[Federal Register Volume 63, Number 104 (Monday, June 1, 1998)]
[Proposed Rules]
[Pages 29674-29675]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-14360]


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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Part 1655


Thrift Savings Plan Loans

AGENCY: Federal Retirement Thrift Investment Board.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Executive Director of the Federal Retirement Thrift 
Investment Board (Board) is publishing a proposed revision to 
regulations concerning Thrift Savings Plan (TSP) loans. The amendment 
will affect participants who are alleged to have submitted false 
information in support of their request for a TSP loan. The amendment 
establishes a process for investigating written allegations of such 
fraudulent activity. When the Board finds that the evidence suggests 
the participant provided false information to the TSP during the loan 
process, the Board will refer the case to the appropriate authorities 
for criminal prosecution and, in the appropriate case, administrative 
action.

DATES: Comments must be submitted on or before July 1, 1998.

ADDRESSES: Comments may be sent to Elizabeth S. Woodruff, Federal 
Retirement Thrift Investment Board, 1250 H Street, N.W., Washington, 
D.C. 20005.

FOR FURTHER INFORMATION CONTACT: Elizabeth S. Woodruff, (202) 942-1661.

SUPPLEMENTARY INFORMATION: A final rule governing TSP loans was 
published in the Federal Register on April 14, 1997 (62 FR 18019). That 
rule revised interim regulations that were published in the Federal 
Register on November 18, 1996 (61 FR 58754). Current regulations 
require participants who are applying for a loan from their TSP 
accounts to provide certain information and certify the truth of the 
information on the application. The terms and conditions of a TSP loan 
are then reflected in a Loan Agreement/Promissory Note which the 
participant signs, thereby certifying, under penalty of perjury, the 
truth of all statements made and documentation provided with this 
signed document.
    Before the TSP will permit a loan to a TSP participant, the 
participant must indicate his or her marital status on the Loan 
Application and, if married, the spouse's name. In the case of a 
married Federal Employees' Retirement System (FERS) participant, the 
participant must obtain the signature of his/her spouse on the Loan 
Agreement/ Promissory Note to show that the spouse has consented to the 
loan. In the case of a married Civil Service Retirement System (CSRS) 
participant, the consent of the spouse is not required; however, the 
TSP must send a notice to the spouse. The CSRS participant is therefore 
required to provide the spouse's address on the loan application. These 
consent and notice requirements can be waived upon application to the 
TSP pursuant to 5 CFR 1655.18.
    This regulation adds paragraph (f) to Sec. 1655.18 to provide that, 
if the Board receives a written allegation from the spouse stating that 
a participant misrepresented his/her marital status or the address of 
the spouse of a CSRS participant, or that the participant submitted a 
Loan Agreement/Promissory Note with a forged signature of the spouse of 
a FERS participant, the Board will submit the questioned document to 
the spouse and request that the allegation of fraud or forgery be 
affirmed. If the allegation is affirmed and the loan has been 
disbursed, the Board will give the participant an opportunity to repay 
the loan within a 60-day period. This will permit the participant to 
return the account to the status quo, thus restoring the spouse's 
interest in the account.
    The notice will also advise that if the participant does not repay 
the loan in full within the 60 days provided, the Board will conduct an 
investigation into the allegation. The Board will not give this 
repayment opportunity to a participant who has received a final divorce 
from his/her spouse before the funds are received by the TSP. In such a 
case, the Board will immediately begin its investigation.
    Where the Board finds evidence to suggest that the participant 
misrepresented his/her marital status or spouse's address or that the 
signature of the spouse was forged, the Board will refer the case to 
the Department of Justice for criminal prosecution and, where the 
participant is still employed, to the Inspector General or other appro-
priate authority in the participant's employing agency for 
administrative action. The Board will also freeze the participant's 
account and will not permit a withdrawal or another loan until the loan 
is repaid, the Board receives assurance from the spouse in writing that 
the notice or consent requirements have been met, the participant is 
divorced, or the Board's investigation does not yield persuasive 
evidence to support the allegation.

