. If such an employee was eligible to participate in the TSP 
prior to separation but did not have a valid TSP election in effect on 
the date that he or she separated from the Federal service, the 
employee will be eligible to contribute to the TSP during the first 
open season beginning after the date he or she commences employment 
with the Authority. If such an employee was not previously eligible to 
participate in the TSP, the employee will become eligible during the 
second open season beginning after the date he or she began to work for 
the Federal Government, not with the Authority.
    Section 1620.114(b) pertains to employees who were separated from 
Federal service for 31 or more full calendar days but less than 2 
months before they were employed by the Authority. Section 
1620.114(b)(1) provides that if such an employee was previously 
eligible to participate in the TSP, he or she will be eligible to 
contribute to the TSP during the first open season beginning after the 
date he or she is employed by the Authority. Section 1620.114(b)(2) 
provides that if the employee was not previously eligible to 
participate in the TSP, he or she will be eligible to contribute to the 
TSP during the second open season beginning after the date he or she is 
employed by the Authority.
    Section 1620.114(b)(3) provides that if an employee covered under 
section 1620.114(b)(1) or (b)(2) commences employment with the 
Authority during an open season but before the election period (the 
last month of the open season), that open season is considered the 
employee's first open season.
    These rules are applied in the following examples:
    Example Number 1: Assume an employee leaves Federal service and 40 
days later, on December 15, 1995 (which is during an open season), 
commences employment with the Authority. Assume also that the employee 
elects retirement coverage under CSRS. Assume further that the employee 
was eligible to contribute to the TSP at the time she separated from 
the Federal agency. Because she commenced employment with the Authority 
after 31 or more full calendar days, but within 2 months after 
separating from Federal service, section 1620.114(b) applies. Because 
she previously was eligible to contribute to the TSP, section 
1620.114(b)(1) applies. Therefore, the employee is eligible to 
contribute to the TSP during the first open season beginning after the 
date the employee commenced employment with the Authority. Furthermore, 
because the employee was hired during a TSP open season, but not during 
the last month of an open season, section 1620.114(b)(3) provides that 
the open season during which she commences employment with the 
Authority is her first open season. Accordingly, the employee would be 
eligible to contribute to the TSP beginning in the first full pay 
period in January 1996. (Note that under section 1620.115(a), if the 
employee was covered by FERS, she would be entitled to Agency Automatic 
(1%) Contributions beginning in the first full pay period in January 
1996, whether or not she elected to contribute to the TSP; and that she 
would be entitled to 

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matching contributions if she did elect to contribute.)
    Example Number 2: Assume an employee begins working for the Federal 
Government on February 28, 1995, and is recruited by the Authority to 
begin working on October 30, 1995. Assume further that the employee 
separates from Federal service one week before commencing service with 
the Authority, and that he elects continued retirement coverage under 
FERS once he starts working for the Authority. Because he commenced 
employment with the Authority with less than a 31 day break in service, 
1620.114(a) applies. Because he was not previously eligible to 
contribute to the TSP, section 1620.114(a)(3) applies and provides that 
he is eligible to contribute to the TSP during the second open season 
beginning after the date he first began working for the Federal 
Government. The employee's first open season was the May 15, 1995, to 
July 31, 1995, open season, during which he was employed by the Federal 
Government. His second open season is the November 15, 1995, to January 
31, 1996, open season, during which he will be employed by the 
Authority. Therefore, the employee can contribute to the TSP in the 
first full pay period in January 1996. (Also note that under section 
1620.115(a), because the employee is covered by FERS, he would be 
entitled to Agency Automatic (1%) Contributions beginning in the first 
full pay period in January 1996, whether or not he elected to 
contribute; and that he would be entitled to matching contributions if 
he did elect to contribute.)
    Section 1620.117 provides that an employee of the Authority who 
elects Federal retirement coverage must notify the TSP recordkeeper 
that he or she has commenced employment with the Authority if the 
employee separated from Federal service with an outstanding TSP loan. 
It may be possible for such employees to continue their TSP loan 
payments and thereby avoid repaying in full or having a taxable 
distribution declared, if their loan payments resume before their loan 
accounts are closed.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities because the 
regulations will affect only a small number of former Federal employees 
and a single agency of the Government of the District of Columbia.

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. Elections made 
under these regulations will affect qualifying employees' participation 
in the TSP retroactive to their entry on duty with the Authority. The 
intent of the legislation is to allow eligible employees to participate 
in the TSP as soon as practicable. A delay in the effective date of 
these regulations would be contrary to the intent of the legislation 
and to the public interest because it would delay the election 
opportunity for eligible employees during the initial staffing of the 
Authority.

