[Federal Register Volume 87, Number 100 (Tuesday, May 24, 2022)]
[Rules and Regulations]
[Pages 31670-31696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-10875]
[[Page 31669]]
Vol. 87
Tuesday,
No. 100
May 24, 2022
Part III
Federal Retirement Thrift Investment Board
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5 CFR Parts 1600, 1601, 1605, et al.
Transition to a New Recordkeeping System; Final Rule
Federal Register / Vol. 87 , No. 100 / Tuesday, May 24, 2022 / Rules
and Regulations
[[Page 31670]]
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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
5 CFR Parts 1600, 1601, 1605, 1620, 1631, 1640, 1645, 1650, 1651,
1653, 1655, and 1690
Transition to a New Recordkeeping System
AGENCY: Federal Retirement Thrift Investment Board.
ACTION: Final rule.
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SUMMARY: The Federal Retirement Thrift Investment Board (FRTIB) is
amending its regulations to reflect new processes and terminology
associated with the Thrift Savings Plan's upcoming transition to a new
recordkeeping system.
DATES: Effective June 1, 2022.
FOR FURTHER INFORMATION CONTACT: Kim Weaver, Office of External
Affairs, (202) 465-5220 or Laurissa Stokes, Office of General Counsel,
(202) 308-7707.
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
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)).
The provisions of FERSA that govern the TSP are codified, as amended,
largely at 5 U.S.C. 8351 and 8401-79.
I. Background
In November 2020, the FRTIB awarded a contract to a service
provider that will maintain and operate technology platform(s) to
deliver retirement plan recordkeeping services. Examples of retirement
plan recordkeeping services include: (1) Maintaining eligibility
records, (2) managing payroll data, (3) processing transactions such as
contribution elections, investment elections, withdrawals, loans, and
beneficiary designations, (4) issuing account statements to
participants, (5) providing online account access, and (6) providing
responsive customer support to TSP participants.
The FRTIB is currently transitioning from its existing technology
platforms to the technology platforms of its new record keeper.
Following this transition, TSP participants will be able to take
advantage of many new services and functionalities, such as a mobile
app, electronic payment options, quick access to customer service
support through an online live chat function, and the ability to
complete most transactions entirely online instead of using paper
forms. On March 1, 2022, the FRTIB published a proposed rule with a
request for comments in the Federal Register (87 FR 11516) that would
amend its regulations to reflect these and other new processes and
update its vocabulary to reflect the terminology used by the new record
keeper.
The FRTIB received one or more comments from 13 commenters. As
described in more detail below, the FRTIB is adopting the proposed rule
as final without any substantive changes, except for one change related
to post-employment distributions.
II. Response to Public Comments
A. 60-Day Waiting Period for Post-Employment Distributions
The proposed rule would have increased the time period a TSP
participant must be separated from government service before he or she
is eligible for a post-employment distribution. Currently, a TSP
participant need only be separated from government service for 31
calendar days. The proposed rule would have increased that time period
to 60 calendar days. We received comments from six commenters strongly
opposing this change.
While the intention behind the proposed increase in time was to
limit the number of post-employment distribution requests by
participants who are between Federal jobs and are not truly separated
from government service, we recognize that it has the ancillary effect
of making participants who truly have separated from government service
wait a substantial amount of time to receive TSP distributions to which
they are entitled. Upon reflecting on these comments, we have
determined that the burden this 60-day waiting period would impose on
TSP participants who have actually separated from government service
outweighs the benefit of limiting the number of erroneous post-
employment distributions and, therefore, the final rule does not
include this change. In order to reduce the number of post-employment
distribution requests by participants who are merely between Federal
jobs and not separated from government service, we will work with
employing agencies to make sure they understand that a participant has
not separated from government service until s/he has been separated for
at least 31 calendar days.
B. Notarization of Spousal Consent
We received four comments concerning our proposal to permit spouses
of TSP participants to provide their written consent to distributions
without the burden of finding and hiring a notary public. Two
commenters supported the proposal. They described the existing
notarization requirement as ``extremely inconvenient'' and ``very
burdensome'' and welcomed the proposed rule as an improvement to the
efficiency of TSP services. The other two commenters opposed the
proposal. They expressed concern that removing the notarization
requirement will result in an increase in fraudulent withdrawals.
The FRTIB has required spouses of TSP participants to notarize
their written consent since 2003. See 68 FR 35491. The notarization
requirement was implemented as a measure to prevent fraud. There was
not then, and is not today, any evidence showing that a notarization
requirement decreases fraudulent TSP withdrawals. Our assumption that
the security-related benefits of requiring notarization were
appreciable enough to justify the burdens they impose on TSP
participants and their spouses was grounded in speculation and custom.
On April 17, 2020, we published an interim rule (85 FR 21311) that
temporarily waived the notarization requirement to accommodate the fact
that COVID-19 safety measures--which included mandatory business and
school closures, stay-at-home/shelter-in-place orders, and
quarantines--made it virtually impossible for many participants to find
and access a notary in person. The interim rule went into effect
immediately without the benefit of public comment, which is normally
required by the Administrative Procedures Act. It was intended to be
only temporary because we are mindful of the importance of public
comment and the narrowness of exceptions to the Administrative
Procedures Act. As such, we withdrew the interim rule on October 1,
2020.
During the time period in which the temporary waiver of the
notarization requirement was in effect--between April 17, 2020 and
October 1, 2020--the TSP did not experience any appreciable increase in
fraudulent withdrawals. We were, therefore, faced with evidence that
challenged our long-standing assumptions concerning the role of the
notarization requirement in preventing fraudulent withdrawals.
Simultaneously, we were confronted
[[Page 31671]]
with the severity of the burden it places on TSP participants and their
spouses during difficult times. Although the disruptive intensity of
the COVID-19 pandemic is subsiding, we continue to hear daily from
participants (and spouses of participants), who are requesting
distributions following natural disasters or medical emergencies.
Accordingly, we sought public comments on a proposal to permanently
remove the notarization requirement.
One of the commenters suggested that remote notarization
technologies provide a better alternative to removing the notarization
requirement altogether. The TSP already permits participants and their
spouses to use remote notarization to whatever extent that remote
notarization is valid under the laws of the state in which they live.
But not every state has laws permitting remote notarization, and not
all state remote notarization laws are the same. The TSP has
participants residing in every state, and over 1.3 million participants
who are serving all over the world as members of the uniformed
services. Removing the notarization requirement has the advantage of
reducing time and expense burdens for all participants and their
spouses equally, wherever they may live or serve.
Having received no additional data from commenters, we are adopting
the proposal to remove the notarization requirement as final. The FRTIB
will continue to require written spousal consent in accordance with 5
U.S.C. 8435.
C. Child Support Court Orders
The proposed rule would have amended FRTIB regulations to reflect a
change to the child support court order (CSCO) review process. One
commenter requested that we add regulatory language requiring the TSP
record keeper to notify the relevant child support agency if a CSCO is
rejected. The FRTIB currently notifies all parties when any court order
or legal process is rejected and will continue to do so in the future.
The final rule clarifies Sec. 1653.3(e) and Sec. 1653.13(e) to that
effect.
Another commenter expressed the view that the $600 CSCO processing
fee included in the proposed rule is overly burdensome. As noted in the
proposed rule, the CSCO review process is a labor-intensive, costly one
that is only utilized by certain TSP participants. In order to ensure
that the associated costs are not subsidized by participants who never
use these services, a $600.00 fee for each CSCO submitted for an
account is necessary. We note that a $600.00 fee is on the lower end
for the retirement plan industry, where court order review fees often
exceed $1,000.00 per review.
D. Miscellaneous
We received five comments from two commenters on issues that are
outside the scope of this rule. One individual requested the ability to
convert a traditional balance to a Roth balance within the TSP. The
FRTIB has, in the past, considered allowing in-plan Roth conversions
and ultimately concluded that the tax complexities involved and, in
particular, the potential irreversible financial pitfalls for
participants, weighed against doing so. Revisiting this decision was
outside the scope of the transition to a new recordkeeping system. This
same individual requested that a participant be allowed to elect to
withdraw amounts from his or her tax-exempt balance only. Not only is
this request out of the scope of this rule, a participant's tax-exempt
balance does not constitute a separate contract under 26 U.S.C. 72(d)
and, therefore, the FRTIB is prohibited by the Internal Revenue Code
from offering this option.
Another commenter requested that the proposed rule be changed to
state that annual statements will continue to be sent to TSP
participants by default. Our existing regulations do not address the
default delivery method for annual statements and adding a provision
addressing this issue is outside of the scope of this rule. The same
commenter criticized the FRTIB for not providing penalties and remedies
for violations of criminal laws that are designed to deter fraudulent
misrepresentations. The FRTIB does not have the statutory authority to
publish regulations for the purpose of enforcing or punishing
violations of criminal law. The same commenter expressed concern that
spouses of participants will no longer have access to account
information necessary to draft a qualifying retirement benefits court
order. Nothing in our proposed or final rule would change the amount or
type of account information that spouses of participants are entitled
to access.
Regulatory Flexibility Act
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 TSP, and beneficiary participants.
Paperwork Reduction Act
This regulation does not require additional reporting under the
criteria of 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, and 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 2 U.S.C. 1532 is not required.
Submission to Congress and the General Accounting Office
Pursuant to 5 U.S.C. 810(a)(1)(A), the FRTIB submitted a report
containing this rule and other required information to the U.S. Senate,
the U.S. House of Representatives, and the Comptroller General of the
United States before publication of this rule in the Federal Register.
This rule is not a major rule as defined at 5 U.S.C. 804(2).
List of Subjects
5 CFR Part 1600
Claims, Government employees, Pensions, Retirement, Taxes.
5 CFR Part 1601
Government employees, Pensions, Retirement.
5 CFR Part 1605
Claims, Government employees, Pensions, Retirement.
5 CFR Part 1620
District of Columbia, Government employees, Pensions, Retirement.
5 CFR Part 1631
Courts, Freedom of information, Government employees.
5 CFR Part 1640
Government employees, Pensions, Retirement.
5 CFR Part 1645
Government employees, Pensions, Retirement.
5 CFR Part 1650
Alimony, Claims, Government employees, Pensions, Retirement.
5 CFR Part 1651
Claims, Government employees, Pensions, Retirement.
[[Page 31672]]
5 CFR Part 1653
Alimony, Child support, Government employees, Pensions, Retirement.
5 CFR Part 1655
Credit, Government employees, Pensions, Retirement.
5 CFR Part 1690
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, INVESTMENT ELECTIONS,
AND AUTOMATIC ENROLLMENT PROGRAM
0
1. The authority citation for part 1600 continues to read as follows:
Authority: 5 U.S.C. 8351, 8432(a), 8432(b), 8432(c), 8432(j),
8432d, 8474(b)(5) and (c)(1), and 8440e.
0
2. The heading for part 1600 is revised to read as set forth above.
0
3. Amend Sec. 1600.11, in paragraph (b), by revising the heading and
removing ``TSP Funds'' and adding in its place ``TSP core funds''.
The revision reads as follows:
Sec. 1600.11 Types of elections.
* * * * *
(b) Investment election. * * *
Sec. 1600.13 [Amended]
0
4. Amend Sec. 1600.13 by removing and reserving paragraph (b).
0
5. Amend Sec. 1600.14 by removing and reserving paragraph (b) and
revising paragraph (d).
The revision reads as follows:
Sec. 1600.14 Effect of election to be covered by BRS.
* * * * *
(d) Agency automatic (1%) contributions for all members covered
under this section and, if applicable, agency matching contributions
attributable to employee contributions must begin at the time set forth
in Sec. 1600.19(c).
Sec. 1600.18 [Amended]
0
6. Amend Sec. 1600.18, in the first sentence, by removing ``TSP'' and
adding in its place ``TSP record keeper''.
0
7. Amend Sec. 1600.19 as follows:
0
a. Revise the headings for paragraphs (a) and (b);
0
b. In paragraphs (c)(2)(i)(A) and (c)(2)(ii)(A), remove ``Agency
Automatic (1%) Contributions'' and add in its place ``Agency automatic
(1%) contributions'';
0
c. In paragraphs (c)(2)(i)(B) and (c)(2)(ii)(B), remove ``Agency
Matching Contributions'' and add in its place ``Agency matching
contributions'';
0
d. In paragraph (c)(2)(i)(B), remove ``2 years'' and add in its place
``2 years and one day''.
The revisions read as follows:
Sec. 1600.19 Employing agency contributions.
(a) Agency automatic (1%) contributions. * * *
(b) Agency matching contributions. * * *
* * * * *
0
8. Amend Sec. 1600.21 by revising the first sentence of paragraph (b)
to read as follows:
Sec. 1600.21 Contributions in whole percentages or whole dollar
amounts.
* * * * *
(b) Uniformed services members may elect to contribute from basic
pay and, if they elect to contribute from basic pay, special or
incentive pay (including bonus pay) subject to the limits described in
Sec. 1600.22. * * *
Sec. 1600.22 [Amended]
0
9. Amend Sec. 1600.22, in paragraph (a), by removing ``(26 U.S.C.)''.
0
10. Revise subpart D to read as follows:
Subpart D--Rollovers From Other Qualified Retirement Plans
Sec.
1600.30 Accounts eligible for rollover.
1600.31 Methods for rolling over eligible rollover distribution to
the TSP.
1600.32 Treatment accorded rollover funds.
1600.33 Combining uniformed services accounts and civilian accounts.
Subpart D--Rollovers From Other Qualified Retirement Plans
Sec. 1600.30 Accounts eligible for rollover.
(a) A participant who has an open TSP account and is entitled to
receive (or receives) an eligible rollover distribution from an
eligible employer plan within the meaning of section 402(c) of the
Internal Revenue Code (26 U.S.C. 402(c)), or from a traditional IRA may
roll over that distribution into his or her existing TSP account in
accordance with Sec. 1600.31.
(b) The only balances that the TSP record keeper will accept are
balances that would otherwise be includible in gross income if the
distribution were paid to the participant. The TSP record keeper will
not accept any balances that have already been subjected to Federal
income tax (after-tax monies) or balances from a uniformed services TSP
account that will not be subject to Federal income tax (tax-exempt
monies).
(c) Notwithstanding paragraph (b) of this section, the TSP record
keeper will accept Roth funds that are transferred via direct rollover
from an eligible employer plan that maintains a qualified Roth
contribution program described in section 402A of the Internal Revenue
Code.
(d) The TSP record keeper will accept a rollover only to the extent
the rollover is permitted by the Internal Revenue Code.
Sec. 1600.31 Methods for rolling over eligible rollover distribution
to the TSP.
(a) Direct rollover. (1) A participant may request that the
administrator or trustee of an eligible employer plan or traditional
IRA roll over any or all of his or her account directly to the TSP in
the form and manner prescribed by the TSP record keeper. The
administrator or trustee must provide to the TSP record keeper the
distribution, information about the type of money included in the
distribution (i.e., tax-deferred and/or Roth amounts), and sufficient
evidence from which to reasonably conclude that a contribution is a
valid rollover contribution (as defined by 26 CFR 1.401(a)(31)-1, Q&A-
14). By way of example, sufficient evidence to conclude a contribution
is a valid rollover contribution includes a copy of the plan's
determination letter, a letter or other statement from the plan
administrator or trustee indicating that it is an eligible employer
plan or traditional IRA, a check indicating that the contribution is a
direct rollover, a payment confirmation, distribution statement or a
tax notice from the plan to the participant indicating that the
participant could receive a rollover from the plan.
(2) If the distribution is from a Roth account maintained by an
eligible employer plan, the plan administrator must also provide to the
TSP record keeper a statement indicating the first year of the
participant's Roth 5 year non-exclusion period under the distributing
plan and either:
(i) The portion of the direct rollover amount that represents Roth
contributions (i.e., basis); or
(ii) A statement that the entire amount of the direct rollover is a
qualified Roth distribution (as defined by Internal Revenue Code
section 402A(d)(2)).
(b) Indirect rollover by participant. A participant who has already
received a
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distribution from an eligible employer plan or traditional IRA may
request to roll over all or part of the distribution into the TSP in
the form and manner prescribed by the TSP record keeper. However, the
TSP record keeper will not accept a rollover by the participant of Roth
funds distributed from an eligible employer plan. A distribution of
Roth funds from an eligible employer plan may be rolled into the TSP by
direct rollover only. The TSP record keeper will accept a rollover by
the participant of tax-deferred amounts if the following requirements
and conditions are satisfied:
(1) The participant must request to roll over the amounts in the
form and manner prescribed by the TSP record keeper.
(2) The administrator or trustee must provide to the TSP record
keeper information about the type of money included in the distribution
(i.e., tax-deferred and/or Roth) and sufficient evidence from which to
reasonably conclude that a contribution is a valid rollover
contribution. By way of example, sufficient evidence to conclude a
contribution is a valid rollover contribution includes a copy of the
plan's determination letter, a letter or other statement from the plan
indicating that it is an eligible employer plan or traditional IRA, a
check indicating that the contribution is a direct rollover, a payment
confirmation, distribution statement or a tax notice from the plan to
the participant indicating that the participant could receive a
rollover from the plan.
(3) The participant must submit a certified check, cashier's check,
cashier's draft, money order, treasurer's check from a credit union, or
personal check, made out to the ``Thrift Savings Plan,'' for the entire
amount of the rollover, along with any other information required by
the TSP record keeper. A participant may roll over the full amount of
the distribution by making up, from his or her own funds, the amount
that was withheld from the distribution for the payment of Federal
taxes.
(4) The transaction must be completed within 60 days of the
participant's receipt of the distribution from his or her eligible
employer plan or traditional IRA. The transaction is not complete until
the TSP record keeper receives the guaranteed funds for the amount to
be rolled over, information sufficient to conclude that the amount is a
valid rollover contribution, and any other information required by the
TSP record keeper.
