[Federal Register Volume 68, Number 246 (Tuesday, December 23, 2003)]
[Rules and Regulations]
[Pages 74450-74451]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31516]



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Part VIII





Federal Retirement Thrift Investment Board





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5 CFR Parts 1600, 1601, et al.



Employee Elections To Contribute To the Thrift Savings Plan, 
Participants' Choices of Investment Funds, Vesting, Uniformed Services 
Accounts, Correction of Administrative Errors, Lost Earnings 
Attributable to Employing Agency Errors, Participant Statements, 
Calculation of Share Prices, Methods of Withdrawing Funds From the 
Thrift Savings Plan, Death Benefits, Domestic Relations Orders 
Affecting Thrift Savings Plan Accounts, Loans, Miscellaneous; Final 
Rule

  Federal Register / Vol. 68, No. 246 / Tuesday, December 23, 2003 / 
Rules and Regulations  

[[Page 74450]]


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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Parts 1600, 1601, 1603, 1604, 1605, 1606, 1640, 1645, 1650, 
1651, 1653, 1655, 1690


Employee Elections To Contribute To the Thrift Savings Plan, 
Participants' Choices of Investment Funds, Vesting, Uniformed Services 
Accounts, Correction of Administrative Errors, Lost Earnings 
Attributable to Employing Agency Errors, Participant Statements, 
Calculation of Share Prices, Methods of Withdrawing Funds From the 
Thrift Savings Plan, Death Benefits, Domestic Relations Orders 
Affecting Thrift Savings Plan Accounts, Loans, Miscellaneous

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 adopting as final the interim rule the 
Board published in June 2003 to implement the new Thrift Savings Plan 
(TSP) record keeping system and to permit the making of catch-up 
contributions by TSP participants who are age 50 and over.

EFFECTIVE DATE: This final rule is effective December 23, 2003.

FOR FURTHER INFORMATION CONTACT: Patrick J. Forrest or Merritt A. 
Willing on (202) 942-1684.

SUPPLEMENTARY INFORMATION: The Board administers the TSP, which was 
established by the Federal Employees' Retirement System Act of 1986 
(FERSA), Public Law 99-335, 100 Stat. 514. The TSP provisions of FERSA 
have been codified, as amended, largely at 5 U.S.C. 8351 and 8401-8479. 
The TSP is a tax-deferred retirement savings plan for Federal civilian 
employees and members of the uniformed services, which is similar to 
cash or deferred arrangements established under section 401(k) of the 
Internal Revenue Code (26 U.S.C. 401(k)). Sums in a TSP participant's 
account are held in trust for the participant.
    Congress amended FERSA in 1996 by enacting the Thrift Savings Plan 
Act of 1996, Public Law 104-208, 110 Stat. 3009, which permitted the 
Executive Director of the Board to offer, among other things, new 
withdrawal options to TSP participants. In order to accommodate these 
new withdrawal options and to make a number of benefits arising from 
recent technological advances available to TSP participants, the Board 
redesigned its record keeping system.
    On June 25, 2002, the Board published a proposed rule with request 
for comments in the Federal Register (67 FR 42856). The proposed rule 
explained how the Board planned to amend TSP regulations to reflect the 
processes and terminology of the new record keeping system. On April 4, 
2003, the Board published a notice of proposed rulemaking in the 
Federal Register (68 FR 16449). That notice explained that the Board 
also planned to amend TSP regulations to permit participants who are 
age 50 or older to make catch-up TSP contributions. The notice also 
proposed additional changes to the TSP regulations to accommodate 
further the operation of the new record keeping system.
    On June 13, 2003, the Board published an interim rule with request 
for comments in the Federal Register (68 FR 35492). The interim rule 
adopted the June 25, 2002, proposed rule with the changes discussed in 
the April 4 notice.
    The Board received no comment on the proposed rule, the notice of 
proposed rulemaking, or the interim rule. Accordingly, the Board is 
adopting the interim rule as a final rule with several minor changes. 
These changes are described below.