Unfunded Mandates Reform Act of 1995

    Pursuant to the Unfunded Mandates Reform Act of 1995, Pub. L. 104-
4, section 201, 109 Stat. 48, 64, the effect of this regulation on 
State, local, and tribal governments and on the private sector has been 
assessed. This regulation will not compel the expenditure in any one 
year of $100 million or more by any State, local, or 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 1620

    District of Columbia, Employment benefit plans, Government 
employees, Retirement, Pensions.

Federal Retirement Thrift Investment Board.
Roger W. Mehle,
Executive Director.

    For the reasons set out in the preamble, 5 CFR Chapter VI is 
amended as set forth below:

PART 1620--CONTINUATION OF ELIGIBILITY

    1. The authority citation for part 1620 is revised to read as 
follows:

    Authority: 5 U.S.C. 8474 and 8432b; Pub. L. 99-591, 100 Stat. 
3341; Pub. L. 100-238, 101 Stat. 1744; Pub. L. 100-659, 102 Stat. 
3910; Pub. L. 104-4, 109 Stat. 48.

    2. Subpart I is added to part 1620 to read as follows:

Subpart I--Certain Employees of the District of Columbia Financial 
Responsibility and Management Assistance Authority.
Sec.
1620.110  Scope.
1620.111  Definitions.
1620.112  Eligibility requirements.
1620.113  Notice to an employee of his or her right to participate 
in the TSP.
1620.114  Employee contributions.
1620.115  Employer contributions.
1620.116  TSP contributions.
1620.117  TSP loan payments.
1620.118  Failure to participate or delay in participation.
1620.119  Other regulations.

Subpart I--Certain Employees of the District of Columbia Financial 
Responsibility and Management Assistance Authority


Sec. 1620.110  Scope.

    The District of Columbia Financial Responsibility and Management 
Assistance Authority (Authority) was established by the District of 
Columbia Financial Responsibility and Management Assistance Act of 1995 
(the Act), Public Law 104-8, 109 Stat. 97. Although the Authority is an 
agency of the District of Columbia Government, any individual who is 
employed by the Authority within two months after being separated from 
Federal service may elect to retain his or her participation in the 
retirement system in which the individual last participated before 
separating from Federal service. This subpart governs participation in 
the Thrift Savings Plan (TSP) by employees of the Authority who elect 
to be covered by FERS or CSRS.


Sec. 1620.111  Definitions.

    As used in this subpart:
    Authority means the District of Columbia Financial Responsibility 
and Management Authority.
    Basic pay means basic pay as defined in 5 U.S.C. 8431.
    CSRS means the Civil Service Retirement System established by 
subchapter III of chapter 83 of title 5, United States Code, or any 
equivalent Government retirement plan.
    Election period means the last calendar month of an open season and 
is the period in which an election to make or change contributions 
during that open season can first become effective.
    FERS means the Federal Employees' Retirement System established by 
chapter 84 of title 5, United States Code, and any equivalent 
retirement system.
    Open season means the period during which employees may make an 
election with respect to their contributions to the Thrift Savings 
Plan.

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    Recordkeeper means the organization under contract to the Board to 
perform recordkeeping services. This currently is the National Finance 
Center, United States Department of Agriculture, P.O. Box 61500, New 
Orleans, Louisiana 70161- 1500.
    Retirement election means an election by an eligible employee of 
the Authority to remain covered by either CSRS or FERS.
    Thrift Savings Plan (TSP) election means a request by an eligible 
employee to start contributing to the TSP, to terminate contributions 
to the TSP, to change the amount of contributions made to the TSP each 
pay period (including a request to terminate contributions), or to 
change the allocation of TSP contributions among the TSP investment 
funds, as described at 5 CFR 1600.4. A TSP election must be made on 
Form TSP-1, Thrift Savings Plan Election Form.


Sec. 1620.112  Eligibility requirements.

    To be eligible to participate in the TSP, an employee of the 
Authority must:
    (a) Have been separated from the Federal service for not more than 
2 months before commencing employment with the Authority;
    (b) Have been covered by FERS or CSRS immediately before separating 
from Federal service; and
    (c) Have elected to be covered by FERS or CSRS within the time 
permitted by the United States Office of Personnel Management.