(c) Participant's certification. When rolling over a distribution
to the TSP by either a direct or indirect rollover, the participant
must certify that the distribution is eligible for roll over into the
TSP, as follows:
(1) Distribution from an eligible employer plan. The participant
must certify that the distribution:
(i) Is not one of a series of substantially equal periodic payments
made over the life expectancy of the participant (or the joint lives of
the participant and designated beneficiary, if applicable) or for a
period of 10 years or more;
(ii) Is not a minimum distribution required by I.R.C. section
401(a)(9) (26 U.S.C. 401(a)(9));
(iii) Is not a hardship distribution;
(iv) Is not a plan loan that is deemed to be a taxed loan because
of default;
(v) Is not a return of excess elective deferrals; and
(vi) If not rolled over, would be includible in gross income for
the tax year in which the distribution is paid. This paragraph
(c)(1)(vi) shall not apply to Roth funds distributed from an eligible
employer plan.
(2) Distribution from a traditional IRA. The participant must
certify that the distribution:
(i) Is not a minimum distribution required under I.R.C. section
401(a)(9) (26 U.S.C. 401(a)(9)); and
(ii) If not rolled over, would be includible in gross income for
the tax year in which the distribution is paid.
Sec. 1600.32 Treatment accorded rollover funds.
(a) All funds rolled over to the TSP pursuant to Sec. Sec. 1600.30
and 1600.31 will be treated as employee contributions.
(b) All funds rolled over to the TSP pursuant to Sec. Sec. 1600.30
and 1600.31 will be invested in accordance with the participant's
investment election on file at the time the rollover is completed.
(c) Funds rolled over to the TSP pursuant to Sec. Sec. 1600.30 and
1600.31 are not subject to the limits on contributions described in
Sec. 1600.22.
Sec. 1600.33 Combining uniformed services accounts and civilian
accounts.
Uniformed services TSP account balances and civilian TSP account
balances may be combined (thus producing one account), subject to
paragraphs (a) through (g) of this section:
(a) An account balance can be combined with another once the TSP
record keeper is informed (by the participant's employing agency) that
the participant has separated from Government service.
(b) Tax-exempt contributions may not be transferred from a
uniformed services TSP account to a civilian TSP account.
(c) A traditional balance and a Roth balance cannot be combined.
(d) Funds transferred to the gaining account will be allocated
among the TSP core funds according to the investment election in effect
for the account into which the funds are transferred.
(e) Funds transferred to the gaining account will be treated as
employee contributions and otherwise invested as described at 5 CFR
part 1600.
(f) A uniformed service member must obtain the consent of his or
her spouse before combining a uniformed services TSP account balance
with his or her civilian account, even if the civilian account is not
subject to FERS spousal rights. A request for an exception to the
spousal consent requirement will be evaluated under the rules explained
in 5 CFR part 1650.
(g) A loan cannot be transferred between accounts. Before the
accounts can be combined, any outstanding loans from the losing account
must be closed as described in 5 CFR part 1655.
Sec. 1600.35 [Amended]
0
11. Amend Sec. 1600.35 as follows:
0
a. In paragraph (a) introductory text, remove ``must be made on'' and
add in its place ``may be made on the TSP website or by completing'';
and
0
b. In paragraph (d), remove ``TSP'' and add in its place ``TSP record
keeper''.
Sec. 1600.37 [Amended]
0
12. Amend Sec. 1600.37 as follows:
0
a. In the introductory text, remove ``The Board'' and add in its place
``The TSP record keeper''; and
0
b. In paragraph (c), remove ``The fund'' and ``a contribution
allocation'', and add in their places ``The TSP core fund'' and ``an
investment election'', respectively.
PART 1601--PARTICIPANTS' CHOICE OF TSP FUNDS
0
13. The authority citation for part 1601 continues to read as follows:
Authority: 5 U.S.C. 8351, 8432d, 8438, 8474(b)(5) and (c)(1).
0
14. Amend Sec. 1601.1, in paragraph (b), as follows:
0
a. In the definition of ``Acknowledgment of risk'', remove ``TSP Fund''
and add in its place ``TSP core fund''; and
0
b. Add definitions in alphabetical order for ``Fund reallocation'' and
``Fund transfer''.
The additions read as follows:
Sec. 1601.1 Definitions.
* * * * *
(b) * * *
[[Page 31674]]
Fund reallocation means the total redistribution of a participant's
existing account balance among the TSP core funds.
Fund transfer means either:
(i) The transfer of money from one or more TSP core fund(s) to
another TSP core fund(s); or
(ii) The transfer of money from the TSP core funds to the mutual
fund window (and vice versa).
0
15. Revise subpart B to read as follows:
Subpart B--Investing Future Deposits
Sec.
1601.11 Applicability.
1601.12 Investing future deposits in the TSP core funds.
1601.13 Elections.
Subpart B--Investing Future Deposits
Sec. 1601.11 Applicability.
This subpart applies only to the investment of future deposits to
the TSP core funds, including contributions, loan payments, and
rollovers from traditional IRAs and eligible employer plans; it does
not apply to fund reallocations or fund transfers within the TSP core
funds, which is covered in subpart C of this part, or fund transfers to
and from the mutual fund window, which is covered in subpart F of this
part.
Sec. 1601.12 Investing future deposits in the TSP core funds.
(a) Allocation. Future deposits in the TSP, including
contributions, loan payments, and rollovers from traditional IRAs and
eligible employer plans, will be allocated among the TSP core funds
based on the most recent investment election on file for the
participant.
(b) TSP core funds availability. All participants may elect to
invest all or any portion of their deposits in any of the TSP core
funds.
Sec. 1601.13 Elections.
(a) Investment election. Each participant may indicate his or her
choice of TSP core funds for the allocation of future deposits in the
form and manner prescribed by the TSP record keeper. Paragraphs (a)(1)
through (5) of this section apply to investment elections:
(1) Investment elections must be made in one percent increments.
The sum of the percentages elected for all of the TSP core funds must
equal 100 percent.
(2) The percentage elected by a participant for investment of
future deposits in a TSP core fund will be applied to all sources of
contributions and rollovers from traditional IRAs and eligible employer
plans. A participant may not make different percentage elections for
different sources of contributions.
(3) The following default investment rules shall apply to civilian
participants:
(i) All deposits made on behalf of a civilian participant enrolled
prior to September 5, 2015, who does not have an investment election in
effect will be invested in the G Fund. A civilian participant who is
enrolled prior to September 5, 2015, and subsequently rehired on or
after September 5, 2015, and has a positive account balance will be
considered enrolled prior to September 5, 2015 for purposes of this
paragraph (a)(3)(i); and
(ii) All deposits made on behalf of a civilian participant first
enrolled on or after September 5, 2015, who does not have an investment
election in effect will be invested in the age-appropriate TSP
Lifecycle Fund.
(iii) A civilian participant enrolled prior to September 5, 2015,
who elects for the first time to invest in a TSP core fund other than
the G Fund must execute an acknowledgement of risk in accordance with
Sec. 1601.33.
(4) The default investment rule in paragraphs (a)(4)(i) through
(iv) of this section apply to uniformed services participants:
(i) All deposits made on behalf of a uniformed services participant
who first entered service prior to January 1, 2018, has not elected to
be covered by BRS, and does not have an investment election in effect
will be invested in the G Fund.
(ii) All deposits made on behalf of a uniformed services
participant who first entered service on or after January 1, 2018, and
who does not have an investment election in effect will be invested in
the age-appropriate TSP Lifecycle Fund.
(iii) If a uniformed services participant makes an election to be
covered by BRS as described in 5 CFR 1600.14 and does not have an
investment election in effect at the time of the election, then all
deposits made after the date of such election will be invested in the
age-appropriate TSP Lifecycle Fund. Deposits made prior to the date of
the election will remain invested in the G Fund.
(iv) A uniformed services participant who first entered service
prior to January 1, 2018, and has not made an election to be covered by
the BRS who elects for the first time to invest in a TSP core fund
other than the G Fund must execute an acknowledgement of risk in
accordance with Sec. 1601.33.
(5) Once an investment election becomes effective, it remains in
effect until it is superseded by a subsequent investment election or
the participant's account balance is reduced to zero. If a rehired
participant has a positive account balance and an investment election
in effect, then the participant's investment election will remain in
effect until a new election is made. If, however, the participant
(other than a participant described in paragraph (a)(4)(i) of this
section) has a zero account balance, then the participant's
contributions will be allocated to the age-appropriate TSP Lifecycle
Fund until a new investment election is made.
(b) Effect of rejection of investment election. If a participant
does not correctly complete an investment election, the attempted
investment election will have no effect. The TSP record keeper will
provide the participant with a written statement of the reason the
transaction was rejected.
(c) Contribution elections. A participant may designate the amount
or type of employee contributions he or she wishes to make to the TSP
or may stop contributions only in accordance with 5 CFR part 1600.
0
16. Revise subpart C to read as follows:
Subpart C--Fund Reallocations and Fund Transfers
Sec.
1601.21 Applicability.
1601.22 Methods of requesting a fund reallocation.
1601.23 Methods of requesting a fund transfer.
Subpart C--Fund Reallocations and Fund Transfers
Sec. 1601.21 Applicability.
This subpart applies only to fund reallocations and fund transfers
involving the movement of money from TSP core fund to one (or more) TSP
core fund(s); it does not apply to the investment of future deposits,
which is covered in subpart B of this part, nor does it apply to fund
transfers involving the movement of money from the TSP core funds to
the mutual fund window (and vice versa), which is covered in subpart F
of this part.
Sec. 1601.22 Methods of requesting a fund reallocation.
(a) Participants may make a fund reallocation in the form and
manner prescribed by the TSP record keeper. Paragraphs (a)(1) and (2)
of this section apply to a fund reallocation request:
(1) Fund reallocation requests must be made in whole percentages
(one percent increments). The sum of the percentages elected for all of
the TSP core funds must equal 100 percent.
[[Page 31675]]
(2) The percentages elected by the participant will be applied to
the balances in each source of contributions and to both traditional
and Roth balances and tax-deferred and tax-exempt balances on the
effective date of the fund reallocation.
(b) A fund reallocation request has no effect on deposits made
after the effective date of the fund reallocation request; subsequent
deposits will continue to be allocated among the TSP core funds in
accordance with the participant's investment election made under
subpart B of this part.
(c) If a fund reallocation is found to be invalid pursuant to Sec.
1601.34, the purported fund reallocation will not be made.
Sec. 1601.23 Methods of requesting a fund transfer.
(a) Participants may make a fund transfer from one or more TSP core
fund to a different TSP core fund(s) in the form and manner prescribed
by the TSP record keeper. Paragraphs (a)(1) and (2) of this section
apply to a fund transfer request:
(1) Fund transfer requests when selecting the TSP core funds to
transfer out of, may be made in whole percentages or in dollars. When
selecting the TSP core funds to transfer into, elections must be made
in whole percentages (one percent increments). The sum of the
percentages elected to transfer into for all of the TSP core funds must
equal 100 percent.
(2) The percentages elected by the participant will be applied to
the balances in each source of contributions and to both traditional
and Roth balances and tax-deferred and tax-exempt balances on the
effective date of the fund transfer.
(b) A fund transfer request has no effect on deposits made after
the effective date of the fund transfer request; subsequent deposits
will continue to be allocated among the TSP core funds in accordance
with the participant's investment election made under subpart B of this
part.
(c) If a fund transfer is found to be invalid pursuant to Sec.
1601.34, the purported fund transfer will not be made.
0
17. Revise subpart D to read as follows:
Subpart D--Investment Elections and Fund Reallocation and Fund Transfer
Requests
Sec.
1601.31 Applicability.
1601.32 Timing and posting dates.
1601.33 Acknowledgment of risk.
1601.34 Error correction.
Subpart D--Investment Elections and Fund Reallocation and Fund
Transfer Requests
Sec. 1601.31 Applicability.
This subpart applies to investment elections made under subpart B
of this part, fund reallocations and fund transfers made under subpart
C of this part, and fund transfers made under subpart F of this part.
Sec. 1601.32 Timing and posting dates.
(a) Posting dates. The date on which an investment election or fund
reallocation or fund transfer request (transaction request) is
processed is subject to a number of factors, including some that are
outside of the control of the TSP, such as power outages, the failure
of telephone service, unusually heavy transaction volume, and acts of
God. These factors also could affect the availability of the TSP
website and the ThriftLine. Therefore, the TSP cannot guarantee that a
transaction request will be processed on a particular day. However, the
TSP will process transaction requests under ordinary circumstances
described in paragraphs (a)(1) through (4) of this section:
(1) A transaction request other than an investment election request
entered into the TSP record keeping system by a participant who uses
the TSP website or the ThriftLine, before 12 noon eastern time of any
business day, will ordinarily be posted that business day. A
transaction request other than an investment election request entered
into the system at or after 12 noon eastern time of any business day
will ordinarily be posted on the next business day. A transaction
request that is an investment election request will ordinarily be
posted immediately and be effective the next business day.
(2) A transaction request made on the TSP website or the ThriftLine
on a non-business day will ordinarily be posted on the next business
day.
(3) A transaction request made on a paper TSP form will ordinarily
be posted under the rules in paragraph (a)(1) of this section, based on
when the TSP record keeper enters the form into the TSP system. The TSP
record keeper ordinarily enters such forms into the system within 48
hours of their receipt.
(4) In most cases, the share price(s) applied to a fund
reallocation or fund transfer request is the value of the shares on the
date the relevant transaction is posted. In some circumstances, such as
error correction, the share price(s) for an earlier date will be used.
(b) Limit. There is no limit on the number of investment election
requests. A participant may make a total of two unrestricted fund
reallocations and/or fund transfers per account (e.g., civilian or
uniformed services), per calendar month. A fund reallocation or fund
transfer will count toward the monthly total on the date posted by the
TSP record keeper and not on the date requested by a participant. After
a participant has made a total of two fund reallocations and/or fund
transfers in a calendar month, the participant may make additional fund
reallocations or fund transfers only into the G Fund until the first
day of the next calendar month.
Sec. 1601.33 Acknowledgment of risk.
(a) Uniformed services participants who first entered service prior
to January 1, 2018, and who have not elected to be covered by BRS and
civilian participants who enrolled prior to September 5, 2015, must
execute an acknowledgement of risk in order to invest in a TSP core
fund other than the G Fund. If a required acknowledgment of risk has
not been executed, no transactions involving the fund(s) for which the
acknowledgment is required will be accepted.
(b) The acknowledgment of risk may be executed in association with
an investment election, a fund reallocation, or a fund transfer in the
form and manner prescribed by the TSP record keeper.
Sec. 1601.34 Error correction.
Errors in processing investment elections and fund reallocation or
fund transfer requests, or errors that otherwise cause money to be
invested in the wrong investment fund, will be corrected in accordance
with the error correction regulations found at 5 CFR part 1605.
0
18. Revise Sec. 1601.40 to read as follows:
Sec. 1601.40 Lifecycle Funds.
The Executive Director will establish TSP Lifecycle Funds, which
are target date asset allocation portfolios. The TSP Lifecycle Funds
will invest solely in the funds established pursuant to 5 U.S.C.
8438(b)(1)(A)-(E).
PART 1605--CORRECTION OF ADMINISTRATIVE ERRORS
0
19. The authority citation for part 1605 continues to read as follows:
Authority: 5 U.S.C. 8351, 8432a, 8432d, 8474(b)(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.
[[Page 31676]]
0
20. Amend Sec. 1605.1, in paragraph (b), as follows:
0
a. Revise the definition of ``Breakage'';
0
b. Add in alphabetical order a definition for ``Earnings'';
0
c. Revise the definitions of ``Error'' and ``Late contributions''.
The revisions and addition read as follows:
Sec. 1605.1 Definitions.
* * * * *
(b) * * *
Breakage means the loss incurred or the gain realized on makeup or
late contributions.
* * * * *
Earnings means both positive and negative fund performance
attributable to differences in TSP core fund share prices.
Error means any act or omission by the Board, the TSP record
keeper, or the participant's employing agency that is not in accordance
with applicable statutes, regulations, or administrative procedures
that are made available to employing agencies and/or TSP participants.
It does not mean an act or omission caused by events that are beyond
the control of the Board, the TSP record keeper, or the participant's
employing agency.
* * * * *
Late contributions means:
(i) Employee contributions that were timely deducted from a
participant's basic pay but were not timely reported to the TSP record
keeper for investment;
(ii) Employee contributions that were timely reported to the TSP
record keeper but were not timely posted to the participant's account
by the TSP record keeper because the payment record on which they were
submitted contained errors;
(iii) Agency matching contributions attributable to employee
contributions referred to in paragraph (i) or (ii) of this definition;
and
(iv) Delayed agency automatic (1%) contributions.
* * * * *
0
21. Revise Sec. 1605.2 to read as follows:
Sec. 1605.2 Calculating, posting, and charging breakage on late
contributions and loan payments.
(a) General criteria. The TSP will calculate breakage on late
contributions, makeup agency contributions, and loan payments as
described by Sec. 1605.15(b). This breakage calculation is subject to
the criteria in paragraphs (a)(1) and (2) of this section:
(1) The TSP record keeper will not calculate breakage if
contributions or loan payments are posted within 30 days of the ``as
of'' date, or if the total amount on a late payment record or the total
agency contributions on a current payment record is less than $1.00;
and
(2) The TSP record keeper will not take the participant's fund
reallocations and fund transfers into account when determining
breakage.
