[Federal Register Volume 64, Number 28 (Thursday, February 11, 1999)]
[Proposed Rules]
[Pages 6818-6819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3324]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 64, No. 28 / Thursday, February 11, 1999 /
Proposed Rules
[[Page 6818]]
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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
5 CFR Part 1651
Death Benefits
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 amendment to the
Board's death benefit regulations. Under the proposed amendment, if a
participant dies with any portion of his or her Thrift Savings Plan
(TSP) account in an investment fund other than the G Fund, the Board
would transfer the entire account into the G Fund after receiving
notice of the participant's death.
DATES: Comments must be received on or before April 12, 1999.
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: The Board administers the TSP, which was
established by the Federal Employees' Retirement System Act of 1986
(FERSA), Pub. L. 99-335, 100 Stat. 514. The provisions governing the
TSP are codified primarily in subchapters III and VII of Chapter 84 of
Title 5, United States Code (1994). The TSP is a tax-deferred
retirement savings plan for Federal employees which is similar to cash
or deferred arrangements established under section 401(k) of the
Internal Revenue Code. Sums in a participant's TSP account are held in
trust for that participant. 5 U.S.C. 8437(g).
The disbursement of death benefits from the TSP is governed by the
provisions of 5 U.S.C. 8433(e) and 8424(d). Under section 8433(e), if a
TSP participant dies before he or she has completed a withdrawal
election, the account is to be disbursed in accordance with the order
of precedence set forth at section 8424(d). Final regulations governing
the payment of the TSP account to a beneficiary were published in the
Federal Register on June 13, 1997 (62 FR 32426).
These regulations do not address how the account will be invested
between the participant's death and disbursement of the account to the
beneficiary(ies). In the past, the Board has maintained the account as
it was invested upon the participant's death; the Board will not
maintain a separate account for a beneficiary and will not permit a
beneficiary to direct how the account should be invested. However, it
may take several months before the Board can identify and locate the
appropriate beneficiary(ies) of an account and pay the account balance
to the beneficiary(ies). During this time, monies in some investment
funds can experience significant changes in value as a result of
fluctuations in the market.
FERSA permits a participant to elect to invest all or any portion
of his or her contributions in several investment options. At present,
all investment options except the Government Securities Investment (G)
Fund are invested in securities that fluctuate in value as market
conditions change. In contrast, monies in the G Fund are invested in
short-term Government securities backed by the full faith and credit of
the United States and do not fluctuate in value.
Before a participant can invest in an investment fund other than
the G Fund, he or she must provide a one-time acknowledgment that the
investment is made at the participant's risk, that the participant is
not protected by the United States Government or by the Board against
any loss on the investment, and that neither the United States
Government nor the Board guarantees any return on the investment. FERSA
does not grant to beneficiaries the right to own or control the TSP
account of a deceased participant; instead, the account is paid out to
them as quickly as administratively feasible. Thus, beneficiaries are
not solicited to acknowledge the risk of investment in market
securities pending payout to them.
Because monies in investment funds other than the G Fund remain
subject to market risk even after a participant's death, however, and
because beneficiaries have neither acknowledged nor have any control
over that risk, the Board proposes to transfer the entire TSP account
into the G Fund after receiving written notice of the participant's
death if a participant dies with any portion of his or her account in
an investment fund other than the G Fund. The account will continue to
accrue earnings at the G Fund rate in accordance with part 1645 until
the account is paid in accordance with the order of precedence set
forth in paragraph (a) of this section. This action will eliminate the
market risk to the beneficiary and will preserve the value of a
deceased participant's account until it can be paid out.
Regulatory Flexibility Act
I certify that this amendment will not have a significant economic
impact on a substantial number of small entities. It will affect only
TSP participants and beneficiaries.
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,
Pub. L. 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 1651
Employee benefit plans, Government employees, Pensions, Retirement.
Roger W. Mehle,
Executive Director, Federal Retirement Thrift Investment Board.
For the reasons set forth in the preamble, part 1651 of chapter VI
of title 5 of the Code of Federal Regulations is amended as follows:
[[Page 6819]]
PART 1651--DEATH BENEFITS
1. The authority citation for part 1651 continues to read as
follows:
Authority: 5 U.S.C. 8424(d), 8433(e), 8435(c)(2), 8474(b)(5) and
8474(c)(1).
2. Section 1651.1 is amended by adding in alphabetical order the
definitions of ``C Fund'', ``F Fund'', ``G Fund'', and ``Investment
fund'', to read as follows:
Sec. 1651.1 Definitions.
* * * * *
C Fund means the Common Stock Index Investment Fund established
under 5 U.S.C. 8438(b)(1)(C);
* * * * *
F Fund means the Fixed Income Investment Fund established under 5
U.S.C. 8438(b)(1)(B);
G Fund means the Government Securities Investment Fund established
under 5 U.S.C. 8438(b)(1)(A);
Investment fund means the C Fund, the F Fund, the G Fund, or any
other TSP investment fund created subsequent to December 27, 1986;
* * * * *
3. Section 1651.2 is amended by adding a new paragraph (c) to read
as follows:
Sec. 1651.2 Entitlement to benefits.
* * * * *
(c) If a participant dies with any portion of his or her TSP
account in an investment fund other than the G Fund, the Board will
transfer the entire account into the G Fund after receiving written
notice of the participant's death. The account will continue to accrue
earnings at the G Fund rate in accordance with part 1645 until it is
paid in accordance with the order of precedence set forth in paragraph
(a) of this section.
[FR Doc. 99-3324 Filed 2-10-99; 8:45 am]
BILLING CODE 6760-11-P