Part 1640

    Interim Sec.  1640.6 requires the TSP to mail quarterly account 
statements and twice-yearly investment fund information to each 
participant, unless the participant elects to receive that information 
via the TSP Web site. The Board has determined that it is more cost 
effective to furnish account and investment fund information to the 3.2 
million TSP participants by posting it on the TSP Web site and to mail 
costly paper copies of that information only to participants who 
request them. Therefore, final Sec.  1640.6 establishes the TSP Web 
site as the primary source for TSP account statements and investment 
fund information.

Part 1650

    A participant can qualify for a hardship withdrawal if his or her 
monthly income is insufficient to pay monthly expenses or the 
participant cannot pay certain specified extraordinary expenses. 
Interim Sec.  1650.32(f) states that a participant cannot receive a 
hardship withdrawal while he or she is a debtor in a chapter 13 
bankruptcy action. The Board adopted this policy because the bankruptcy 
court establishes a plan for a chapter 13 debtor to repay creditors 
while preserving sufficient monthly income for the debtor's support. 
However, a participant who is a chapter 13 debtor is not necessarily 
protected from hardship based on an extraordinary expense. Therefore, 
final Sec.  1650.32(f) provides that a participant cannot receive a 
hardship withdrawal based solely on negative monthly cash flow while he 
or she is a debtor in a chapter 13 bankruptcy action.

Parts 1651 and 1653

    Parts 1651 and 1653 concern the payment of death benefits and court 
ordered payments to TSP beneficiaries. When the TSP informs a 
beneficiary that he or she will receive a payment from the TSP, it also 
provides each beneficiary with information concerning TSP payment 
options, the tax treatment of a payment from the TSP and the forms the 
beneficiary needs to elect tax withholding, electronic funds transfer, 
or a transfer of the payment to an individual retirement account or 
eligible employer plan. The TSP schedules the payment to occur 60 days 
after the information and forms are mailed to the beneficiary. If the 
TSP does not receive any of the election forms from the beneficiary by 
the scheduled payment date, or if the beneficiary does not request 
additional time to complete the forms, the TSP pays the beneficiary 
directly by United States Treasury check.
    The TSP expects a beneficiary to review the tax and payment 
information, and return, in a timely manner, the appropriate forms to 
the TSP to request additional tax withholding or to elect a payment 
option. Therefore, if the TSP pays a beneficiary directly, he or she 
cannot return the funds to the TSP with an untimely request to reissue 
the payment in a different form. The current TSP regulations do not 
inform participants of this policy; therefore, the final rule explains 
that a beneficiary cannot return a properly paid court order or death 
benefit payment, once issued, to the TSP.

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 employees and former employees of the Federal government.

Paperwork Reduction Act

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

[[Page 74451]]

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 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 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.

Submission to Congress and the General Accounting Office

    Pursuant to 5 U.S.C. 801(a)(1)(A), the Board submitted a report 
containing these rules and other required information to the U.S. 
Senate, the U.S. House of Representatives, and the Comptroller General 
of the United States prior to publication of this rule in today's 
Federal Register. These rules are not major rules as defined at 5 
U.S.C. 804(2).

List of Subjects

5 CFR Parts 1600, 1601, 1603, 1606, 1645, 1650, 1651, 1653, 1690

    Employee benefit plans, Government employees, Pensions, Retirement.

5 CFR Parts 1604, 1655

    Employee benefit plans, Government employees, Military personnel, 
Pensions, Retirement.

5 CFR Part 1605

    Administrative practice and procedure, Employee benefit plans, 
Government employees, Pensions, Retirement.

5 CFR Part 1640

    Employee benefit plans, Government employees, Pensions, Reporting 
and recordkeeping requirements, Retirement.

Gary A. Amelio,
Executive Director, Federal Retirement Thrift Investment Board.


0
For the reasons set out in the preamble, the Executive Director of the 
Federal Retirement Thrift Investment Board adopts as a final rule the 
interim rule amending 5 CFR parts 1600, 1601, 1603, 1604, 1605, 1606, 
1640, 1645, 1560, 1651, 1653, 1655 and 1690, which was published at 68 
FR 35492 on June 13, 2003, with the following changes:

PART 1605--CORRECTION OF ADMINISTRATIVE ERRORS

0
1. The authority citation for part 1605 continues to read as follows:

    Authority: 5 U.S.C. 8351, 8432a, and 8474(b)(5) and (c)(1).