(b) Calculating breakage. The TSP record keeper will calculate
breakage for all contributions or loan payment corrections as follows:
(1) Use the participant's investment election on file for the ``as
of'' date to determine how the funds would have been invested, going
back to the earliest daily share prices available. If there is no
investment election on file, or one cannot be derived based on the
investment of contributions, the TSP record keeper will consider the
funds to have been invested in the default investment fund in effect
for the participant on the ``as of'' date;
(2) Determine the number of shares of the applicable investment
funds the participant would have received had the contributions or loan
payments been made on time. If the ``as of'' date is before TSP account
balances were converted to shares, this determination will be the
number of shares the participant would have received on the conversion
date, and will include the daily earnings the participant would have
received had the contributions or loan payments been made on the ``as
of'' date;
(3) Determine the dollar value on the posting date of the number of
shares the participant would have received had the contributions or
loan payments been made on time. If the contributions or loan payments
would have been invested in a Lifecycle fund that is retired on the
posting date, the share price of the L Income Fund will be used. The
dollar value shall be the number of shares the participant would have
received had the contributions or loan payments been made on time
multiplied by the share price; and
(4) The difference between the dollar value of the contribution or
loan payment on the posting date and the dollar value of the
contribution or loan payment on the ``as of'' date is the breakage.
(c) Posting contributions and loan payments. Makeup and late
contributions, late loan payments, and breakage, will be posted to the
participant's account according to his or her investment election on
file for the posting date. If there is no investment election on file
for the posting date, they will be posted to the default investment
fund in effect for the participant.
(d) Charging breakage. If the dollar amount posted to the
participant's account is greater than the dollar amount of the makeup
or late contribution or late loan payment, the TSP record keeper will
charge the agency the additional amount. If the dollar amount posted to
the participant's account is less than the dollar amount of the makeup
or late contribution, or late loan payment, the difference between the
amount of the contribution and the amount posted will be forfeited to
the TSP.
(e) Posting of multiple contributions. If the TSP record keeper
posts multiple makeup or late contributions or late loan payments with
different ``as of'' dates for a participant on the same business day,
the amount of breakage charged to the employing agency or forfeited to
the TSP will be determined separately for each transaction, without
netting any gains or losses attributable to different ``as of'' dates.
In addition, gains and losses from different sources of contributions
or different TSP core funds will not be netted against each other.
Instead, breakage will be determined separately for each as-of date,
TSP core fund, and source of contributions.
Sec. 1605.3 [Amended]
0
22. Amend Sec. 1605.3 as follows:
0
a. In paragraph (a), remove ``TSP'' and add in its place ``TSP record
keeper'', remove ``contribution allocation'' and add in its place
``investment election'', and remove ``interfund transfer'' and add in
its place ``fund reallocation and fund transfer''; and
0
b. In paragraphs (b) and (c), remove ``TSP'' and add in its place ``TSP
record keeper''.
Sec. 1605.11 [Amended]
0
23. Amend Sec. 1605.11 as follows:
0
a. In paragraph (a), remove ``Board'' and add in its place ``Board and/
or the TSP record keeper'';
0
b. In paragraph (b) introductory text, remove ``Agency Automatic (1%)
Contributions'' and add in its place ``agency automatic (1%)
contributions'' and remove ``Agency Matching Contributions'' and add in
its place ``agency matching contributions'';
0
c. In paragraph (b)(2), remove ``TSP'' and add in its place ``TSP
record keeper'';
0
d. In paragraph (c)(1), remove ``agency'' and add in its place
``employing agency'';
0
e. In paragraph (c)(4), remove the last two sentences.
0
f. In paragraph (c)(5), remove ``contribution allocation'' and add in
its place ``investment election'' and remove
[[Page 31677]]
``TSP Fund'' and add in its place ``TSP core fund'';
0
g. In paragraph (c)(9), in the second to last sentence, remove
``matching contributions'' and add in its place ``agency matching
contributions''; and
0
h. In paragraph (c)(13), remove ``TSP'' and add in its place ``TSP
record keeper''.
0
24. Amend Sec. 1605.12 as follows:
0
a. Revise paragraphs (a), (b) introductory text, (c) introductory text,
(c)(1) introductory text, (c)(1)(i), (c)(2) introductory text,
(c)(2)(ii), and (d)(4);
0
b. Add a heading for paragraph (f); and
0
c. Revise paragraph (f)(1).
The revisions and addition read as follows:
Sec. 1605.12 Removal of erroneous contributions.
(a) Applicability. This section applies to the removal of funds
erroneously contributed to the TSP. This action is called a negative
adjustment, and agencies may only request negative adjustments of
erroneous contributions made on or after January 1, 2000. Excess
contributions addressed by this section include, for example, excess
employee contributions that result from employing agency error and
excess employer contributions. This section does not address excess
contributions resulting from a FERCCA correction; those contributions
are addressed in Sec. 1605.14.
(b) Method of correction. Negative adjustment records must be
submitted by employing agencies in accordance with this part and any
other procedures provided by the Board and/or the TSP record keeper.
* * * * *
(c) Processing negative adjustments. To determine current value, a
negative adjustment will be allocated among the TSP core funds as it
would have been allocated on the attributable pay period (as reported
by the employing agency). The TSP record keeper will, for each source
of contributions and TSP core fund:
(1) If the attributable pay date for the erroneous contribution is
on or before the date TSP accounts were converted to shares (and on or
after January 1, 2000), the TSP record keeper will, for each source of
contributions and investment fund:
(i) Determine the dollar value of the amount to be removed by using
the daily returns for the applicable TSP core fund;
* * * * *
(2) If the attributable pay date of the negative adjustment is
after the date TSP accounts were converted to shares, the TSP record
keeper will, for each source of contributions and TSP core fund:
* * * * *
(ii) Multiply the price per share on the date the adjustment is
posted by the number of shares calculated in paragraph (c)(2)(i) of
this section. If the contribution was erroneously contributed to a
Lifecycle fund that is retired on the date the adjustment is posted,
the share price of the L Income Fund will be used.
(d) * * *
(4) If all employee contributions are removed from a participant's
account under the rules set forth in this section, the earnings
attributable to those contributions will remain in the account until
the participant removes them with a TSP withdrawal. If the participant
is not eligible to maintain a TSP account, the employing agency must
submit an employee data record to the TSP record keeper indicating that
the participant has separated from Government service (this will allow
the TSP-ineligible participant to make a post-employment distribution
election).
* * * * *
(f) Multiple negative adjustments. (1) If multiple negative
adjustments for the same attributable pay date for a participant are
posted on the same business day, the amount removed from the
participant's account and used to offset TSP administrative expenses,
or returned to the employing agency, will be determined separately for
each adjustment. Earnings and losses for erroneous contributions made
on different dates will not be netted against each other. In addition,
for a negative adjustment for any attributable pay date, gains and
losses from different sources of contributions or different TSP core
funds will not be netted against each other. Instead, for each
attributable pay date each source of contributions and each TSP core
fund will be treated separately for purposes of these calculations. The
amount computed by applying the rules in this section will be removed
from the participant's account pro rata from all funds, by source,
based on the allocation of the participant's account among the TSP core
funds when the transaction is posted; and
* * * * *
0
25. Amend Sec. 1605.13 as follows:
0
a. In paragraph (a)(3), remove ``contribution allocation'' and add in
its place ``investment election'';
0
b. In paragraph (b)(3), remove ``contribution allocation'' and add in
its place ``investment election''; and
0
c. Revise paragraphs (d) and (e).
The revisions read as follows:
Sec. 1605.13 Back pay awards and other retroactive pay adjustments.
* * * * *
(d) Prior withdrawal of TSP account. If a participant has received
a post-employment distribution in any form other than an annuity, and
the separation from Government service upon which the post-employment
distribution was based is reversed, resulting in reinstatement of the
participant without a break in service, the participant will have the
option to restore the amount distributed to his or her TSP account. The
right to restore the distributed funds will expire if the participant
does not notify the TSP record keeper within 90 days of reinstatement.
If the participant returns the funds that were distributed, the number
of shares purchased will be determined by using the share price of the
applicable investment fund on the posting date. Restored funds will not
incur breakage.
(e) Reinstating a loan. Participants who are covered by paragraph
(d) of this section and who elect to return funds that were distributed
may also elect to reinstate a loan which was previously declared to be
a loan foreclosure.
0
26. Amend Sec. 1605.14 by revising paragraphs (a)(2), (b)(4), (c)(3),
(f)(3), and (g)(2) to read as follows:
Sec. 1605.14 Misclassified retirement system coverage.
(a) * * *
(2) All agency contributions that were made to a CSRS participant's
account will be forfeited. An employing agency may submit a negative
adjustment record to request the return of an erroneous contribution
that has been in the participant's account for less than one year.
(b) * * *
(4) If the retirement coverage correction is a FERCCA correction,
the employing agency must submit makeup employee contributions on late
payment records. The participant is entitled to breakage on
contributions from all sources. Breakage will be calculated pursuant to
Sec. 1605.2. If the retirement coverage correction is not a FERCCA
correction, the employing agency must submit makeup employee
contributions on current payment records; in such cases, the employee
is not entitled to breakage. Agency makeup contributions may be
submitted on either current or late payment records; and
* * * * *
(c) * * *
(3) The TSP record keeper will consider a participant to be
separated
[[Page 31678]]
from Government service for all TSP purposes and the employing agency
must submit an employee data record to reflect separation from
Government service. If the participant has an outstanding loan, it will
be subject to the provisions of part 1655 of this chapter. The
participant may make a TSP post-employment distribution election
pursuant to 5 CFR part 1650, subpart B, and the distribution will be
subject to the provisions of 5 CFR 1650.60(b).
* * * * *
(f) * * *
(3) The employing agency must, under the rules of Sec. 1605.11,
make agency automatic (1%) contributions and agency matching
contributions on employee contributions that were made while the
participant was misclassified; and
* * * * *
(g) * * *
(2) All agency contributions that were made to a non-BRS
participant's account will be forfeited. An employing service may
submit a negative adjustment record to request the return of an
erroneous contribution that has been in the participant's account for
less than one year.
Sec. 1605.15 [Amended]
0
27. Amend Sec. 1605.15 as follows:
0
a. In paragraph (b), remove ``TSP'' and add in its place ``TSP record
keeper''; and
0
b. In paragraph (d), remove ``TSP'' and add in its place ``TSP record
keeper''.
0
28. Amend Sec. 1605.16 by revising paragraphs (a)(1) and (2) and
(b)(1) and (2) to read as follows:
Sec. 1605.16 Claims for correction of employing agency errors; time
limitations.
(a) * * *
(1) Upon discovery of an error made within the past six months
involving the correct or timely remittance of payments to the TSP
record keeper (other than a retirement system misclassification error,
as covered in paragraph (c) of this section), an employing agency must
promptly correct the error on its own initiative. If the error was made
more than six months before it was discovered, the agency may exercise
sound discretion in deciding whether to correct it, but, in any event,
the agency must act promptly in doing so.
(2) For errors involving incorrect dates of birth caused by
employing agency error that result in default investment in the wrong L
Fund, the employing agency must promptly notify the TSP record keeper
that the participant is entitled to breakage if the error is discovered
within 30 days of either the date the TSP record keeper provides the
participant with a notice reflecting the error or the date the TSP or
its record keeper makes available on its website a participant
statement reflecting the error, whichever is earlier. If it is
discovered after that time, the employing agency may use its sound
discretion in deciding whether to pay breakage, but, in any event, must
act promptly in doing so.
(b) * * *
(1) If an agency fails to discover an error of which a participant
has knowledge involving the correct or timely remittance of a payment
to the TSP record keeper (other than a retirement system
misclassification error as covered by paragraph (c) of this section),
the participant may file a claim with his or her employing agency to
have the error corrected without a time limit. The agency must promptly
correct any such error for which the participant files a claim within
six months of its occurrence; if the participant files a claim to
correct any such error after that time, the agency may do so at its
sound discretion.
(2) For errors involving incorrect dates of birth that result in
default investment in the wrong L Fund of which a participant or
beneficiary has knowledge, he or she may file a claim for breakage with
the employing agency no later than 30 days after either the date the
TSP record keeper provides the participant with a notice reflecting the
error or the date the TSP or its record keeper makes available on its
website a participant statement reflecting the error, whichever is
earlier. The employing agency must promptly notify the TSP record
keeper that the participant is entitled to breakage.
* * * * *
0
29. Amend Sec. 1605.17 by revising paragraphs (b) and (c)(1) through
(3) to read as follows:
Sec. 1605.17 Redesignation and recharacterization.
* * * * *
(b) Method of correction. The employing agency must promptly submit
a redesignation record or a recharacterization record in accordance
with this part and the procedures provided to employing agencies by the
Board and/or the TSP record keeper in bulletins or other guidance.
(c) * * *
(1) Upon receipt of a properly submitted redesignation record, the
TSP record keeper shall treat the erroneously submitted contribution
(and associated positive earnings) as if the contribution had been made
to the correct balance on the date that it was contributed to the wrong
balance. The TSP record keeper will adjust the participant's
traditional balance and the participant's Roth balance accordingly. The
TSP record keeper will also adjust the participant's Roth initiation
date as necessary.
(2) Upon receipt of a properly submitted recharacterization record
or recharacterization request, the TSP record keeper will update the
tax characterization of the erroneously characterized contribution.
(3) Agency automatic (1%) contributions and agency matching
contributions cannot be redesignated as Roth contributions or
recharacterized as tax-exempt contributions.
* * * * *
0
30. Revise Sec. 1605.21 to read as follows:
Sec. 1605.21 Plan-paid breakage and other corrections.
(a) Plan-paid breakage. (1) Subject to paragraph (a)(3) of this
section, if, because of an error committed by the Board or the TSP
record keeper, a participant's account is not credited or charged with
the investment gains or losses the account would have received had the
error not occurred, the account will be credited accordingly.
(2) Errors that warrant the crediting of breakage under paragraph
(a)(1) of this section include, but are not limited to:
(i) Delay in crediting contributions or other money to a
participant's account;
(ii) Improper issuance of a loan or TSP withdrawal payment to a
participant or beneficiary which requires the money to be restored to
the participant's account; and
(iii) Investment of all or part of a participant's account in the
wrong investment fund(s).
(3) A participant will not be entitled to breakage under paragraph
(a)(1) of this section if the participant had the use of the money on
which the investment gains would have accrued.
(4) If the participant continued to have a TSP account, or would
have continued to have a TSP account but for the Board or TSP record
keeper's error, the TSP record keeper will compute gains or losses
under paragraph (a)(1) of this section for the relevant period based
upon the investment funds in which the affected money would have been
invested had the error not occurred. If the participant did not have,
and should not have had, a TSP account during this period, then the TSP
will use the rate of return set forth in Sec. 1605.2(b) for the
relevant period and return the money to the participant.
(b) Other corrections. The Executive Director may, in his or her
discretion
[[Page 31679]]
and consistent with the requirements of applicable law, correct any
other errors not specifically addressed in this section, including
payment of breakage, if the Executive Director determines that the
correction would serve the interests of justice and fairness and equity
among all participants of the TSP.
Sec. 1605.22 [Amended]
0
31. Amend Sec. 1605.22, in the last sentence of paragraph (d)(1), by
removing ``record keeper's'' and adding in its place ``TSP record
keeper's''.
0
32. Amend Sec. 1605.31 by revising paragraphs (c)(1) through (5) and
(d) to read as follows:
Sec. 1605.31 Contributions missed as a result of military service.
* * * * *
(c) * * *
(1) The employee is entitled to receive the agency automatic (1%)
contributions that he or she would have received had he or she remained
in civilian service or pay status. Within 60 days of the employee's
reemployment or restoration to pay status, the employing agency must
calculate the makeup agency automatic (1%) contributions and report
those contributions to the record keeper, subject to any reduction in
agency automatic (1%) contributions required by paragraph (c)(5) of
this section.
(2) An employee who contributed to a uniformed services TSP account
during the period of military service is also immediately entitled to
receive makeup agency matching contributions to his or her civilian
account for the employee contributions to the uniformed services
account that were deducted from his or her basic pay, subject to any
reduction in agency matching contributions required by paragraph (c)(4)
of this section. However, an employee is not entitled to receive makeup
agency matching makeup contributions on contributions that were
deducted from his or her incentive pay or special pay, including bonus
pay, while performing military service.
(3) An employee who makes up missed contributions is entitled to
receive attributable makeup agency matching contributions (unless the
employee has already received the maximum amount of matching
contributions, as described in paragraphs (c)(2) and (4) of this
section).
(4) If the employee received uniformed services agency matching
contributions, the makeup agency matching contributions will be reduced
by the amount of the uniformed services agency matching contributions.
(5) If the employee received uniformed services agency automatic
(1%) contributions, the agency automatic (1%) contributions will be
reduced by the amount of the uniformed services agency automatic (1%)
contributions.
(d) Breakage. The employee is entitled to breakage on agency
contributions made under paragraph (c) of this section. Breakage will
be calculated based on the investment election(s) on file for the
participant during the period of military service.
PART 1620--EXPANDED AND CONTINUING ELIGIBILITY
0
33. The authority citation for part 1620 continues to read as follows:
Authority: 5 U.S.C. 8474(b)(5) and (c)(1). Subpart C also issued
under 5 U.S.C. 8440a(b)(7), 8440b(b)(8), and 8440c(b)(8). Subpart D
also issued under sec. 1043(b) of Pub. L. 104-106, 110 Stat. 186,
and sec. 7202(m)(2) of Pub. L. 101-508, 104 Stat. 1388. Subpart E
also issued under 5 U.S.C. 8432b(1) and 8440e.
0
34. Revise Sec. 1620.3 to read as follows:
Sec. 1620.3 Contributions.
The employing agency is responsible for transmitting to the TSP
record keeper, in accordance with the TSP record keeper's procedures,
any employee and employer contributions that are required by this part.
Sec. 1620.14 [Amended]
0
35. Amend Sec. 1620.14 as follows:
0
a. In the section heading, remove ``record keeper'' and add in its
place ``TSP record keeper''; and
0
b. In paragraph (b), remove ``Board'' and add in its place ``its''.