Sec. 1620.113  Notice to an employee of his or her right to participate 
in the TSP.

    The Authority must notify an employee of his or her right to 
participate in the TSP at the time the employee is required to be 
notified of his or her right to elect to be covered under FERS or CSRS.


Sec. 1620.114  Employee contributions.

    (a) An employee of the Authority who is separated from Federal 
service for less than 31 full calendar days before commencing 
employment with the Authority and who elects to be covered by FERS or 
CSRS within the time period mandated by the United States Office of 
Personnel Management will be eligible to contribute to the TSP as 
though he or she had transferred to the Authority from the losing 
Federal agency, i.e., as though the employee did not have a break in 
service as defined by the TSP.
    (b) An employee who is employed by the Authority after 31 or more 
full calendar days but within 2 months after separating from Federal 
service and who elects to be covered by FERS or CSRS within the time 
period permitted by the United States Office of Personnel Management 
will be eligible to contribute to the TSP as follows:
    (1) If the employee was previously eligible to participate in the 
TSP, the employee will be eligible to contribute to the TSP in the 
first open season (as determined in accordance with paragraph (b)(3) of 
this section) beginning after the date the employee commences 
employment with the Authority.
    (2) If the employee was not previously eligible to participate in 
the TSP, the employee will be eligible to contribute to the TSP in the 
second open season (as determined in accordance with paragraph (b)(3) 
of this section) beginning after the date the employee commences 
employment with the Authority.
    (3) If an employee of the Authority who is described in paragraphs 
(b)(1) and (b)(2) of this section is employed by the Authority during 
an open season, but before the election period (the last calendar month 
of the open season), the open season during which the employee is 
employed will be considered the employee's first open season.
    (c) TSP contributions from employees of the Authority must be made 
from the employee's basic pay for service with the Authority and are 
subject to the limits described at 5 CFR Part 1600, subpart C.


Sec. 1620.115  Employer contributions.

    (a) If an eligible employee of the Authority elects to be covered 
by FERS, the Authority must contribute on the employee's behalf each 
pay period to the Thrift Savings Fund, in accordance with Board 
procedures, an amount equal to 1 percent of the employee's basic pay 
paid to such employee for that period of service, as required by 5 
U.S.C. 8432(c)(1)(A), beginning:
    (1) Immediately upon employment with the Authority if the employee 
separated from Federal service less than 31 full calendar days before 
commencing employment with the Authority and was eligible to 
participate in the TSP when he or she separated from Federal service; 
or
    (2) With the first pay period in which the employee is eligible to 
contribute to the TSP (as determined in accordance with Sec. 1620.114 
of this subpart) for all other FERS employees of the Authority.
    (b) If a FERS employee of the Authority elects to participate in 
the TSP under Sec. 1620.114 of this subpart, the Authority must 
contribute on behalf of such employee each pay period to the Thrift 
Savings Fund, in accordance with Board procedures, any matching 
contributions which he or she is eligible to receive under 5 U.S.C. 
8432(c).


Sec. 1620.116  TSP contributions.

    The Authority is responsible for transmitting, in accordance with 
Board procedures, any employee and employer contributions that are 
required by this subpart to the Board's Recordkeeper.


Sec. 1620.117  TSP loan payments.

    The Authority shall deduct and transmit TSP loan payments for 
employees in accordance with 5 CFR part 1655 and Board procedures. An 
employee of the Authority who separates from Federal service with an 
outstanding TSP loan and who elects to be covered under FERS or CSRS 
must notify the recordkeeper that he or she has commenced employment 
with the Authority.


Sec. 1620.118  Failure to participate or delay in participation.

    If an employee of the Authority who elects to be covered by FERS or 
CSRS fails to participate or is delayed in participating in the TSP 
because of a delay in the implementation of the Act or in the 
promulgation of the regulations in this subpart, the employee may 
request that retroactive corrective action be taken in accordance with 
5 CFR 1605.2(b)(2), as if the delay were attributable to employing 
agency error. Lost earnings shall be payable pursuant to 5 CFR part 
1606 due to delay described in this section, as if the delay were 
attributable to employing agency error.


Sec. 1620.119  Other regulations.

    The Authority and individuals covered by Sec. 1620.110 of this 
subpart are governed by the regulations in 5 CFR chapter VI, to the 
extent the regulations in 5 CFR chapter VI are not inconsistent with 
this subpart.

[FR Doc. 96-1492 Filed 1-26-96; 8:45 am]
BILLING CODE 6760-01-P