Regulatory Flexibility Act

    I certify that this amendment will not have a significant economic 
impact on a substantial number of small entities because the 
regulations will only affect TSP participants.

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, section 201, 
Public Law 104-4, 109 Stat. 48, 64, the effect of these regulations 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, 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 1655

    Credit, Government employees, Pensions, Retirement.
Roger W. Mehle,
Executive Director, Federal Retirement Thrift Investment Board.

    For the reasons set forth in the preamble, part 1655 of chapter VI 
of title 5 of the Code of Federal Regulations is amended as follows:

[[Page 29675]]

PART 1655--LOAN PROGRAM

    1. The authority citation for part 1655 continues to read as 
follows:

    Authority: 5 U.S.C. 8433(g) and 8474.

    2. Section 1655.18 is amended by adding paragraph (f) as follows:


Sec. 1655.18  Spousal rights.

* * * * *
    (f)(1) By signing the Loan Application and the Loan Agreement/
Promissory Note, the participant represents that all information 
provided to the TSP during the loan process is true and correct, 
including statements concerning the participant's marital status and 
spouse's address at the time the application is filed and documentation 
that the current spouse has consented to the loan.
    (2) If the Board receives a written allegation from the spouse that 
the participant may have misrepresented his/her marital status or the 
spouse's address (in the case of a CSRS participant), or that the 
signature of the spouse of a FERS participant was forged, the Board 
will submit the questioned document to the spouse and request that he 
or she state in writing that the information is false or that the 
spouse's signature has been forged. In the event of an alleged forgery, 
the Board will also request the spouse to provide at least three 
signature samples.
    (3) If the spouse affirms the allegation in accordance with the 
procedure set forth in paragraph (f)(2) of this section and the loan 
has been disbursed, the Board will give the participant an opportunity 
to repay, within 60 days, the unpaid loan principal, plus unpaid 
interest. If the loan is repaid, the Board will not investigate the 
spouse's allegation.
    (4) Paragraph (f)(3) of this section will not apply where the 
participant has received a final divorce decree before the funds are 
received by the Thrift Savings Plan.
    (5) If the unpaid loan principal, plus unpaid interest, is not 
repaid to the Plan in full within the time period provided in paragraph 
(f)(3) of this section, the Board will conduct an investigation into 
the allegation. If the participant has received a final divorce decree 
before the funds are received by the Thrift Savings Plan, the Board 
will begin its investigation immediately.
    (6) If, during its investigation, the Board finds evidence to 
suggest that the participant misrepresented his/her marital status or 
spouse's address (in the case of a CSRS participant), or submitted the 
Loan Agreement/Promissory Note with a forged signature, the Board will 
refer the case to the Department of Justice for criminal prosecution 
and, if the participant is still employed, to the Inspector General or 
other appropriate authority in the participant's employing agency for 
administrative action.
    (7) Upon receipt of an allegation described in paragraph (f)(2) of 
this section, the participant's account will be frozen and no 
withdrawal or loan will be permitted until after:
    (i) Thirty days have elapsed since the participant's spouse was 
sent a copy of the questioned document and no written affirmation of 
the alleged false information or forgery (together with signature 
samples in the case of an alleged forgery) has been received by the 
Board;
    (ii) The loan is repaid pursuant to paragraph (f)(3) of this 
section;
    (iii) The Executive Director concludes that the Board's 
investigation did not yield persuasive evidence that supports the 
spouse's allegation;
    (iv) The Executive Director has been assured in writing by the 
spouse that any future request for a loan or withdrawal comports with 
the applicable requirement of notice or consent; or
    (v) The participant is divorced.

[FR Doc. 98-14360 Filed 5-29-98; 8:45 am]
BILLING CODE 6760-01-U