[Federal Register Volume 61, Number 225 (Wednesday, November 20, 1996)]
[Rules and Regulations]
[Pages 58973-58974]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29450]



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 Rules and Regulations
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  Federal Register / Vol. 61, No. 225 / Wednesday, November 20, 1996 / 
Rules and Regulations  

[[Page 58973]]



FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Part 1645


Allocation of Earnings

AGENCY: Federal Retirement Thrift Investment Board.

ACTION: Final rule.

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SUMMARY: The Executive Director of the Federal Retirement Thrift 
Investment Board (Board) is publishing final regulations describing the 
Board's allocation of earnings for the three funds in which assets of 
the Thrift Savings Fund may be invested. These are the Government 
Securities Investment Fund (G Fund), the Common Stock Index Investment 
Fund (C Fund), and the Fixed Income Index Investment Fund (F Fund). The 
final rule reflects policies adopted by the Board since publication of 
the interim rule on May 2, 1988.

EFFECTIVE DATE: These final rules are effective November 20, 1996.

FOR FURTHER INFORMATION CONTACT: Elizabeth S. Woodruff, Federal 
Retirement Thrift Investment Board, 1250 H Street, N.W., Washington, 
D.C. 20005. Telephone: (202) 942-1661. Telefacsimile: (202) 942-1676.

SUPPLEMENTARY INFORMATION: The Federal Retirement Thrift Investment 
Board (Board) administers the Thrift Savings Plan (TSP) pursuant to the 
authority vested in it by the Federal Employees' Retirement System Act 
of 1986 (FERSA), Public Law 99-335, 100 Stat. 514 (1986), which has 
been codi-fied, 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. Part 1645 describes the 
process for determining and allocating earnings for each of the three 
investment funds--the G Fund, the C Fund, and the F Fund--to individual 
accounts of participants in the TSP.
    The final rule reflects the Board's policies of allocating earnings 
as of month-end and of applying a single allocation factor for each 
source of contributions. There has been no change in the formula for 
calculating the amount of earnings.
    On August 30, 1996, the Board published a proposed rule with a 
request for comments in the Federal Register (61 FR 45906). The Board 
received no comments on the proposed rule. Therefore, the Board is 
adopting the provisions of the proposed rule as a final rule without 
change.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities. The 
regulations will affect only internal Board procedures for allocating 
earnings.

Paperwork Reduction Act

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

Unfunded Mandates Reform Act of 1995

    Pursuant to the Unfunded Mandates Reform Act of 1995, Public Law 
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.

Submission to Congress and the General Accounting Office

    Under section 801(a)(1)(A) of the Administrative Procedure Act 
(APA), as amended by the Regulatory Enforcement Fairness Act of 1996, 
Public Law 104-121, tit. II, 110 Stat. 847, 857-875 (5 U.S.C. 
801(a)(1)(A)), the Board submitted a report containing this rule and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the General Accounting 
Office prior to the publication of this rule in today's Federal 
Register. This rule is not a ``major rule'' as defined in section 
804(2) of the APA as amended (5 U.S.C. 804(2)).

List of Subjects in 5 CFR Part 1645

    Employee benefit plans, Government employees, Pensions, Retirement.

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

    For the reasons set out in the preamble, 5 CFR Part 1645 is amended 
as set forth below.

PART 1645--ALLOCATION OF EARNINGS

    1. The authority citation for Part 1645 continues to read as 
follows:

    Authority: 5 U.S.C. 8439(a)(3) and 5 U.S.C. 8474.

    2. Section 1645.1 is amended by revising the definitions of 
``Allocation date'', ``Employer contributions'', ``Forfeitures'', 
``Source'', and ``Valuation period''; by removing the definitions of 
``Employer basic contributions'' and ``Employer matching 
contributions''; and by adding in alphabetical order the definitions of 
``Agency automatic (1%) contributions'', ``Agency matching 
contributions'', and ``Month-end account balance'', to read as follows:


Sec. 1645.1   Definitions.