Sec. 1620.22 [Amended]
0
36. Amend Sec. 1620.22 as follows:
0
a. In paragraph (a) introductory text, remove ``withdrawal'' and add in
its place ``distribution''; and
0
b. In paragraph (a)(2) introductory text, remove ``withdrawal'' and add
in its place ``distribution''.
0
37. Revise Sec. 1620.35 to read as follows:
Sec. 1620.35 Loan payments.
NAF instrumentalities must deduct and transmit TSP loan payments
for employees who elect to be covered by CSRS or FERS to the TSP record
keeper in accordance with 5 CFR part 1655 and the TSP record keeper's
procedures. Loan payments may not be deducted and transmitted for
employees who elect to be covered by the NAF retirement system. Such
employees will be considered to have separated from Government service
and may continue making loan repayments in accordance with 5 CFR part
1655 and the TSP record keeper's procedures.
Sec. 1620.42 [Amended]
0
38. Amend Sec. 1620.42, in paragraph (c)(1), by removing the word
``form''.
Sec. 1620.43 [Amended]
0
39. Amend Sec. 1620.43, in the section heading and paragraphs (a) and
(c), by removing ``record keeper'' and adding in its place ``TSP record
keeper''.
0
40. Revise Sec. 1620.45 to read as follows:
Sec. 1620.45 Suspending TSP loans, restoring post-employment
distributions, and reversing loan foreclosures.
(a) Suspending TSP loans during nonpay status. If the TSP record
keeper is notified that an employee entered into a nonpay status to
perform military service, any outstanding TSP loan from a civilian TSP
account will be suspended, that is, it will not be declared a loan
foreclosure while the employee is performing military service.
(1) Interest will accrue on the loan balance during the period of
suspension. When the employee returns to civilian pay status, the
employing agency will resume deducting loan payments from the
participant's basic pay and the TSP record keeper will reamortize the
loan (which will include interest accrued during the period of military
service). The maximum loan repayment term will be extended by the
employee's period of military service. Consequently, when the employee
returns to pay status, the TSP record keeper must receive documentation
to show the beginning and ending dates of military service.
(2) The TSP record keeper may close the loan account and declare it
to be a loan foreclosure if the TSP record keeper does not receive
documentation that the employee entered into nonpay status. However,
this can be reversed in accordance with paragraph (c) of this section.
(b) Restoring post-employment distributions. An employee who
separates from civilian service to perform military service and who
receives an automatic payment pursuant to Sec. 1650.11 may return to
the TSP an amount equal to the amount of the payment. The employee must
notify the TSP record keeper of his or her intent to return the
distributed funds within 90 days of the date the employee returns to
civilian service or pay status; if the employee is eligible to return a
distribution, the TSP record keeper will
[[Page 31680]]
then inform the employee of the actions that must be taken to return
the funds.
(c) Reversing loan foreclosures. An employee may request that a
loan foreclosure be reversed it resulted from the employee's separation
or placement in nonpay status to perform military service. The TSP
record keeper will reverse the loan foreclosure under the process
described as follows:
(1) An employee who received a post-employment distribution when he
or she separated to perform military service can have a loan
foreclosure reversed only if the distributed amount is returned as
described in paragraph (b) of this section;
(2) A loan foreclosure can be reversed either by reinstating the
loan or by repaying it in full. The TSP loan can be reinstated only if
the employee agrees to repay the loan within the maximum loan repayment
term plus the length of military service, and if, after reinstatement
of the loan, the employee will have no more than two outstanding loans,
only one of which is a residential loan; and
(3) The employee must notify the TSP record keeper of his or her
intent to reverse a loan foreclosure within 90 days of the date the
employee returns to civilian service or pay status; if the employee is
eligible to reverse a loan foreclosure, the TSP record keeper will then
inform the employee of the actions that must be taken to reverse the
distribution.
(d) Breakage. Employees will not receive breakage on amounts
returned to their accounts under this section.
Sec. 1620.46 [Amended]
0
41. Amend Sec. 1620.46, in paragraphs (b) an (d), by removing ``record
keeper'' and adding in its place ``TSP record keeper''.
PART 1631--AVAILABILITY OF RECORDS
Subpart A--Production or Disclosure of Records Under the Freedom of
Information Act, 5 U.S.C. 552
0
42. The authority citation for subpart A of part 1631 continues to read
as follows:
Authority: 5 U.S.C. 552.
0
43. Amend Sec. 1631.3 by revising paragraphs (a)(3) and (7) through
(11) and removing paragraph (a)(12) to read as follows:
Sec. 1631.3 Organization and functions.
(a) * * *
(3) The Office of Participant Services;
* * * * *
(7) The Office of Planning and Risk;
(8) The Office of External Affairs;
(9) The Office of Chief Financial Officer;
(10) The Office of Resource Management; and
(11) The Office of Technology Services.
* * * * *
PART 1640--PERIODIC PARTICIPANT STATEMENTS
0
44. 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).
Sec. 1640.2 [Amended]
0
45. Amend Sec. 1640.2 by removing ``Board'' and adding in its place
``TSP or its record keeper''.
0
46. Revise Sec. 1640.3 to read as follows:
Sec. 1640.3 Statement of individual account.
In the quarterly statements, the TSP or its record keeper will
furnish each participant with the following information concerning the
participant's individual account:
(a) Name and account number under which the account is established.
(b) Statement whether the participant has a beneficiary designation
on file with the TSP record keeper.
(c) Investment election that is current at the end of the statement
period.
(d) Beginning and ending dates of the period covered by the
statement.
(e) The following information for and, as of the close of business
on the ending date of, the period covered by the statement:
(1) The total account balance and tax-exempt balance, if
applicable;
(2) The account balance for each source of contributions;
(3) The account balance and activity in each TSP core fund,
including the dollar amount of the transaction, the share price, and
the number of shares;
(4) Loan information and activity, if applicable; and
(5) The mutual fund window account balance, if applicable.
(f) Any other information concerning the account that the Executive
Director determines should be included in the statement.
0
47. Revise Sec. 1640.4 to read as follows:
Sec. 1640.4 Account transactions.
(a) Where relevant, the following transactions will be reported in
each individual account statement:
(1) Contributions;
(2) Withdrawals;
(3) Forfeitures;
(4) Loan disbursements and repayments;
(5) Fund reallocations and fund transfers among TSP core funds;
(6) Adjustments to prior transactions;
(7) Rollovers from traditional individual retirement accounts
(IRAs) and eligible employer plans within the meaning of section 402(c)
of the Internal Revenue Code (26 U.S.C. 402(c)); and
(8) Any other transaction that the Executive Director determines
will affect the status of the individual account.
(b) Where relevant, the statement will contain the following
information concerning each transaction identified in paragraph (a) of
this section:
(1) Type of transaction;
(2) TSP core funds affected;
(3) Amount of the transaction (in dollars); and
(4) Any other information the Executive Director deems relevant.
0
48. Revise Sec. 1640.5 to read as follows:
Sec. 1640.5 TSP core fund information.
The TSP or its record keeper will provide to each participant each
calendar year information concerning each of the TSP core funds,
including:
(a) A summary description of the type of investments made by the
fund, written in a manner that will allow the participant to make an
informed decision; and
(b) The performance history of the type of investments made by the
fund, covering the five-year period preceding the date of the
evaluation.
0
49. Revise Sec. 1640.6 to read as follows:
Sec. 1640.6 Methods of providing information.
The TSP or its record keeper will furnish the information described
in this part to participants by making it available on the TSP website.
A participant can request paper copies of that information by calling
the ThriftLine, submitting a request through the TSP website, or by
writing to the TSP record keeper.
PART 1645--CALCULATION OF SHARE PRICES
0
50. The authority citation for part 1645 continues to read as follows:
Authority: 5 U.S.C. 8439(a)(3) and 8474.
0
51. Revise Sec. 1645.2 to read as follows:
Sec. 1645.2 Posting of transactions.
Contributions, loan payments, loan disbursements, withdrawals, fund
reallocations, fund transfers, and other transactions will be posted in
dollars and in shares by source and by TSP core fund to the appropriate
individual account by the TSP record keeper, using the share price for
the date the transaction is posted.
[[Page 31681]]
Sec. 1645.3 [Amended]
0
52. Amend Sec. 1645.3 as follows:
0
a. In the section heading and paragraph (a), remove ``TSP Fund'' and
add in its place ``TSP core fund''; and
0
b. In paragraph (c), remove ``each TSP fund'' and add in its place
``each TSP core fund''.
0
53. Amend Sec. 1645.4 by revising the section heading, introductory
text, and paragraphs (a) and (c) to read as follows:
Sec. 1645.4 Administrative expenses attributable to each TSP core
fund.
A portion of the administrative expenses accrued during each
business day will be charged to each TSP core fund. A fund's respective
portion of administrative expenses will be determined as follows:
(a) Accrued administrative expenses (other than those described in
paragraph (b) of this section) will be reduced by:
(1) Accrued forfeitures;
(2) The fees described in Sec. Sec. 1601.53(a) (relating to the
mutual fund window), 1655.21 (relating to loans), 1653.6 (relating to
retirement benefits court orders), and 1653.16 (relating to child
support court orders) of this chapter; and
(3) Accrued earnings on forfeitures, abandoned accounts, unapplied
deposits, and fees described in paragraph (a)(2) of this section.
* * * * *
(c) The amount of accrued administrative expenses not covered by
forfeitures, fees, and earnings under paragraph (a) of this section,
and not described in paragraph (b) of this section, will be charged on
a pro rata basis to all TSP core funds, based on the respective fund
balances on the last business day of the prior month end.
Sec. 1645.5 [Amended]
0
54. Amend Sec. 1645.5, in paragraph (a), as follows:
0
a. Remove ``TSP Fund'' and adding in its place ``TSP core fund''; and
0
b. Remove ``two decimal places'' and add in its place ``four decimal
places''.
Sec. 1645.6 [Amended]
0
55. Amend Sec. 1645.6 by removing ``TSP Fund'' and adding in its place
``TSP core fund''.
PART 1650--METHODS OF WITHDRAWING FUNDS FROM THE THRIFT SAVINGS
PLAN
0
56. 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
57. Amend Sec. 1650.1, in paragraph (b), as follows:
0
a. Remove the definition of ``Post-employment withdrawal''; and
0
b. Add in alphabetical order definitions for ``Post-employment
distribution'' and ``TSP withdrawal''.
The additions read as follows:
Sec. 1650.1 Definitions.
* * * * *
(b) * * *
Post-employment distribution means a distribution from the TSP that
is available to a participant who is separated from Government service.
* * * * *
TSP withdrawal means a post-employment distribution and/or an in-
service withdrawal.
0
58. Amend Sec. 1650.2 by revising paragraphs (a) through (c), (f), and
(h) to read as follows:
Sec. 1650.2 Eligibility and general rules for a TSP withdrawal.
(a) A participant who is separated from Government service can
elect a distribution of all or a portion of his or her account balance
by one or a combination of the distribution methods described in
subpart B of this part.
(b) A post-employment distribution will not be paid unless TSP
records indicate that the participant is separated from Government
service. The TSP record keeper will, when possible, cancel a pending
post-employment distribution election upon receiving information from
an employing agency that a participant is no longer separated.
(c) A participant cannot make a full post-employment distribution
of his or her account until any outstanding TSP loan has either been
repaid in full or declared to be a loan foreclosure. An outstanding TSP
loan will not affect a participant's eligibility for a partial post-
employment distribution or an in-service withdrawal.
* * * * *
(f) A participant can elect to have any portion of a single or
installment payment that is not rolled over to an eligible employer
plan, traditional IRA, or Roth IRA deposited directly, by electronic
funds transfer (EFT), into a savings or checking account at a financial
institution in the United States.
* * * * *
(h) A participant may elect to have his or her TSP withdrawal
distributed from the participant's traditional balance only, Roth
balance only, or pro rata from the participant's traditional and Roth
balances. Any distribution from the traditional balance will be
prorated between the tax-deferred balance and any tax-exempt balance.
Any distribution from the Roth balance will be prorated between
contributions in the Roth balance and earnings in the Roth balance. In
addition, all TSP withdrawals will be distributed pro rata from all TSP
core funds in which the participant's account is invested. All prorated
amounts will be based on the balances in each TSP core fund or source
of contributions on the day the TSP withdrawal is processed.
0
59. Revise Sec. 1650.3 to read as follows:
Sec. 1650.3 Frozen accounts.
(a) All distributions from the TSP are subject to the rules
relating to spousal rights (found in subpart G of this part) and to
domestic relations orders, alimony and child support legal process, and
child abuse enforcement orders (found in 5 CFR part 1653).
(b) A participant may not take a distribution of any portion of his
or her account balance if the account is frozen due to a pending
retirement benefits court order, an alimony or child support
enforcement order, or a child abuse enforcement order, or because a
freeze has been placed on the account by the TSP record keeper for
another reason.
0
60. Revise Sec. 1650.4 to read as follows:
Sec. 1650.4 Certification of truthfulness.
By completing a TSP withdrawal request, the participant certifies,
under penalty of perjury, that all information provided to the TSP
record keeper during the withdrawal process is true and complete,
including statements concerning the participant's marital status and,
where applicable, the spouse's email or physical address at the time
the application is filed or the current spouse's consent to the
withdrawal.
0
61. Revise Sec. 1650.5 to read as follows:
Sec. 1650.5 Returned funds.
If a TSP withdrawal is returned as undeliverable, the TSP record
keeper will attempt to locate the participant. If the participant does
not respond within 90 days, the returned funds will be forfeited to the
TSP. The participant can claim the forfeited funds, although they will
not be credited with TSP investment fund returns.
0
62. Revise Sec. 1650.6 to read as follows:
Sec. 1650.6 Deceased participant.
(a) The TSP record keeper will cancel a pending TSP withdrawal
request if it receives notice, in the form and manner prescribed by the
TSP record keeper, that a participant is deceased. The TSP record
keeper will also cancel an annuity purchase made on or after the
participant's date of death but before annuity payments have begun, and
the
[[Page 31682]]
annuity vendor will return the funds to the TSP.
(b) If the TSP record keeper processes a TSP withdrawal request
before being notified that a participant is deceased, the funds cannot
be returned to the TSP.
0
63. Revise Sec. 1650.11 to read as follows:
Sec. 1650.11 Post-employment distribution elections.
(a) Subject to the restrictions in this subpart, participants may
elect a distribution of all or a portion of their TSP accounts in a
single payment, a series of installment payments, a life annuity, or
any combination of these options.
(b) If a participant's account balance is less than $5.00 when he
or she separates from Government service, the balance will
automatically be forfeited to the TSP. The participant can reclaim the
money by contacting the TSP record keeper and requesting the amount
that was forfeited; however, TSP investment earnings will not be
credited to the account after the date of the forfeiture.
(c) Provided that the participant has not submitted a post-
employment distribution election prior to the date the automatic
payment is processed, if a participant's vested account balance is less
than $200 when he or she separates from Government service, the TSP
record keeper will automatically pay the balance in a single payment to
the participant at his or her TSP address of record. The participant
will not be eligible for any other payment option or be allowed to
remain in the TSP.
(d) Only one post-employment distribution election per account will
be processed in any 30-calendar-day period.
0
64. Revise Sec. 1650.12 to read as follows:
Sec. 1650.12 Single payment.
Provided that, in the case of a partial distribution, the amount
elected is not less than $1,000, a participant can elect a distribution
of all or a portion of his or her account balance in a single payment.
0
65. Amend Sec. 1650.13 by revising paragraphs (a) introductory text,
(a)(2), (f), and (g) to read as follows:
Sec. 1650.13 Installment payments.
(a) A participant can elect a distribution of all or a portion of
the account balance in a series of substantially equal installment
payments, to be paid on a monthly, quarterly, or annual basis in one of
the following manners:
* * * * *
(2) An installment payment amount calculated based on life
expectancy. Payments based on life expectancy are determined using the
factors set forth in the Internal Revenue Service life expectancy
tables codified at 26 CFR 1.401(a)(9)-9(b) and (c). The installment
payment amount is calculated by dividing the account balance by the
factor from the IRS life expectancy tables based upon the participant's
age as of his or her birthday in the year payments are to begin. This
amount is then divided by the number of installment payments to be made
per calendar year to yield the installment payment amount. In
subsequent years, the installment payment amount is recalculated in
January by dividing the prior December 31 account balance by the factor
in the IRS life expectancy tables based upon the participant's age as
of his or her birthday in the year payments will be made. There is no
minimum amount for an installment payment calculated based on this
method.
* * * * *
(f) A participant receiving installment payments may change the
investment of his or her account balance among the TSP core funds and
may invest through the mutual fund window as provided in 5 CFR part
1601.
(g) Upon receiving information from an employing agency that a
participant receiving installment payments is no longer separated, the
TSP record keeper will cancel all pending and future installment
payments.
0
66. Amend Sec. 1650.14 by revising paragraphs (a), (b), (d), (e),
(g)(3)(iii), and (h) to read as follows:
Sec. 1650.14 Annuities.
(a) A participant electing a post-employment distribution can use
all or a portion of his or her total account balance, traditional
balance only, or Roth balance only to purchase a life annuity.
(b) If a participant has a traditional balance and a Roth balance
and elects to use all or a portion of his or her total account balance
to purchase a life annuity, the TSP record keeper must purchase two
separate annuity contracts for the participant: One from the portion of
the withdrawal distributed from his or her traditional balance and one
from the portion of the withdrawal distributed from his or her Roth
balance.
