[Federal Register Volume 85, Number 221 (Monday, November 16, 2020)]
[Rules and Regulations]
[Pages 72913-72914]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24203]


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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Parts 1600 and 1605


Simplification of Catch-Up Contribution Process

AGENCY: Federal Retirement Thrift Investment Board.

ACTION: Final rule.

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SUMMARY: The Federal Retirement Thrift Investment Board (``FRTIB'') is 
reducing paperwork burdens on participants who are eligible to make 
catch-up contributions by removing the regulation that requires them to 
submit two different contribution election forms.

DATES: This rule is effective January 1, 2021.

FOR FURTHER INFORMATION CONTACT: Austen Townsend, (202) 864-8647.

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 (IRC)(26 U.S.C. 401(k)).
    Normally, a TSP participant's contributions to his or her account 
cannot exceed the statutory limits set forth in IRC section 402(g) 
(limiting the amount of traditional and Roth contributions to $19,500 
for calendar year 2021) and IRC section 415(c) (limiting the total 
amount of traditional, Roth, tax-exempt, matching, and automatic 1% 
contributions to the lesser of 100% of the participant's compensation 
or $58,000 for calendar year 2021). However, a TSP participant who is 
age 50 or older is permitted to make catch-up contributions to his or 
her TSP account beyond these statutory limits up to the dollar limit in 
IRC section 414(v), which is $6,500 for calendar year 2021.
    On January 23, 2020, the FRTIB published a proposed rule with 
request for comments in the Federal Register (85 FR 3857) to simplify 
the catch-up contribution process by no longer requiring participants 
to submit separate catch-up contribution election forms. The FRTIB 
received five comments on the proposed rule. Three comments expressed 
strong support for reducing the burden on participants by eliminating 
the separate catch-up contribution election forms. Two of the comments 
did not address the substance of the regulations. Therefore the FRTIB, 
is publishing the proposed rule as final without change.
    Although the regulatory text is being published without change, in 
order to avoid confusion, the FRTIB wishes to clarify the effect of the 
simplified catch-up contribution process on the rules set forth at 5 
CFR 1605.13 regarding back pay awards and other retroactive pay 
adjustments. If a TSP participant was age 50 or older during the 
year(s) to which a back pay award or other retroactive pay adjustment 
is attributable and the corrective contributions or make-up 
contributions exceed the IRC section 402(g) or 415(c) limit, then 
corrective contributions or make-up contributions will spill over 
toward the catch-up limit for those years, even if the contributions 
are attributable to years before 2021. However, catch-up contributions 
attributable to years before 2021 are not eligible for matching.

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 
by FERSA and is administered by the FRTIB.

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

5 CFR Part 1600

    Taxes, Claims, Government employees, Pensions, Retirement.

5 CFR Part 1605

    Claims, Government employees, Pensions, Retirement.

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

    For the reasons stated in the preamble, the FRTIB amends 5 CFR 
chapter VI as follows:

PART 1600--EMPLOYEE CONTRIBUTION ELECTIONS, CONTRIBUTION 
ALLOCATIONS, AND AUTOMATIC ENROLLMENT PROGRAM

0
1. The authority citation for part 1600 continues to read as follows:


[[Page 72914]]


    Authority:  5 U.S.C. 8351, 8432(a), 8432(b), 8432(c), 8432(j), 
8432d, 8474(b)(5) and (c)(1), and 8440e.


Sec.  1600.23  [Amended]

0
2. Amend Sec.  1600.23 by removing and reserving paragraphs (b) and 
(h).

PART 1605--CORRECTION OF ADMINISTRATIVE ERRORS

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

    Authority:  5 U.S.C. 8351, 8432a, 8432d, 8474(b)(5)(5) and 
(c)(1). Subpart B also issued under section 1043(b) of Public Law 
104-106, 110 Stat. 186 and sec. 7202(m)(2) of Public Law 101-508, 
104 Stat. 1388.


0
4. Amend Sec.  1605.13 by revising paragraph (c)(2) to read as follows:


Sec.  1605.13  Back pay awards and other retroactive pay adjustments.

* * * * *
    (c) * * *
    (2) Must not cause the participant to exceed the annual 
contribution limit(s) contained in sections 402(g), 415(c), or 414(v) 
of the I.R.C. (26 U.S.C. 402(g), 415(c), 414(v)) for the year(s) with 
respect to which the contributions are being made, taking into 
consideration the TSP contributions already made in (or with respect 
to) that year; and
* * * * *

[FR Doc. 2020-24203 Filed 11-13-20; 8:45 am]
BILLING CODE 6760-01-P