* * * * *
    Agency automatic (1%) contributions means contributions made 
pursuant to 5 U.S.C. 8432(c)(1) or 5 U.S.C. 8432(c)(3).
    Agency matching contributions means contributions made pursuant to 
5 U.S.C. 8432(c)(2).
* * * * *
    Allocation date means the last day of each calendar month.
* * * * *
    Employer contributions means agency automatic (1%) contributions 
and agency matching contributions.
* * * * *
    Forfeitures means amounts forfeited pursuant to 5 U.S.C. 8432(g)(2) 
and other nonstatutory forfeited amounts, net of restored forfeited 
amounts.
* * * * *
    Month-end account balance means the value, as of the allocation 
date, of the funds for each source of contributions in each investment 
fund, including all earnings, and any

[[Page 58974]]

forfeiture, restored forfeited amount, adjustment, earnings correction, 
loan, withdrawal, or interfund transfer transactions posted as of the 
allocation date.
* * * * *
    Source means the origin of any one of the three types of 
contributions that are made to the Fund on behalf of participants--
employee contributions, agency automatic (1%) contributions, or agency 
matching contributions.
* * * * *
    Valuation period means the calendar month during which earnings 
accrue.
    3. Section 1645.2 is revised to read as follows:


Sec. 1645.2   Posting of receipts.

    Agency and employee contributions and loan repayments will be 
posted by source and by investment fund to the appropriate individual 
account on the day they are processed by the recordkeeper.


Sec. 1645.3   [Amended]

    4. Section 1645.3 is amended by revising all references to 
``Investment Fund'' to read ``investment fund''.
    5. Section 1645.4 is revised to read as follows:


Sec. 1645.4   Administrative expenses attributable to each investment 
fund.

    A portion of administrative expenses accrued during each valuation 
period will be charged to each investment fund. The investment funds' 
respective portions will be determined as follows:
    (a) Investment managers' fees and other accrued administrative 
expenses attributable only to the C or F Fund will be charged to the C 
or F Fund, respectively;
    (b) All other accrued administrative expenses will be reduced by 
forfeitures and earnings on forfeitures accrued during the valuation 
period;
    (c) The amount of accrued administrative expenses not covered by 
forfeitures under paragraph (b) of this section will be charged on a 
pro rata basis to the investment funds, based on the respective 
investment fund balances on the last day of the prior valuation period.
    6. Section 1645.5 is revised to read as follows:


Sec. 1645.5  Basis for allocation of earnings.

    (a) Individual account basis. Except for the amounts described in 
paragraph (b) of this section, the individual account basis on the 
earnings allocation date for each source of contributions in each 
investment fund equals:
    (1) The month-end account balance as of the previous allocation 
date; plus
    (2) One-half of contributions posted to the individual account 
during the current valuation period (except for contributions referred 
to in paragraph (b) of this section); plus
    (3) One-half of all loan repayments posted to the individual 
account during the current valuation period.
    (b) Inclusion of retroactive contributions. The individual account 
basis for agency automatic (1%) contributions will also include all 
amounts attributable to retroactive contributions that are made to the 
individual account pursuant to 5 U.S.C. 8432(c)(3) and that are 
processed by the recordkeeper during the current valuation period.
    (c) Computation of fund basis. For each valuation period, the total 
fund basis for each investment fund will be the sum of all individual 
account bases for all sources of contributions in that investment fund, 
calculated as described in paragraphs (a) and (b) of this section.
    7. Section 1645.6 is revised to read as follows:


Sec. 1645.6  Earnings allocation for individual accounts.

    (a) Computation of earnings for each individual account. Earnings 
for each source of contributions for each investment fund will be 
allocated to each individual account separately. The total net earnings 
for each investment fund (as computed under Sec. 1645.3) will be 
divided by the total fund basis for that investment fund (as computed 
under Sec. 1645.5(c)). The resulting number (the ``allocation factor'') 
will be multiplied by the individual account basis for the respective 
source of contributions in that investment fund (as computed under 
Sec. 1645.5(a)), to determine the individual account earnings for the 
valuation period attributable to that source of contributions in that 
investment fund. The earnings of the individual account for each source 
of contributions in each investment fund, when added together, will 
constitute the earnings for that individual account during the 
valuation period.
    (b) Residual net earnings. Amounts allocated to individual accounts 
may not exceed the total amount of earnings available to be allocated. 
To avoid allocating excessive amounts, computation of earnings for 
individual accounts described in paragraph (a) of this section will not 
include fractions of a cent. Residual net earnings attributable to 
unallocated fractions of a cent will be allocated with the earnings for 
the following valuation period.
    8. Section 1645.7 is revised to read as follows:


Sec. 1645.7  Posting of earnings to individual accounts.

    For each source of contributions for each investment fund, the 
amount of earnings computed for each individual account in a valuation 
period, as described in Sec. 1645.6, will be posted to the individual 
account as of the allocation date.

[FR Doc. 96-29450 Filed 11-19-96; 8:45 am]
BILLING CODE 6760-01-P