* * * * *
(d) Unless an amount must be paid directly to the participant to
satisfy any applicable minimum distribution requirement of the Internal
Revenue Code, the TSP record keeper will purchase the annuity
contract(s) from the TSP's annuity vendor using the participant's
entire account balance or the portion specified. In the event that a
minimum distribution is required by section 401(a)(9) of the Internal
Revenue Code before the date of the first annuity payment, the TSP
record keeper will compute that amount prior to purchasing the annuity
contract(s) and pay it directly to the participant.
(e) An annuity will provide a payment for life to the participant
and, if applicable, to the participant's survivor, in accordance with
the type of annuity chosen. The TSP annuity vendor will make the first
annuity payment approximately 30 days after the TSP record keeper
purchases the annuity.
* * * * *
(g) * * *
(3) * * *
(iii) A participant can establish that a person not described in
paragraph (g)(3)(ii) of this section has an insurable interest in him
or her by submitting, with the annuity request, an affidavit from a
person other than the participant or the joint annuitant that
demonstrates that the designated joint annuitant has an insurable
interest in the participant (as described in paragraph (g)(3)(i) of
this section).
* * * * *
(h) For each distribution election in which the participant elects
to purchase an annuity with some or all of the amount distributed, if
the TSP record keeper must purchase two annuity contracts, the type of
annuity, the annuity features, and the joint annuitant (if applicable)
selected by the participant will apply to both annuities purchased. For
each distribution election, a participant cannot elect more than one
type of annuity by which to receive a distribution, or portion thereof,
from any one account.
* * * * *
0
67. Amend Sec. 1650.16 by revising paragraphs (c) and (d) to read as
follows:
Sec. 1650.16 Required minimum distributions.
* * * * *
(c) In the event that a separated participant does not withdraw
from his or her account an amount sufficient to satisfy his or her
required minimum distribution for the year, the TSP record keeper will
automatically distribute the necessary amount on or before the
applicable date described in paragraph (a) of this section.
(d) The TSP record keeper will disburse required minimum
distributions described in paragraph (c) of this section pro rata from
the
[[Page 31683]]
participant's traditional balance and the participant's Roth balance.
* * * * *
0
68. Revise Sec. 1650.17 to read as follows:
Sec. 1650.17 Changes and cancellation of a post-employment
distribution request.
(a) Before processing. A pending post-employment distribution
request can be cancelled if the cancellation is received and can be
processed before the TSP record keeper processes the request. However,
the TSP record keeper processes post-employment distribution requests
each business day and those that are entered into the record keeping
system by 12 noon eastern time will ordinarily be processed that night;
those entered after 12 noon eastern time will be processed the next
business day. Consequently, a cancellation request must be received and
entered into the system before the cut-off for the day the request is
submitted for processing in order to be effective to cancel the post-
employment distribution.
(b) After processing. A post-employment distribution election
cannot be changed or cancelled after the withdrawal request has been
processed. Consequently, funds disbursed cannot be returned to the TSP.
(c) Change in installment payments. If a participant is receiving a
series of installment payments, with appropriate supporting
documentation as required by the TSP record keeper, the participant can
change at any time: The payment amount or frequency (including stopping
installment payments), the address to which the payments are mailed,
the amount of federal tax withholding, whether or not a payment will be
rolled over (if permitted) and the portion to be rolled over, the
method by which direct payments to the participant are being sent (EFT
or check), the identity of the financial institution to which payments
are rolled over or sent directly to the participant by EFT, or the
identity of the EFT account.
0
69. Revise subpart C to read as follows:
Subpart C--Procedures for Post-Employment Distributions
Sec.
1650.21 Information provided by employing agency or service.
1650.22 Accounts of $200 or more.
1650.23 Accounts of less than $200.
1650.24 How to obtain a post-employment distribution.
1650.25 Rollovers from the TSP.
Subpart C--Procedures for Post-Employment Distributions
Sec. 1650.21 Information provided by employing agency or service.
When a TSP participant separates from Government service, his or
her employing agency or service must report the separation and the date
of separation to the TSP record keeper. Until the TSP record keeper
receives this information from the employing agency or service, it will
not pay a post-employment distribution.
Sec. 1650.22 Accounts of $200 or more.
A participant whose account balance is $200 or more must submit a
properly completed distribution election to request a post-employment
distribution of his or her account balance.
Sec. 1650.23 Accounts of less than $200.
Upon receiving information from the employing agency that a
participant has been separated for more than 60 days and that any
outstanding loans have been closed, provided the participant has not
made a distribution election before the distribution is processed, if
the account balance is $5.00 or more but less than $200, the TSP record
keeper will automatically distribute the entire amount of his or her
account balance. The TSP record keeper will not pay this amount by EFT.
The participant may not elect to leave this amount in the TSP, nor will
the TSP record keeper roll over any automatically distributed amount to
an eligible employer plan, traditional IRA, or Roth IRA. However, the
participant may make an indirect rollover of this payment into an
eligible employer plan, traditional IRA, or Roth IRA to the extent the
roll over is permitted by the Internal Revenue Code.
Sec. 1650.24 How to obtain a post-employment distribution.
To request a post-employment distribution, a participant must
initiate a request in the form and manner prescribed by the TSP record
keeper.
Sec. 1650.25 Rollovers from the TSP.
(a) The TSP record keeper will, at the participant's election, roll
over all or any portion of an eligible rollover distribution (as
defined by section 402(c) of the Internal Revenue Code) directly to an
eligible employer plan or an IRA.
(b) If a post-employment distribution includes a payment from a
participant's traditional balance and a payment from the participant's
Roth balance, the TSP record keeper will, at the participant's
election, roll over all or a portion of the payment from the
traditional balance to a single plan or IRA and all or a portion of the
payment from the Roth balance to another plan or IRA. The TSP record
keeper will also allow the traditional and Roth portions of a payment
to be rolled over to the same plan or IRA but, for each type of
balance, the election must be made separately by the participant and
each type of balance will be rolled over separately. However, the TSP
record keeper will not roll over portions of the participant's
traditional balance to two different institutions or portions of the
participant's Roth balance to two different institutions.
(c) If a post-employment distribution includes an amount from a
participant's Roth balance and the participant elects to roll over that
amount to another eligible employer plan or Roth IRA, the TSP record
keeper will inform the plan administrator or trustee of the start date
of the participant's Roth 5 year non-exclusion period or the
participant's Roth initiation date, and the portion of the distribution
that represents Roth contributions. If a post-employment distribution
includes an amount from a participant's Roth balance and the
participant does not elect to roll over the amount, the TSP record
keeper will inform the participant of the portion of the distribution
that represents Roth contributions.
(d) Tax-exempt contributions can be rolled over only if the IRA or
plan accepts such funds.
(e) The TSP record keeper will roll over distributions only to the
extent that the rollover is permitted by the Internal Revenue Code.
0
70. Amend Sec. 1650.31 by revising paragraph (b) to read as follows:
Sec. 1650.31 Age-based withdrawals.
* * * * *
(b) An age-based withdrawal is an eligible rollover distribution,
so a participant may request that the TSP record keeper roll over all
or a portion of the withdrawal to a traditional IRA, an eligible
employer plan, or a Roth IRA in accordance with Sec. 1650.25.
* * * * *
0
71. Amend Sec. 1650.32 by revising paragraphs (a), (b)(5), and (e) to
read as follows:
Sec. 1650.32 Financial hardship withdrawals.
(a) A participant who has not separated from Government service and
who can certify that he or she has a financial hardship is eligible to
withdraw all or a portion of his or her own contributions to the TSP
(and their attributable earnings) in a single payment to meet certain
specified financial obligations. The amount of a financial hardship
withdrawal request must be at least $1,000.
[[Page 31684]]
(b) * * *
(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 FEMA for individual assistance with respect to the
disaster.
* * * * *
(e) The participant must certify that he or she has a financial
hardship as described on the hardship withdrawal request, and that the
dollar amount of the withdrawal request does not exceed the actual
amount of the financial hardship.
* * * * *
Sec. 1650.33 [Removed and Reserved]
0
72. Remove and reserve Sec. 1650.33.
0
73. Revise Sec. 1650.34 to read as follows:
Sec. 1650.34 Uniqueness of loans and in-service withdrawals.
An outstanding TSP loan cannot be converted into an in-service
withdrawal or vice versa. Funds distributed as an in-service withdrawal
cannot be returned or repaid.
0
74. Revise subpart E to read as follows:
Subpart E--Procedures for In-Service Withdrawals
Sec.
1650.41 How to obtain an age-based withdrawal.
1650.42 How to obtain a financial hardship withdrawal.
1650.43 [Reserved]
Subpart E--Procedures for In-Service Withdrawals
Sec. 1650.41 How to obtain an age-based withdrawal.
To request an age-based withdrawal, a participant must initiate a
request in form and manner prescribed by the TSP record keeper.
Sec. 1650.42 How to obtain a financial hardship withdrawal.
(a) To request a financial hardship withdrawal, a participant must
initiate a request in the form and manner prescribed by the TSP record
keeper.
(b) There is no limit on the number of financial hardship
withdrawals a participant can make; however, the TSP record keeper will
not accept a financial hardship withdrawal request for a period of six
months after a financial hardship disbursement is made.
Sec. 1650.43 [Reserved]
0
75. Amend Sec. 1650.61 by revising paragraphs (a), (b), (c)
introductory text, and (c)(1), (2), (4), and (5) to read as follows:
Sec. 1650.61 Spousal rights applicable to post-employment
distributions.
(a) The spousal rights described in this section apply to total
post-employment distributions when the married participant's vested TSP
account balance exceeds $3,500, to partial post-employment
distributions without regard to the amount of the participant's account
balance, and to any change in the amount or frequency of an existing
installment payment series, including a change from payments calculated
based on life expectancy to payments based on a fixed-dollar amount.
(b) Unless the participant was granted an exception under this
subpart to the spousal notification requirement within 90 days of the
date the distribution request is processed by the TSP record keeper,
the spouse of a CSRS participant is entitled to notice when the
participant applies for a post-employment distribution or makes a
change to the amount or frequency of an existing installment payment
series. The participant must provide the TSP record keeper with the
spouse's correct email or physical address to which to send the
required notice.
(c) The spouse of a FERS or uniformed services participant has a
right to a joint and survivor annuity with a 50 percent survivor
benefit, level payments, and no cash refund based on the participant's
entire account balance when the participant elects a total post-
employment distribution.
(1) The participant may make a different total post-employment
distribution election only if his or her spouse consents to that
election and waives the right to this annuity.
(2) A participant's spouse must consent to any partial post-
employment distribution election (other than an election to purchase
this type of an annuity with such amount) and waive his or her right to
this annuity with respect the amount distributed.
* * * * *
(4) Unless the participant was granted an exception under this
subpart to the spousal consent requirement within 90 days of the date
the distribution request is processed by the TSP record keeper, to show
that the spouse has consented to a different total or partial post-
employment distribution election or installment payment change and
waived the right to this annuity with respect to the applicable amount,
the participant must submit to the TSP record keeper a properly
completed distribution request, signed by his or her spouse.
(5) The spouse's consent and waiver is irrevocable for the
applicable distribution or installment payment change once the TSP
record keeper has received it.
0
76. Amend Sec. 1650.62 by revising paragraphs (b) and (c) to read as
follows:
Sec. 1650.62 Spousal rights applicable to in-service withdrawals.
* * * * *
(b) Unless the participant was granted an exception under this
subpart to the spousal notification requirement within 90 days of the
date on which the withdrawal request is processed by the TSP record
keeper, the spouse of a CSRS participant is entitled to notice when the
participant applies for an in-service withdrawal. The participant must
provide the TSP record keeper with the spouse's correct email or
physical address to which to send the required notice.
(c) Unless the participant was granted an exception under this
subpart to the spousal consent requirement within 90 days of the date
the withdrawal request is processed by the TSP record keeper, before
obtaining an in-service withdrawal, a participant who is covered by
FERS or who is a member of the uniformed services must obtain the
consent of his or her spouse and waiver of the spouse's right to a
joint and survivor annuity described in Sec. 1650.61(c) with respect
to the applicable amount. To show the spouse's consent and waiver, a
participant must submit to the TSP record keeper a properly completed
withdrawal request, signed by his or her spouse. Once a request
containing the spouse's consent and waiver has been submitted to the
TSP record keeper, the spouse's consent is irrevocable for that
withdrawal.
0
77. Amend Sec. 1650.63 by revising paragraphs (a) introductory text,
(a)(3)(i), (b), and (c) to read as follows:
Sec. 1650.63 Executive Director's exception to the spousal
notification requirement.
(a) Whenever this subpart requires the Executive Director to give
notice of an action to the spouse of a CSRS participant, an exception
to this requirement may be granted if the participant establishes to
the satisfaction of the Executive Director that the spouse's
whereabouts cannot be determined. A request for such an exception must
be submitted to the TSP
[[Page 31685]]
record keeper in the form and manner prescribed by the TSP record
keeper, accompanied by the following:
* * * * *
(3) * * *
(i) The participant's statement must give the full name of the
spouse, declare the participant's inability to locate the spouse, state
the last time the spouse's location was known, explain why the spouse's
location is not known currently, and describe the good faith efforts
the participant has made to locate the spouse in the 90 days before the
request for an exception was received by the TSP record keeper.
Examples of attempting to locate the spouse include, but are not
limited to, checking with relatives and mutual friends or using
telephone directories and directory assistance for the city of the
spouse's last known address. Negative statements, such as, ``I have not
seen nor heard from him,'' or ``I have not had contact with her,'' are
not sufficient.
* * * * *
(b) A TSP withdrawal election will be processed within 90 days of
an approved exception so long as the spouse named on the TSP withdrawal
request is the spouse for whom the exception has been approved.
(c) The TSP and/or its record keeper may require a participant to
provide additional information before granting a waiver. The TSP and/or
its record keeper may use any of the information provided to conduct
its own search for the spouse.
0
78. Amend Sec. 1650.64 by revising paragraphs (a) introductory text,
(a)(2)(ii)(C), and (b) to read as follows:
Sec. 1650.64 Executive Director's exception to the spousal consent
requirement.
(a) Whenever this subpart requires the consent of a spouse of a
FERS or uniformed services participant to a loan or TSP withdrawal or a
waiver of the right to a survivor annuity, an exception to this
requirement may be granted if the participant establishes to the
satisfaction of the Executive Director that:
* * * * *
(2) * * *
(ii) * * *
(C) Expressly states that the participant may obtain a loan from
his or her TSP account or make a TSP withdrawal notwithstanding the
absence of the spouse's signature.
(b) A post-employment distribution election or an in-service
withdrawal request processed within 90 days of an approved exception
will be accepted by the TSP record keeper so long as the spouse named
on the request is the spouse for whom the exception has been approved.
PART 1651--DEATH BENEFITS
0
79. The authority citation for part 1651 continues to read as follows:
Authority: 5 U.S.C. 8424(d), 8432d, 8432(j), 8433(e),
8435(c)(2), 8474(b)(5) and 8474(c)(1).
Sec. 1651.1 [Amended]
0
80. Amend Sec. 1651.1 by removing the definition of ``TIN''.
0
81. Amend Sec. 1651.2 by revising paragraphs (a) introductory text,
(a)(1), (b) introductory text, (b)(1) through (4), (c), and (d) to read
as follows:
Sec. 1651.2 Entitlement to funds in a deceased participant's account.
(a) Death benefits. Except as provided in paragraph (b) of this
section, the account balance of a deceased participant will be paid as
a death benefit to the individual or individuals surviving the
participant, in the following order of precedence:
(1) To the beneficiary or beneficiaries designated by the
participant in accordance with Sec. 1651.3;
* * * * *
(b) TSP withdrawals. If the TSP record keeper processes a notice
that a participant has died, it will cancel any pending request by the
participant to withdraw his or her account. The TSP record keeper will
also cancel an annuity purchase made on or after the participant's date
of death but before annuity payments have begun, and the annuity vendor
will return the funds to the TSP. The funds designated by the
participant for the withdrawal will be paid as a death benefit in
accordance with paragraph (a) of this section, unless the participant
elected to withdrawal his or her account in the form of an annuity, in
which case the funds designated for the purchase of the annuity will be
paid as described in paragraphs (b)(1) through (5) of this section:
(1) If the participant requested a single life annuity with no cash
refund or 10-year certain feature, the TSP record keeper will pay the
funds as a death benefit in accordance with paragraph (a) of this
section.
(2) If the participant requested a single life annuity with a cash
refund or 10-year certain feature, the TSP record keeper will pay the
funds as a death benefit to the beneficiary or beneficiaries designated
by the participant on the annuity portion of the TSP post-employment
distribution request, or as a death benefit in accordance with
paragraph (a) of this section if no beneficiary designated on the
withdrawal request survives the participant.
(3) If the participant requested a joint life annuity without
additional features, the TSP record keeper will pay the funds as a
death benefit to the joint life annuitant if he or she survives the
participant, or as a death benefit in accordance with paragraph (a) of
this section if the joint life annuitant does not survive the
participant.
(4) If the participant requested a joint life annuity with a cash
refund or 10-year certain feature, the TSP record keeper will pay the
funds as a death benefit to the joint life annuitant if he or she
survives the participant, or as a death benefit to the beneficiary or
beneficiaries designated by the participant on the annuity portion of
the TSP post-employment distribution request if the joint life
annuitant does not survive the participant, or as a death benefit in
accordance with paragraph (a) of this section if neither the joint life
annuitant nor any designated beneficiary survives the participant.
* * * * *
(c) TSP loans. If the TSP record keeper processes a notice that a
participant has died, any pending loan disbursement will be cancelled
and the funds designated for the loan will be distributed as a death
benefit in accordance with paragraph (a) of this section. If a TSP loan
has been disbursed, but the check has not been negotiated (or an
electronic funds transfer (EFT) has been returned), the loan proceeds
will be used to pay off the loan. If the loan check has been negotiated
(or the EFT has been processed), the funds cannot be returned to the
TSP and the TSP record keeper will declare the loan balance as a loan
foreclosure in accordance with part 1655 of this chapter.