0
2. Amend Sec.  1605.2 by removing ``after December 31, 2000'' from 
paragraph (b)(1) and adding in its place ``on or after January 1, 
2000''.

0
3. Amend Sec.  1605.12 as follows:
0
a. By removing ``after December 31, 2000'' from paragraphs (a) and 
(c)(1) and adding in its place ``on or after January 1, 2000''.
0
b. By removing ``on or before December 31, 2000'' from paragraph (a) 
and adding in its place ``before January 1, 2000''.
0
4. Amend Sec.  1605.13 as follows:
0
a. By removing ``after December 31, 2000'' from paragraph (b)(3)(i) and 
adding in its place ``on or after January 1, 2000''.
0
b. By removing ``on or before December 31, 2000'' from paragraph 
(b)(3)(ii) and adding in its place ``before January 1, 2000''.

0
5. Amend Sec.  1605.14 as follows:
0
a. By removing ``after December 31, 2000'' from paragraph (a)(1) and 
adding in its place ``on or after January 1, 2000''.
0
b. By removing ``on or before December 31, 2000'' from paragraph (a)(1) 
and adding in its place ``before January 1, 2000''.

PART 1640--PERIODIC PARTICIPANT STATEMENTS

0
6. The authority citation for Part 1640 continues to read as follows:

    Authority: 5 U.S.C. 8439(c)(1) and (c)(2), 5 U.S.C. 8474(b)(5) 
and (c)(1).


0
7. Revise Sec.  1640.6 to read as follows:


Sec.  1640.6  Methods of providing information.

    The TSP will furnish the information described in this part to 
participants by making it available on the TSP Web site. A participant 
can request paper copies of that information from the TSP by calling 
the ThriftLine, submitting a request through the TSP Web site, or by 
writing to the TSP record keeper.

PART 1650--METHODS OF WITHDRAWING FUNDS FROM THE THRIFT SAVINGS 
PLAN

0
8. The authority citation for Part 1650 continues to read as follows:

    Authority:  5 U.S.C. 8351, 8433, 8434, 8435, 8474(b)(5), and 
8474(c)(1).

Subpart D--In-Service Withdrawals

0
9. Amend Sec.  1650.32 by revising paragraph (f) to read as follows:


Sec.  1650.32  Financial hardship withdrawals.

* * * * *
    (f) A participant is not eligible for an in-service hardship 
withdrawal based solely on monthly negative cash flow (as described in 
paragraph (b)(1) of this section) during the time he or she has pending 
a petition in bankruptcy under Chapter 13 of the Bankruptcy Code (11 
U.S.C. chapter 13).

PART 1651--DEATH BENEFITS

0
10. The authority citation for part 1651 continues to read as follows:

    Authority: 5 U.S.C. 8424(d), 8432(j), 8433(e), 8435(c)(2), 
8474(b)(5) and 8474(c)(1).


0
11. Amend Sec.  1651.14 by adding a new paragraph (h) to read as 
follows:


Sec.  1651.14  How payment is made.

* * * * *
    (h) A properly paid death benefit payment cannot be returned to the 
TSP.

PART 1653--COURT ORDERS AND LEGAL PROCESSES AFFECTING THRIFT 
SAVINGS PLAN ACCOUNTS

0
12. The authority citation for Part 1653 continues to read as follows:

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

Subpart A--Retirement Benefits Court Orders

0
13. Amend Sec.  1653.5 by adding a new paragraph (l) after paragraph 
(k) to read as follows:


Sec.  1653.5  Payment.

* * * * *
    (l) A properly paid court order payment cannot be returned to the 
TSP.

PART 1655--LOAN PROGRAM

0
14. The authority citation for Part 1655 continues to read as follows:

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


0
15. Amend Sec.  1655.15 by removing the word ``because'' from paragraph 
(a)(7) and adding in its place the word ``became''.
0
16. Amend Sec.  1655.18 by removing the citation ``1650.64 and 
1650.65'' from paragraph (c) and adding in its place the citation 
``part 1650, subpart G''.

[FR Doc. 03-31516 Filed 12-22-03; 8:45 am]
BILLING CODE 6760-01-P