[Federal Register Volume 85, Number 31 (Friday, February 14, 2020)]
[Proposed Rules]
[Pages 8482-8483]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03041]


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 Proposed Rules
                                                 Federal Register
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 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. 85, No. 31 / Friday, February 14, 2020 / 
Proposed Rules  

[[Page 8482]]



FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Part 1650


Hardship Withdrawals for Expenses Related to Natural Disasters

AGENCY: Federal Retirement Thrift Investment Board.

ACTION: Proposed rule.

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SUMMARY: The Federal Retirement Thrift Investment Board (``FRTIB'') 
proposes to allow participants to take hardship withdrawals for 
expenses related to natural disasters.

DATES: Comments must be received on or before March 16, 2020.

ADDRESSES: You may submit comments using one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Office of General Counsel, Attn: Megan G. Grumbine, 
Federal Retirement Thrift Investment Board, 77 K Street NE, Suite 1000, 
Washington, DC 20002.
     Hand Delivery/Courier: The address for sending comments by 
hand delivery or courier is the same as that for submitting comments by 
mail.
     Facsimile: Comments may be submitted by facsimile at (202) 
942-1676.

FOR FURTHER INFORMATION CONTACT: Jessica Bradford, (202) 864-8699.

SUPPLEMENTARY INFORMATION: The FRTIB administers the Thrift Savings 
Plan (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 are codified, as amended, largely at 5 U.S.C. 8351 
and 8401-79. The TSP is a tax-deferred retirement savings plan for 
federal civilian employees and members of the uniformed services. The 
TSP is similar to cash or deferred arrangements established for 
private-sector employees under section 401(k) of the Internal Revenue 
Code (26 U.S.C. 401(k)).
    FERSA regulations permit in-service withdrawals from TSP accounts 
based upon four different types, or conditions, of financial hardship 
experienced by participants: (1) Negative monthly cash flow; (2) 
certain medical expenses of participant and his or her spouse or 
dependents; (3) payments for repairs or replacement of property 
resulting from personal casualty losses; and (4) attorney's fees and 
court costs associated with a participant's separation or divorce.
    In the past, expenses and lost income resulting from natural 
disasters were not one of the four authorized hardship expenses. 
Instead, in order to allow participants to take hardship withdrawals 
based on natural disaster expenses and losses, the TSP relied on relief 
and guidance issued by the Internal Revenue Service (IRS), which made 
disaster relief announcements to allow participants in private sector 
401(k) plans to take hardship withdrawals for natural disaster expenses 
and losses. However, the IRS recently announced that it will 
discontinue its practice of issuing disaster relief announcements. 
Rather than issuing such an announcement after a natural disaster to 
permit plans to authorize such hardship withdrawals, it amended its 
regulation to add to its safe harbor list of financial hardship 
expenses a new type of expense incurred as a result of certain 
disasters.
    Specifically, on September 23, 2019, the IRS amended Treasury 
Regulation Sec.  1.401(k)-1(d)(3), adding to the safe harbor financial 
hardship expenses, losses (including loss of income) and expenses 
incurred by a participant on account of a disaster declared by the 
Federal Emergency Management Agency (FEMA) if the participant's 
principal residence or principal place of employment at the time of the 
disaster was located in an area designated by the FEMA for individual 
assistance with respect to the disaster.
    Because the TSP has relied on the IRS' disaster relief 
announcements to authorize hardship withdrawals for expenses and lost 
income relating to natural disasters, and because those announcements 
will no longer be made by the IRS in light of its amended regulation, 
the FRTIB proposes to add to its list of authorized hardship expenses, 
the expenses and losses (including loss of income) resulting from a 
natural disaster as declared by the FEMA in order to allow TSP 
participants to make financial hardship withdrawals for such natural 
disaster expenses. The FRTIB intends for this proposed regulation to 
mirror Treasury Regulation Sec.  1.401(k)-1(d)(3)(ii)(B)(7) to the 
extent it is applicable.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities. This regulation will 
affect Federal employees, members of the uniformed services who 
participate in the Thrift Savings Plan, and their beneficiaries. The 
TSP is a Federal defined contribution retirement savings plan created 
FERSA and is administered by the Agency.

Paperwork Reduction Act

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

Unfunded Mandates Reform Act of 1995

    Pursuant to the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 602, 
632, 653, 1501-1571, 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 1532 
is not required.

List of Subjects in 5 CFR Part 1650

    Taxes, Claims, Government employees, Pensions, Retirement.

Ravindra Deo,
Executive Director, Federal Retirement Thrift Investment Board.

    For the reasons stated in the preamble, the FRTIB proposes to amend 
5 CFR chapter VI as follows:

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

0
1. The authority citation for part 1650 continues to read as follows:

    Authority:  5 U.S.C. 8351, 8432d, 8433, 8434, 8435, 8474(b)(5) 
and 8474(c)(1).

0
2. Amend Sec.  1650.32 by revising paragraph (b) introductory text and

[[Page 8483]]

adding paragraph (b)(5) to read as follows:


Sec.  1650.32  Financial hardship withdrawals.

* * * * *
    (b) To be eligible for a financial hardship withdrawal, a 
participant must have a financial need that results from at least one 
of the following five conditions:
* * * * *
    (5) The participant has incurred expenses and losses (including 
loss of income) on account of a disaster declared by the Federal 
Emergency Management Agency (FEMA) under the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act, Public Law 100-707, 
provided that the participant's principal residence or principal place 
of employment at the time of the disaster was located in an area 
designated by the FEMA for individual assistance with respect to the 
disaster.
* * * * *
[FR Doc. 2020-03041 Filed 2-13-20; 8:45 am]
 BILLING CODE 6760-01-P