(d) TSP investments. Upon a participant's death, his or her TSP
account will remain invested in the same TSP core funds as the account
balance was invested on his or her date of death. If any portion of the
participant's TSP account is invested through the mutual fund window at
the time of his or her death, his or her mutual fund window account
will be closed and the balance will be transferred back to the TSP core
funds in the participant's TSP account in accordance with his or her
most recent investment election until it is paid out or a beneficiary
participant account is established under this part.
0
82. Revise Sec. 1651.3 to read as follows:
[[Page 31686]]
Sec. 1651.3 Designation of beneficiary.
(a) Designation requirements. A participant may designate one or
more beneficiaries for his or her TSP account. A valid TSP designation
of beneficiary remains in effect until it is properly changed as
described in Sec. 1651.4.
(b) Eligible beneficiaries. Any individual, firm, corporation, or
legal entity, including the U.S. Government, may be designated as a
beneficiary. A participant can name up to 20 total (primary and
contingent) beneficiaries to share the death benefit. A beneficiary may
be designated without the knowledge or consent of that beneficiary or
the knowledge or consent of the participant's spouse.
(c) Validity requirements. To be valid and accepted by the TSP
record keeper, a TSP designation of beneficiary must:
(1) Be received by the TSP record keeper on or before the date of
the participant's death;
(2) Identify the participant in such a manner so that the TSP
record keeper can locate his or her TSP account;
(3) Be signed and properly dated by the participant and signed and
properly dated by one witness:
(i) The participant must either sign the designation of beneficiary
in the presence of the witness or acknowledge his or her signature on
the designation of beneficiary to the witness;
(ii) A witness must be age 21 or older; and
(iii) A witness designated as a beneficiary will not be entitled to
receive a death benefit payment; if a witness is the only named
beneficiary, the designation of the beneficiary is invalid. If more
than one beneficiary is named, the share of the witness beneficiary
will be allocated among the remaining beneficiaries pro rata;
(4) Designate primary beneficiary shares which when summed equal
100%;
(5) Contain no substantive alterations (e.g., struck-through shares
or scratched-out names of beneficiaries);
(6) Designate each primary and each contingent beneficiary in such
a manner so that the TSP record keeper can identify the individual or
entity;
(7) Not attempt to designate beneficiaries for the participant's
traditional balance and the participant's Roth balance separately; and
(8) Be received by the TSP record keeper not more than 365 calendar
days after the date of the participant's most recent signature.
(d) Will. A participant cannot use a will to designate a TSP
beneficiary.
0
83. Revise Sec. 1651.4 to read as follows:
Sec. 1651.4 How to change a designation of beneficiary.
(a) Change. To change a designation of beneficiary, the participant
must submit to the TSP record keeper a new TSP designation of
beneficiary meeting the requirements of Sec. 1651.3 to the TSP record
keeper. If the TSP record keeper receives more than one valid
designation of beneficiary, it will honor the designation with the
latest date signed by the participant. A participant may change a TSP
beneficiary at any time, without the knowledge or consent of any
person, including his or her spouse.
(b) [Reserved]
(c) Will. A participant cannot use a will to change a TSP
designation of beneficiary.
Sec. 1651.5 [Amended]
0
84. Amend Sec. 1651.5, in paragraph (b), by removing ``TSP'' and
adding in its place ``TSP record keeper''.
Sec. 1651.6 [Amended]
0
85. Amend Sec. 1651.6, in paragraph (d) introductory text, by removing
``TSP'' and adding in its place ``TSP record keeper''.
Sec. 1651.8 [Amended]
0
86. Amend Sec. 1651.8, in paragraph (b), by removing ``Board'' and
adding in its place ``TSP record keeper''.
Sec. 1651.10 [Amended]
0
87. Amend Sec. 1651.10, in paragraph (c), by removing ``form''.
Sec. 1651.12 [Amended]
0
88. Amend Sec. 1651.12 by removing ``Board'' and adding in its place
``TSP record keeper'' wherever it appears.
0
89. Revise Sec. 1651.13 to read as follows:
Sec. 1651.13 How to apply for a death benefit.
To apply for a TSP death benefit, a potential beneficiary must
contact the ThriftLine for instructions on providing a certified copy
of the participant's death certificate, along with any other
information as required by the TSP.
0
90. Revise Sec. 1651.14 to read as follows:
Sec. 1651.14 How payment is made.
(a) In general. Each beneficiary's death benefit will be disbursed
pro rata from the participant's traditional and Roth balances. The
payment from the traditional balance will be further pro rated between
the tax-deferred balance and tax-exempt balance. The payment from the
Roth balance will be further pro rated between contributions in the
Roth balance and earnings in the Roth balance. In addition, all death
benefits will be disbursed pro rata from all TSP core funds in which
the deceased participant's account is invested. All pro rated amounts
will be based on the balances in each TSP core fund or source of
contributions on the day the disbursement is made. Disbursement will be
made separately for each entitled beneficiary.
(b) Spouse beneficiaries. The TSP record keeper will automatically
transfer a surviving spouse's death benefit to a beneficiary
participant account (described in Sec. 1651.19) established in the
spouse's name. The TSP record keeper will not maintain a beneficiary
participant account if the balance of the beneficiary participant
account is less than $200 on the date the account is established. The
TSP record keeper also will not transfer this amount or pay it by
electronic funds transfer. Instead, the spouse will receive an
immediate distribution in the form of a check.
(c) Nonspouse beneficiaries. The TSP record keeper will send notice
of pending payment to each beneficiary. Payment will be sent to the
address that is provided on the participant's TSP designation of
beneficiary unless the TSP record keeper receives notice of a more
recent address. All individual beneficiaries must provide the TSP
record keeper with a Social Security number. The following additional
rules apply to payments to nonspouse beneficiaries:
(1) Payment to minor child or incompetent beneficiary. Payment will
be made in the name of a minor child or incompetent beneficiary. A
parent or other guardian may direct where the payment should be sent
and may make any permitted tax withholding election. A guardian of a
minor child or incompetent beneficiary must submit court documentation
showing his or her appointment as guardian.
(2) Payment to executor or administrator. If payment is to the
executor or administrator of an estate, the check will be made payable
to the estate of the deceased participant, not to the executor or
administrator. A taxpayer identification number must be provided for
all estates.
(3) Payment to trust. If payment is to a trust, the payment will be
made payable to the trust and mailed in care of the trustee. A taxpayer
identification number must be provided for the trust.
(4) Payment to inherited IRA on behalf of a nonspouse beneficiary.
If payment is to an inherited IRA on behalf of a nonspouse beneficiary,
the check will be made payable to the account. Information pertaining
to the
[[Page 31687]]
inherited IRA must be submitted by the IRA trustee. A payment to an
inherited IRA will be made only in accordance with the rules set forth
in 5 CFR 1650.25.
(5) Undeliverable payments. If a death benefit payment is returned
as undeliverable, the TSP record keeper will attempt to contact the
beneficiary. If the beneficiary does not respond within 90 days, the
death benefit payment will be forfeited to the TSP. The beneficiary can
claim the forfeited funds, although they will not be credited with
investment returns.
(6) Proper payments. A properly paid death benefit payment cannot
be returned to the TSP.
0
91. Amend Sec. 1651.16 by revising paragraph (c) to read as follows:
Sec. 1651.16 Missing and unknown beneficiaries.
* * * * *
(c) Abandoned account. If no beneficiaries of the account are
located, the account will be considered abandoned and the funds will
revert to the TSP. If there are multiple beneficiaries and one or more
of them refuses to cooperate in the TSP record keeper's search for the
missing beneficiary, the missing beneficiary's share will be considered
abandoned. In such circumstances, the account can be reclaimed if the
missing beneficiary is found at a later date. However, earnings will
not be credited from the date the account is abandoned. The TSP may
require the beneficiary to apply for the death benefit in the form and
manner prescribed by the TSP record keeper and submit proof of identity
and relationship to the participant.
0
92. Amend Sec. 1651.19 by revising paragraphs (a), (b), (c)(3) and
(4), (e), (g), (h), (k), (l), (m) introductory text, (m)(1) and (4),
and (n) to read as follows:
Sec. 1651.19 Beneficiary participant accounts.
* * * * *
(a) Initial investment allocation. Each beneficiary participant
account, once established, will be allocated to the TSP core funds in
which the deceased participant's account balance was invested on his or
her date of death. A beneficiary participant may redistribute his or
her beneficiary participant account balance among the TSP core funds by
making a fund reallocation or fund transfer request described in part
1601, subpart C, of this chapter. A beneficiary participant may move a
portion of his or her beneficiary account balance from the TSP core
funds to the mutual fund window by making a fund transfer request
described in part 1601, subpart F.
(b) Contributions. A beneficiary participant may not make
contributions or rollovers to his or her beneficiary participant
account. The TSP record keeper will not accept an investment election
request described in part 1601, subpart B, of this chapter for a
beneficiary participant account.
(c) * * *
(3) In the event that a beneficiary participant does not withdraw
from his or her beneficiary participant account an amount sufficient to
satisfy his or her required minimum distribution for the year, the TSP
record keeper will automatically distribute the necessary amount on or
before the applicable date described in paragraph (c)(1) of this
section.
(4) The TSP record keeper will disburse required minimum
distributions described in paragraph (c)(3) of this section pro rata
from the beneficiary participant's traditional balance and the
beneficiary participant's Roth balance.
* * * * *
(e) Ineligibility for certain withdrawals. A beneficiary
participant is ineligible to request the following types of withdrawals
from his or her beneficiary participant account: Age-based withdrawals
described in Sec. 1650.31 of this chapter, financial hardship
withdrawals described in Sec. 1650.32 of this chapter, or loans
described in part 1655 of this chapter.
* * * * *
(g) Rollovers. A beneficiary participant may request that the TSP
record keeper roll over all or a portion of an eligible rollover
distribution (within the meaning of I.R.C. section 402(c)) from his or
her beneficiary participant account to a traditional IRA, Roth IRA or
eligible employer plan (including a civilian or uniformed services TSP
account other than a beneficiary participant account) in the form and
manner prescribed by the TSP record keeper.
(h) Periodic statements. The TSP or its record keeper will furnish
beneficiary participants with periodic statements in a manner
consistent with part 1640 of this chapter.
* * * * *
(k) Court orders. Court orders relating to a civilian beneficiary
participant account or uniformed services beneficiary participant
account shall be processed pursuant to the procedures set forth in part
1653 of this chapter as if all references to a TSP participant are
references to a beneficiary participant and all references to a TSP
account or account balance are references to a beneficiary participant
account or beneficiary participant account balance. Notwithstanding any
provision of part 1653, a payee of a court-ordered distribution from a
beneficiary participant account cannot request a rollover of the court-
ordered distribution to an eligible employer plan or IRA.
(l) Death of beneficiary participant. To the extent it is not
inconsistent with this Sec. 1651.19, a beneficiary participant account
shall be disbursed upon the death of the beneficiary participant in
accordance with part 1651 as if any reference to a participant is a
reference to a beneficiary participant. For example, a beneficiary
participant may designate a beneficiary for his or her beneficiary
participant account in accordance with Sec. Sec. 1651.3 and 1651.4. No
individual who is entitled to a death benefit from a beneficiary
participant account shall be eligible to keep the death benefit in the
TSP or request that the TSP record keeper roll over all or a portion of
the death benefit to an IRA or eligible employer plan.
(m) Uniformed services beneficiary participant accounts. Uniformed
services beneficiary participant accounts are subject to the following
additional rules and procedures:
(1) Uniformed services beneficiary participant accounts are
established and maintained separately from civilian beneficiary
participant accounts. Beneficiary participants who have a uniformed
services beneficiary participant account and a civilian beneficiary
participant account will be issued two separate TSP account numbers. A
beneficiary participant must submit separate fund allocation, fund
transfer, re and/or TSP withdrawal requests for each account and submit
separate beneficiary designations for each account;
* * * * *
(4) A beneficiary participant may roll over all or any portion of
an eligible rollover distribution (within the meaning of I.R.C. section
402(c)) from a uniformed services beneficiary participant account into
a civilian or uniformed services TSP participant account. However, tax-
exempt money attributable to combat zone contributions cannot be rolled
over from a uniformed services beneficiary participant account to a
civilian TSP participant account.
(n) Multiple beneficiary accounts. Each beneficiary participant
account is maintained separately from all other beneficiary participant
accounts. If an individual has multiple beneficiary
[[Page 31688]]
participant accounts, each of the individual's beneficiary participant
accounts will have a unique account number. A beneficiary participant
must submit separate fund reallocation, fund transfer, and/or TSP
withdrawal requests and submit separate beneficiary designations for
each beneficiary participant account that the TSP maintains for him or
her. A beneficiary participant account cannot be combined with another
beneficiary participant account.
PART 1653--COURT ORDERS AND LEGAL PROCESSES AFFECTING THRIFT
SAVINGS PLAN ACCOUNTS
0
93. The authority citation for part 1653 continues to read as follows:
Authority: 5 U.S.C. 8432d, 8435, 8436(b), 8437(e), 8439(a)(3),
8467, 8474(b)(5) and 8474(c)(1).
Sec. 1653.1 [Amended]
0
94. Amend Sec. 1653.1, in the definition of ``TSP investment earnings
or earnings'', by removing ``TSP fund'' and adding in its place ``TSP
core fund''.
0
95. Amend Sec. 1653.2 by revising paragraphs (a)(3)(ii) and (iv) and
(b)(1), (2), (4), (5), and (7) to read as follows:
Sec. 1653.2 Qualifying retirement benefits court orders.
(a) * * *
(3) * * *
(ii) A stated percentage of the account; or
* * * * *
(iv) The following examples would qualify to require payment from
the TSP, although ambiguous or conflicting language used elsewhere
could cause the order to be rejected.
(A) Example 1. ORDERED: [payee's name, Social Security number
(SSN), and address] is awarded $__ from the [civilian or uniformed
services] Thrift Savings Plan account of [participant's name, account
number or SSN, and address].
(B) Example 2. ORDERED: [payee's name, SSN, and address] is awarded
__ % of the [civilian and/or uniformed services] Thrift Savings Plan
account[s] of [participant's name, account number or SSN, and address]
as of [date].
Note 1 to paragraph (a)(3)(iv). The following optional language
can be used in conjunction with any of the above examples. FURTHER
ORDERED: Earnings will be paid on the amount of the entitlement
under this ORDER until payment is made.
* * * * *
(b) * * *
(2) An order relating to a TSP account that contains only nonvested
money;
* * * * *
(4) An order requiring the TSP to make a payment in the future,
unless the present value of the payee's entitlement can be calculated,
in which case the TSP will make the payment currently;
(5) An order that does not specify the account to which the order
applies, if the participant has both a civilian TSP account and a
uniformed services TSP account;
* * * * *
(7) An order that designates the TSP core fund, source of
contributions, or balance (e.g., traditional, Roth, or tax-exempt) from
which the payment or portions of the payment shall be made.
0
96. Revise Sec. 1653.3 to read as follows:
Sec. 1653.3 Processing retirement benefits court orders.
(a) The payment of a retirement benefits court order from the TSP
is governed solely by FERSA and by the terms of this subpart. The TSP
record keeper will honor retirement benefits court orders properly
issued and certified by a court (as defined in Sec. 1653.1). However,
those courts have no jurisdiction over the TSP and the TSP cannot be
made a party to the underlying domestic relations proceedings.
(b) The TSP record keeper will review a retirement benefits court
order to determine whether it is enforceable against the TSP only after
the TSP record keeper has received a complete copy of the document.
Receipt by an employing agency or any other agency of the Government
does not constitute receipt by the TSP record keeper. Retirement
benefits court orders should be submitted to the TSP record keeper at
the current address as provided at https://www.tsp.gov. Receipt by the
TSP record keeper is considered receipt by the TSP. To be complete, a
court order must be written in English or be accompanied by a certified
English translation and contain all pages and attachments; it must also
provide (or be accompanied by a document that provides):
(1) The participant's account number or Social Security number
(SSN);
(2) The name and last known mailing address of each payee covered
by the order; and
(3) The payee's SSN and state of legal residence if he or she is
the current or former spouse of the participant.
(c) As soon as practicable after the TSP record keeper receives a
document that purports to be a qualifying retirement benefits court
order, whether or not complete, the participant's account will be
frozen. After the account is frozen, no withdrawals or loan
disbursements (other than a required minimum distribution pursuant to
section 401(a)(9) of the Internal Revenue Code, 26 U.S.C. 401(a)(9))
will be allowed until the account is unfrozen. All other account
activity will be permitted.
(d) The following documents do not purport to be qualifying
retirement benefits court orders, and accounts of participants to whom
such orders relate will not be frozen:
(1) A court order relating to a TSP account that has been closed;
(2) A court order dated before June 6, 1986;
(3) A court order that does not award all or any part of the TSP
account to someone other than the participant; and
(4) A court order that does not mention retirement benefits.
(e) After the participant's account is frozen, the TSP record
keeper will review the document further to determine if it is complete;
if the document is not complete, it will be rejected, the account will
be unfrozen, all parties will be notified, and no further action will
be taken with respect to the document.
(f) The TSP record keeper will review a complete copy of an order
to determine whether it is a qualifying retirement benefits court order
as described in Sec. 1653.2. The TSP record keeper will mail a
decision letter to all parties containing the following information:
(1) A determination regarding whether the court order is
qualifying;
(2) A statement of the applicable statutes and regulations;
(3) An explanation of the effect the court order has on the
participant's TSP account; and
(4) If the qualifying order requires payment, the letter will
provide:
(i) An explanation of how the payment will be calculated and an
estimated amount of payment;
(ii) The anticipated date of payment;
(iii) Tax and withholding information to the person responsible for
paying Federal income tax on the payment;
(iv) Information on how to roll over the payment to an eligible
employer plan within the meaning of section 402(c) of the Internal
Revenue Code (26 U.S.C. 402(c)), traditional IRA, or Roth IRA (if the
payee is the current or former spouse of the participant); and
(v) Information on how to receive the payment through an electronic
funds transfer (EFT).
(g)[Reserved]
[[Page 31689]]
(h) An account frozen under this section will be unfrozen as
follows:
(1) If the account was frozen in response to an order issued to
preserve the status quo pending final resolution of the parties' rights
to the participant's TSP account, the account will be unfrozen if the
TSP record keeper receives a court order that vacates or supersedes the
previous order (unless the order vacating or superseding the order
itself qualifies to place a freeze on the account). A court order that
purports to require a payment from the TSP supersedes an order issued
to preserve the status quo, even if it does not qualify to require a
payment from the TSP;
(2) If the account was frozen in response to an order purporting to
require a payment from the TSP, the freeze will be lifted:
(i) Once payment is made, if the court order is qualifying; or
(ii) Eighteen (18) months after the date of the decision letter if
the court order is not qualifying. The 18-month period will be
terminated, and the account will be unfrozen, if both parties submit to
the TSP record keeper a written request for such a termination.
(i) The TSP record keeper will hold in abeyance the processing of a
court-ordered payment if the TSP record keeper is notified in writing
that the underlying court order has been appealed, and that the effect
of the filing of the appeal is to stay the enforceability of the order.
(1) In the notification, the TSP record keeper must be provided
with proper documentation of the appeal and citations to legal
authority, which address the effect of the appeal on the enforceability
of the underlying court order.
(i) If the TSP record keeper receives proper documentation and
citations to legal authority which demonstrate that the underlying
court order is not enforceable, the TSP record keeper will inform the
parties that the payment will not occur until resolution of the appeal,
and the account will remain frozen for loans and withdrawals.
(ii) In the absence of proper documentation and citations to legal
authority, the TSP record keeper will presume that the provisions
relating to the TSP in the court order remain valid and will proceed
with the payment process.
(2) The TSP record keeper must be notified in writing of the
disposition of the appeal before the freeze will be removed from the
participant's account or a payment will be made. The notification must
include a complete copy of an order from the appellate court explaining
the effect of the appeal on the participant's account.
(j) Multiple qualifying court orders relating to the same TSP
account and received by the TSP record keeper will be processed as
follows:
(1) If the orders make awards to the same payee or payees and do
not indicate that the awards are cumulative, the TSP record keeper will
only honor the order bearing the latest effective date.
(2) If the orders relate to different former spouses of the
participant and award survivor annuities, the TSP record keeper will
honor them in the order of their effective dates.
(3) If the orders relate to different payees and award fixed dollar
amounts, percentages of an account, or portions of an account
calculated by the application of formulae, the orders will be honored:
(i) In the order of their receipt by the TSP record keeper, if
received by the TSP record keeper on different days; or
(ii) In the order of their effective dates, if received by the TSP
record keeper on the same day.
(4) In all other cases, the TSP record keeper will honor multiple
qualifying court orders relating to the same TSP account in the order
of their receipt by the TSP record keeper.
0
97. Amend Sec. 1653.4 by revising paragraphs (b), (c), (f)
introductory text, (f)(1), (f)(3) introductory text, (f)(3)(i), (g)
introductory text, and (g)(2) to read as follows:
Sec. 1653.4 Calculating entitlements.
* * * * *
(b) If the court order awards a percentage of an account as of a
specific date, the payee's entitlement will be calculated based on the
account balance as of that date. If the date specified in the order is
not a business day, the TSP record keeper will use the participant's
account balance as of the last preceding business day.
(c) If the court order awards a percentage of an account but does
not contain a specific date as of which to apply that percentage, the
TSP record keeper will use the liquidation date.
* * * * *
(f) The payee's entitlement will be credited with TSP investment
earnings as described:
(1) The entitlement calculated under this section will not be
credited with TSP investment earnings unless the court order
specifically provides otherwise. The court order may not specify a rate
for earnings.
* * * * *
(3) If earnings are awarded, the TSP record keeper will calculate
the amount to be awarded by:
(i) Determining the payee's award amount (e.g., the percentage of
the participant's account);
* * * * *
(g) The TSP record keeper will estimate the amount of a payee's
entitlement when it prepares the decision letter and will recalculate
the entitlement at the time of payment. The recalculation may differ
from the initial estimation because:
* * * * *
(2) After the estimate of the payee's entitlement is prepared, the
TSP record keeper may process account transactions that have an
effective date on or before the date used to compute the payee's
entitlement. Those transactions will be included when the payee's
entitlement is recalculated at the time of payment; and
* * * * *
0
98. Amend Sec. 1653.5 by revising paragraphs (a)(1) and (2), (d), (e),
(g), (h), (k), (m), and (n) to read as follows:
Sec. 1653.5 Payment.
(a) * * *
(1) As soon as administratively practicable after the date of the
decision letter when the payee is the current or former spouse of the
participant, but in no event earlier than 30 days after the date of the
decision letter.
(2) As soon as administratively practicable after the date of the
decision letter when the payee is someone other than the current or
former spouse of the participant.
* * * * *
(d) Payment will be made pro rata from the participant's
traditional and Roth balances. The distribution from the traditional
balance will be further pro rated between the tax-deferred balance and
tax-exempt balance. The payment from the Roth balance will be further
pro rated between contributions in the Roth balance and earnings in the
Roth balance. In addition, all payments will be distributed pro rata
from all TSP core funds in which the participant's account is invested.
All pro rated amounts will be based on the balances in each fund or
source of contributions on the day the disbursement is made. The TSP
record keeper will not honor provisions of a court order that require
payment to be made from a specific TSP core fund, source of
contributions, or balance.
(e) Payment will be made only to the person or persons specified in
the court order. However, if the court order specifies a third-party
mailing address for the payment, the TSP record keeper will mail to the
address specified any portion of the payment that is not rolled over to
a traditional IRA, Roth IRA, or
[[Page 31690]]
eligible employer plan within the meaning of section 402(c) of the
Internal Revenue Code (26 U.S.C. 402(c)).
* * * * *
(g) If there are insufficient funds to pay each court order payee,
payment will be made as follows:
(1) If the order specifies an order of precedence for the payments,
the TSP record keeper will honor it.
(2) If the order does not specify an order of precedence for the
payments, the TSP record keeper will pay a current or former spouse
first and a dependent second.
(h) If the payee dies before a payment is disbursed, payment will
be made to the estate of the payee, unless otherwise specified by the
court order. A distribution to the estate of a deceased court order
payee will be reported as income to the decedent's estate. If the
participant dies before payment is made, the order will be honored so
long as it is submitted to the TSP record keeper before the TSP account
has been closed.
* * * * *
(k) If a court ordered payment is returned as undeliverable, the
TSP record keeper will attempt to locate the payee by writing to the
address provided on the court order. If the payee does not respond
within 90 days, the funds will be forfeited to the TSP. The payee can
claim the forfeited funds, although they will not be credited with TSP
investment fund returns.
* * * * *
(m) A payee who is a current or former spouse of the participant
may elect to roll over a court-ordered payment to a traditional IRA,
eligible employer plan within the meaning of section 402(c) of the
Internal Revenue Code (26 U.S.C. 402(c)), or Roth IRA. Any election
permitted by this paragraph (m) must be made pursuant to the rules
described in 5 CFR 1650.25.
(n) If a court order payee who is the current or former spouse of
the participant has their own TSP account (other than a beneficiary
participant account), the payee can request that the TSP record keeper
roll over the court-ordered payment to the payee's TSP account in
accordance with the rules described in 5 CFR 1650.25. However, any pro
rata share attributable to tax-exempt contributions cannot be rolled
over; instead, it will be paid directly to the payee.
0
99. Add Sec. 1653.6 to subpart A to read as follows:
Sec. 1653.6 Fees.
The TSP record keeper will charge a participant a $600.00 court
order processing fee as follows:
(a) Upon receipt of a complete court order document (whether draft
or final) and prior to reviewing the order to determine whether it is a
qualifying retirement benefits court order, the fee will be deducted
from his or her TSP account balance on a pro rata basis from the
participant's traditional and Roth balances. The portion of the fee
deducted from the traditional balance will be further pro rated between
the tax-deferred balance and tax-exempt balance. The portion of the fee
deducted from the Roth balance will be further pro rated between
contributions in the Roth balance and earnings in the Roth balance. In
addition, the entire fee will be distributed pro rata from all TSP core
funds in which the participant's account is invested. All pro rated
amounts will be based on the balances in each fund or source of
contributions on the day the fee is deducted;
(b) The fee will be charged only once per court order. However, it
will not be refunded in the event that the court order is never
determined to be a qualifying retirement benefits court order; and
(c)(1) If the court order:
(i) Is determined to be a qualifying retirement benefits court
order; and
(ii) Explicitly requires the fee to be split between the
participant and the payee;
(2) The TSP record keeper will deduct the payee's portion of the
fee from his or her payment and credit that amount back to the
participant's TSP account balance.
0
100. Amend Sec. 1653.12 as follows:
0
a. In paragraph (a), remove ``TSP'' and add in its place ``TSP record
keeper'';
0
b. Revise paragraph (c)(2); and
0
c. In paragraph (c)(6), remove ``TSP Fund'' and add in its place ``TSP
core fund''.
The revision reads as follows:
Sec. 1653.12 Qualifying legal processes.
* * * * *
(c) * * *
(2) A legal process relating to a TSP account that contains only
nonvested money;
* * * * *
0
101. Revise Sec. 1653.13 to read as follows:
Sec. 1653.13 Processing legal processes.
(a) The payment of legal processes from the TSP is governed solely
by the Federal Employees' Retirement System Act, 5 U.S.C. chapter 84,
and by the terms of this subpart. Although the TSP record keeper will
honor legal processes properly issued by a competent authority, those
entities have no jurisdiction over the TSP and the TSP cannot be made a
party to the underlying proceedings.
(b) The TSP record keeper will review a legal process to determine
whether it is enforceable against the TSP only after the TSP record
keeper has received a complete copy of the document. Receipt by an
employing agency or any other agency of the Government does not
constitute receipt by the TSP. Legal processes should be submitted to
the TSP record keeper at the current address as provided at https://www.tsp.gov. Receipt by the TSP record keeper is considered receipt by
the TSP. To be complete, a legal process must contain all pages and
attachments; it must also provide (or be accompanied by a document that
provides):
(1) The participant's account number or Social Security number
(SSN);
(2) The name and last known mailing address of each payee covered
under the order; and
(3) The SSN and state of legal residence of the payee if he or she
if the current or former spouse of the participant.
(c) As soon as practicable after the TSP record keeper receives a
document that purports to be a qualifying legal process, whether or not
complete, the participant's account will be frozen. After the account
is frozen, no TSP withdrawal or loan disbursements will be allowed
until the account is unfrozen. All other account activity will be
permitted, including contributions, loan repayments, adjustments,
investment elections, fund reallocations, and fund transfers.
(d) The following documents will not be treated as purporting to be
a qualifying legal processes, and accounts of participants to whom such
orders relate will not be frozen:
(1) A document that does not indicate on its face (or accompany a
document that establishes) that it has been issued by a competent
authority;
(2) A legal process relating to a TSP account that has been closed;
and
(3) A legal process that does not relate either to the TSP or to
the participant's retirement benefits.
(e) After the participant's account is frozen, the TSP record
keeper will review the document further to determine if it is complete;
if the document is not complete, it will be rejected, the account will
be unfrozen, all parties will be notified, and no further action will
be taken with respect to the document.
[[Page 31691]]
(f) As soon as practicable after receipt of a complete copy of a
legal process, the TSP record keeper will review it to determine
whether it is a qualifying legal process as described in Sec. 1653.12.
The TSP record keeper will mail a decision letter to all parties
containing the same information described at Sec. 1653.3(f).
(g) [Reserved]
(h) An account frozen under this section will be unfrozen as
follows:
(1) If the account was frozen pursuant to a legal process requiring
the TSP to freeze the participant's account in anticipation of an order
to pay from the account, the account will be unfrozen if any one of the
following events occurs:
(i) As soon as practicable after the TSP record keeper receives a
complete copy of an order vacating or superseding the preliminary order
(unless the order vacating or superseding the preliminary order
qualifies to place a freeze on the account);
(ii) Upon payment pursuant to the order to pay from the account, if
the TSP record keeper determines that the order is qualifying; or
(iii) As soon as practicable after the TSP issues a decision letter
informing the parties that the order to pay from the account is not a
qualifying legal process;
(2) If the account was frozen after the TSP record keeper received
a document that purports to be a legal process requiring payment from
the participant's account, the account will be unfrozen:
(i) Upon payment pursuant to a qualifying legal process; or
(ii) As soon as practicable after the TSP record keeper informs the
parties that the document is not a qualifying legal process.
(i) The TSP record keeper will hold in abeyance the processing of a
payment required by legal process if the TSP record keeper is notified
in writing that the legal process has been appealed, and that the
effect of the filing of the appeal is to stay the enforceability of the
legal process. The notification must be accompanied by the
documentation and citations to legal authority described at Sec.
1653.3(i).
(j) Multiple qualifying legal processes relating to the same TSP
account and received by the TSP record keeper will be processed as
follows:
(1) If the legal processes make awards to the same payee or payees
and do not indicate that the awards are cumulative, the TSP record
keeper will only honor the legal process bearing the latest effective
date.
(2) If the legal processes relate to different payees, the legal
process will be honored:
(i) In the order of their receipt by the TSP record keeper, if
received by the TSP record keeper on different days; or
(ii) In the order of their effective dates, if received by the TSP
record keeper on the same day.
0
102. Add Sec. 1653.16 to subpart B to read as follows:
Sec. 1653.16 Fees.
The TSP record keeper will charge a participant a $600.00 legal
process processing fee as follows:
(a) Upon receipt of a complete legal process document (whether
draft or final) and prior to reviewing order to determine whether it is
a qualifying legal process, the fee will be deducted from his or her
TSP account balance on a pro rata basis from the participant's
traditional and Roth balances. The portion of the fee deducted from the
traditional balance will be further pro rated between the tax-deferred
balance and tax-exempt balance. The portion of the fee deducted from
the Roth balance will be further pro rated between contributions in the
Roth balance and earnings in the Roth balance. In addition, the entire
fee will be distributed pro rata from all TSP core funds in which the
participant's account is invested. All pro rated amounts will be based
on the balances in each fund or source of contributions on the day the
fee is deducted; and
(b) The fee will be charged only once per legal process. However,
it will not be refunded in the event that the court order is never
determined to be a qualifying legal process.
Sec. 1653.22 [Amended]
0
103. Amend Sec. 1653.22 by removing ``TSP'' and adding in its place
``TSP record keeper''.
Sec. 1653.23 [Amended]
0
104. Amend Sec. 1653.23 by removing ``TSP'' and adding in its place
``TSP record keeper''.
Sec. 1653.32 [Amended]
0
105. Amend Sec. 1653.32 as follows:
0
a. In paragraph (a), remove ``TSP'' and add in its place ``TSP record
keeper'';
0
b. In paragraph (c)(2), remove ``the TSP'' and add in its place ``the
TSP record keeper''; and
0
c. In paragraph (c)(6), remove ``TSP Fund'' and add in its place ``TSP
core fund''.
Sec. 1653.33 [Amended]
0
106. Amend Sec. 1653.33 as follows:
0
a. In paragraph (a), remove ``TSP'' and add in its place ``TSP record
keeper'';
0
b. In paragraph (c)(2), remove ``the TSP'' and add in its place ``the
TSP record keeper''; and
0
c. In paragraph (c)(6), remove ``TSP Fund'' and add in its place ``TSP
core fund''.
0
107. Revise Sec. 1653.34 to read as follows:
Sec. 1653.34 Processing Federal tax levies and criminal restitution
orders.
(a) The payment of tax levies and criminal restitution orders from
the TSP is governed solely by the Federal Employees' Retirement Systems
Act, 5 U.S.C. chapter 84, and by the terms of this subpart. Although
the TSP record keeper will honor tax levies or criminal restitution
orders properly issued, those entities have no jurisdiction over the
TSP and the TSP cannot be made a party to the underlying proceedings.
(b) The TSP record keeper will review a tax levy or criminal
restitution order to determine whether it is enforceable against the
TSP record keeper only after it has received a complete copy of the
document. Receipt by an employing agency or any other agency of the
Government does not constitute receipt by the TSP record keeper. Tax
levies and criminal restitution orders should be submitted to the TSP
record keeper at the current address as provided at https://www.tsp.gov. Receipt by the TSP record keeper is considered receipt by
the TSP. To be complete, a tax levy or criminal restitution order must
meet all the requirements of Sec. 1653.32 or Sec. 1653.33; it must
also provide (or be accompanied by a document or enforcement letter
that provides):
(1) The participant's TSP account number or Social Security number
(SSN); and
(2) The name and mailing address of the payee.
(c) As soon as practicable after the TSP record keeper receives a
document that purports to be a qualifying tax levy or criminal
restitution order, the participant's account will be frozen. After the
participant's account is frozen, no TSP withdrawal or loan
disbursements will be allowed until the account is unfrozen. All other
account activity will be permitted, including contributions, loan
repayments, adjustments, investment elections, fund reallocations, and
fund transfers. Once a disbursement from the account is made in
accordance with the restitution order or levy, the hold will be removed
from the participant's account.
(d) As soon as practicable after receipt of a complete copy of a
tax levy or criminal restitution order, the TSP record keeper will
review it to determine whether it is qualifying as
[[Page 31692]]
described in Sec. 1653.32 or Sec. 1653.33. The TSP record keeper will
mail a decision letter to all parties containing the following
information:
(1) A determination regarding whether the restitution order or levy
is qualifying;
(2) A statement of the applicable statutes and regulations;
(3) An explanation of the effect the restitution order or levy has
on the participant's TSP account; and
(4) If the qualifying restitution order or levy requires payment,
the letter will provide:
(i) An explanation of how the payment will be calculated and an
estimated amount of payment;
(ii) The anticipated date of payment.
Sec. 1653.36 [Amended]
0
108. Amend Sec. 1653.36 as follows
0
a. In paragraph (a), remove ``TSP'';
0
b. In paragraph (e), remove ``TSP Funds'' and add in its place ``TSP
core funds''; and
0
c. In paragraph (h), remove ``TSP'' and add in its place ``TSP record
keeper''.
PART 1655--LOAN PROGRAM
0
109. The authority citation for part 1655 continues to read as follows:
Authority: 5 U.S.C. 8432d, 8433(g), 8439(a)(3) and 8474.
0
110. Amend Sec. 1655.1, in paragraph (b), as follows:
0
a. Add in alphabetical order a definition for ``Cure period'';
0
b. Remove the definition of ``Date of application'';
0
c. Add in alphabetical order definitions for ``Deemed distribution'',
``Loan direct debit repayment'', and ``Loan offset''; and
0
d. Remove the definition of ``Taxable distribution''.
The additions read as follows:
Sec. 1655.1 Definitions.
* * * * *
(b) * * *
Cure period means the period set forth at Sec. 1655.14(e).
Date of request means the day on which the TSP record keeper
receives the loan request in the form and manner prescribed by the TSP
record keeper.
Deemed distribution means a deemed distribution under Internal
Revenue Code section 72(p) and the regulations promulgated thereunder.
Also referred to as a loan taxation or taxed loan, it means the amount
of outstanding principal and interest on a loan that must be reported
to the Internal Revenue Service as taxable income as a result of the
failure of a participant who has not separated from Government service
to:
(i) Make timely loan repayments before the end of the cure period;
or
(ii) Repay the loan in full by the maximum term limit.
* * * * *
Loan direct debit repayment means a loan repayment made directly
from a participant's personal savings or checking account.
* * * * *
Loan offset means a loan offset under Internal Revenue Code section
72(p) and the regulations promulgated thereunder. Also referred to as a
loan foreclosure, it means the amount of outstanding principal and
interest on a loan that must be reported to the Internal Revenue
Service as taxable income as the result of the failure of a participant
who has separated from Government service to repay his or her loan in
full or begin making repayments by the deadline imposed by the TSP
record keeper.
* * * * *
0
111. Revise Sec. 1655.2 to read as follows:
Sec. 1655.2 Eligibility for loans.
A participant can apply for a TSP general purpose or residential
loan if:
(a) More than 30 business days have elapsed since the participant
has repaid in full any TSP loan;
(b) The participant is in pay status;
(c) The participant is eligible to contribute to the TSP; and
(d) The participant has at least $1,000 in employee contributions
and attributable earnings in his or her account. Paragraph (b) of this
section shall not apply to loan requests made during a Government
shutdown by participants who are furloughed or excepted from furlough
due to the Government shutdown.
Sec. 1655.3 [Amended]
0
112. Amend Sec. 1655.3 by removing ``record keeper''.
0
113. Revise Sec. 1655.4 to read as follows:
Sec. 1655.4 Number of loans.
A participant may have no more than two loans outstanding from his
or her TSP account at any time. No more than one outstanding loan from
an account may be a residential loan. A participant with both a
civilian TSP account and a uniformed services TSP account may have two
outstanding loans from each account.
0
114. Revise Sec. 1655.5 to read as follows:
Sec. 1655.5 Loan repayment period.
(a) Minimum. The minimum repayment period a participant may request
for a general purpose loan is 12 months of scheduled payments. The
minimum repayment period a participant may request for a residential
loan is 61 months of scheduled payments.
(b) Maximum. The maximum repayment period a participant may request
for a general purpose loan is 60 months of scheduled payments. The
maximum repayment period a participant may request for a residential
loan is 180 months years of scheduled payments.
0
115. Amend Sec. 1655.6 by revising paragraph (b)(2) and adding
paragraph (d) to read as follows:
Sec. 1655.6 Amount of loan.
* * * * *
(b) * * *
(2) 50 percent of the participant's vested account balance that is
attributable to employee contributions and attributable earnings
(including any outstanding loan balance) or $10,000, whichever is
greater, minus any outstanding loan balance; or
* * * * *
(d) Any amount invested through the mutual fund window at the time
the participant makes a loan request will not be considered for
purposes of determining either the minimum or maximum loan amounts.
0
116. Amend Sec. 1655.7 by revising paragraph (a) to read as follows:
Sec. 1655.7 Interest rate.
(a) Except as provided in paragraph (b) of this section, loans will
bear interest at the monthly G Fund interest rate established by the
Department of the Treasury in effect on the 15th of the month prior to
the date the loan request is made.
* * * * *
Sec. 1655.8 [Removed and Reserved]
0
117. Remove and reserve Sec. 1655.8.
0
118. Amend Sec. 1655.9 as follows:
0
a. In paragraph (b), remove ``TSP Fund'' and add in its place ``TSP
core fund'';
0
b. In paragraph (c), remove ``TSP Funds'' and add in its place ``TSP
core funds'' and remove ``TSP Fund'' and ad in its place ``TSP core
fund'';
0
c. In paragraph (d), remove ``contribution allocation'' and add in its
place ``investment election'' and remove ``TSP Fund'' and add in its
place ``TSP core fund''; and
0
d. Add paragraph (e).
The addition reads as follows:
Sec. 1655.9 Effect of loans on individual account.
* * * * *
[[Page 31693]]
(e) Loan disbursements will not be made from any amounts invested
through the mutual fund window and loan payments will not be credited
to a participant's mutual fund window account.
0
119. Revise Sec. 1655.10 to read as follows:
Sec. 1655.10 Loan request process.
(a) Any participant may apply for a loan by submitting a completed
TSP loan request in the form and manner prescribed by the TSP record
keeper.
(b) If a participant has a uniformed services account and a
civilian account, a separate loan request must be made for each
account.
0
120. Revise Sec. 1655.11 to read as follows:
Sec. 1655.11 Loan acceptance.
If the requirements set forth in Sec. Sec. 1655.2, 1655.4, and
1655.6(a) are satisfied, the TSP record keeper will nevertheless reject
a loan request if:
(a) The participant has failed to provide all required information
on the loan request;
(b) The participant has a pending loan request or in-service
withdrawal request; or
(c) A hold has been placed on the account pursuant to 5 CFR
1653.3(c).
0
121. Revise Sec. 1655.12 to read as follows:
Sec. 1655.12 Loan agreement.
(a) Upon determining that a loan request meets the requirements of
this part, the TSP record keeper will provide the participant with the
terms and conditions of the loan.
(b) By accepting the loan agreement, the participant agrees to be
bound by all of its terms and conditions, agrees to repay the loan by
payroll deduction, and certifies, under penalty of perjury, to the
truth and completeness of all statements made in the loan request and
loan agreement to the best of his or her knowledge.
(c) For loan requests not completed on the TSP website, the TSP
record keeper must receive the completed loan agreement (including any
required supporting documentation) before the expiration date stated on
the loan agreement or the agreement will not be processed.
(d) The signed loan agreement must be accompanied by:
(1) In the case of a residential loan, supporting materials that
document the purchase or construction of the residence and the amount
requested (as described in Sec. 1655.20); and
(2) Any other information that the Executive Director may require.
(e) A participant may request, in the form and manner prescribed by
the TSP record keeper, that the loan be disbursed by direct deposit to
a checking or savings account maintained by the participant in a
financial institution.
Sec. 1655.13 [Amended]
0
122. Amend Sec. 1655.13 as follows:
0
a. In paragraph (b)(2), remove ``TSP'' and add in its place ``TSP
record keeper'';
0
b. Remove paragraph (b)(5); and
0
c. In paragraph (e), remove ``60'' and add in its place ``90'' and
remove ``TSP'' and add in its place ``TSP record keeper''.
0
123. Revise Sec. 1655.14 to read as follows:
Sec. 1655.14 Loan payments.
(a) In the case of a participant who has not separated from
Government service, loan payments must be made through payroll
deduction in accordance with the loan agreement. Once loan payments
begin, the employing agency cannot terminate the payroll deductions at
the employee's request, unless the TSP or its record keeper instructs
it to do so.
(b) The participant may make additional payments by mailing a check
or guaranteed funds to the TSP record keeper or by enrolling in loan
direct debit repayments from his or her personal savings or checking
account. If the TSP record keeper receives a payment that repays the
outstanding loan amount and overpays the loan by $10.00 or more, the
overpayment will be refunded to the participant. Overpayments of less
than $10.00 will be applied to the participant's account and will not
be refunded. If a loan overpayment refund is returned as undeliverable,
the TSP record keeper will attempt to locate the participant. If the
participant does not respond within 90 days, the overpayment refund
will be forfeited to the TSP. The participant can claim the forfeited
funds, although they will not be credited with TSP investment fund
returns.
(c) The initial payment on a loan is due on or before the 60th day
following the loan issue date. Interest accrues on the loan from the
date of issuance.
(d) Subsequent payments are due at regular intervals as prescribed
in the loan agreement, or most recent amortization, according to the
participant's pay cycle.
(e) In the case of a participant who has not separated from
Government service, if a payment is not made when due, the TSP record
keeper will notify the participant of the missed payment and the
participant must make up the payment in full. The participant's make-up
payment must be in the form of a check, guaranteed funds, or a one-time
payment via loan direct debit from his or her personal savings or
checking account. If the participant does not make up all missed
payments by the end of the calendar quarter following the calendar
quarter in which the first payment was missed, the TSP record keeper
will declare the loan to be a deemed distribution in accordance with
Sec. 1655.15(a). The declaration of a deemed distribution does not
relieve the participant of his or her obligation to repay the amount.
(f) Interest will accrue on all missed payments and will be
included in the calculation of any deemed distribution subsequently
declared in accordance with Sec. 1655.15(a). Interest will also accrue
on payments missed while a participant is in nonpay status and on any
deemed distribution until it is repaid in full.
(g) A participant who has separated from Government service with an
outstanding loan balance may continue making loan repayments via check,
guaranteed funds, or loan direct debit repayments. If a separated
participant does not begin making post-separation loan repayments or
pay off the loan in full by the deadline imposed by the TSP record
keeper, the TSP record keeper will declare the outstanding loan balance
and accrued interest to be a loan offset in accordance with Sec.
1655.15(b). In the case of a separated participant who commences post-
separation loan repayments, if a payment is not made when due, the TSP
record keeper will notify the separated participant of the missed
payment and he or she must make up the payment in full. The make-up
payment must be in the form of a check, guaranteed funds, or a one-time
payment via loan direct debit from his or her personal savings or
checking account. If the participant does not make up all missed
payments by the end of the calendar quarter following the calendar
quarter in which the first payment was missed, the TSP record keeper
will declare the outstanding loan balance and accrued interest to be a
loan offset in accordance with Sec. 1655.15(b).
0
124. Revise Sec. 1655.15 to read as follows:
Sec. 1655.15 Deemed Distributions and Loan Offsets.
(a) The TSP record keeper will ensure that all requirements set
forth in section 72(p) of the Internal Revenue Code and the regulations
promulgated thereunder with respect to deemed distributions are
satisfied.
[[Page 31694]]
(1) The TSP record keeper will declare the entire unpaid balance of
an outstanding loan (including interest) to be a deemed distribution
if:
(i) The participant misses two or more loan payments or the
participant's payments are made for less than the required amount, and
the delinquency is not cured within the cure period;
(ii) The loan is not repaid in full by the maximum term limit; or
(iii) A participant is in a confirmed nonpay status for a period of
one year or more, has not advised the TSP record keeper that he or she
is serving on active military duty, and payments are not resumed after
the participant is notified the loan has been reamortized.
(2) Loan taxation does not relieve a participant of his or her
obligation to repay the taxed loan amount. A participant may repay a
taxed loan in full (including accrued interest) via check or money
order up until the time he or she separates from Government service.
The tax basis in a participant's TSP account will be adjusted to
reflect the repayment of a taxed loan.
(3) If a participant does not repay a taxed loan:
(i) His or her account balance will be permanently reduced; and
(ii) The taxed loan will count as one of the two loans the
participant is permitted per account and is treated as an outstanding
loan balance when calculating the participant's maximum loan amount.
(b) The TSP record keeper will ensure that all requirements set
forth in section 72(p) of the Internal Revenue Code and the regulations
promulgated thereunder with respect to loan offsets are satisfied.
(1) The TSP record keeper will declare a loan offset in the
following situations:
(i) A participant separates from Government service and does not
begin making loan repayments or repay the outstanding loan principal
and interest in full within the period specified by the notice to the
participant from the TSP record keeper explaining the participant's
repayment options; or
(ii) The participant dies.
(2) [Reserved]
(c) If a deemed distribution or loan offset occurs in accordance
with paragraph (a) or (b) of this section, as applicable, the TSP
record keeper will notify the participant of the amount and date of the
distribution. The TSP record keeper will report the distribution to the
Internal Revenue Service as income for the year in which it occurs.
(d) If a participant dies and a loan offset occurs in accordance
with paragraph (b) of this section, the TSP record keeper will notify
the participant's estate of the amount and date of the distribution.
Neither the estate nor any other person, including a beneficiary, may
repay the loan of a deceased participant, nor can the funds be returned
to the TSP.
(e) If, because of Board or TSP record keeper error, a TSP loan is
declared a deemed distribution or loan offset under circumstances that
make such a declaration inconsistent with this part, or inconsistent
with other procedures established by the Board or TSP record keeper in
connection with the TSP loan program, the distribution will be
reversed. The participant will be provided an opportunity to reinstate
loan payments or repay in full the outstanding balance on the loan.
0
125. Revise Sec. 1655.16 to read as follows:
Sec. 1655.16 Reamortization.
(a) When a participant's pay cycle changes for any reason, he or
she must notify the TSP record keeper of the change in the form and
manner prescribed by the TSP record keeper. Upon notification, the
participant's loan will be reamortized to adjust the scheduled payment
to an equivalent amount in the new pay cycle. If the new pay cycle
results in fewer payments per year and the participant does not
reamortize the loan, the loan may be declared a deemed distribution
pursuant to Sec. 1655.15(a)(1).
(b) Upon reamortization, the outstanding principal balance remains
the same. Any accrued interest is paid off first before payments are
applied to principal and current interest.
(c) The interest rate on a reamortized loan will be the same as the
interest rate on the original loan.
0
126. Revise Sec. 1655.17 to read as follows:
Sec. 1655.17 Prepayment.
(a) A participant may repay a loan in full, without a penalty, at
any time before the declaration of a deemed distribution or loan
foreclosure under Sec. 1655.15. Repayment in full means receipt by the
TSP record keeper of a payment, by check or guaranteed funds made
payable to the Thrift Savings Plan or via loan direct debit repayments,
of all principal and interest due on the loan.
(b) If a participant returns a loan check to the TSP record keeper,
it will be treated as a repayment; however, additional interest may be
owed, which, if not paid, could result in a deemed distribution. The
loan, even though repaid, will also be taken into account in
determining the maximum amount available for future loans, in
accordance with Sec. 1655.6(b).
(c) The amount outstanding on a loan can be obtained from the TSP
website, the ThriftLine, or by a written request to the TSP record
keeper.
0
127. Amend Sec. 1655.18 by revising paragraph (d) to read as follows:
Sec. 1655.18 Spousal rights.
* * * * *
(d) Certification of truthfulness. By completing a loan request,
the participant certifies, under penalty of perjury, that all
information provided to the TSP record keeper during the loan process
is true and complete, including statements concerning the participant's
marital status, the spouse's email or physical address at the time the
application is filed, or the current spouse's consent to the loan.
0
128. Revise Sec. 1655.20 to read as follows:
Sec. 1655.20 Residential loans.
(a) A residential loan will be made only for the purchase or
construction of the primary residence of the participant, or for the
participant and his or her spouse, and for the amount required to close
on the purchase. The participant must actually bear all or part of the
cost of the purchase. If the participant purchases a primary residence
with someone other than his or her spouse, only the portion of the
purchase costs that is borne by the participant will be considered in
making the loan. A residential loan will not be made for the purpose of
paying off an existing mortgage or otherwise providing financing for a
previously purchased primary residence.
(b) The participant's primary residence is his or her principal
residence. A primary residence may include a house, a townhouse, a
condominium, a share in a cooperative housing corporation, or a mobile
home; a primary residence does not include a second home or vacation
home. A participant cannot have more than one primary residence.
(c) Purchase of a primary residence means acquisition of the
residence through the exchange of cash or other property or through the
total construction of a new residence. A residential loan will not be
made for a lease-to-buy option, unless the option to buy is being
exercised and the documentation states that the funds are being used to
purchase the primary residence. Construction of an addition to or the
renovation of a residence or the purchase of land only does not
constitute the purchase of a primary residence.
[[Page 31695]]
(d) The amount required to close on the purchase of a primary
residence does not include points or loan origination fees charged for
a loan. In addition, real estate taxes cannot be included.
(e) The documentation required for a loan under this section is as
follows:
(1) For all purchases, except for construction, a signed sale/
purchase contract/settlement offer or agreement or addendum; or
(2) For construction, a signed builder's agreement/contract; and
(3) For requests including closing costs and/or settlement charges,
a loan estimate/worksheet/statement/closing disclosure from a mortgage
company.
(f) The documentation provided under this section must meet the
requirements set forth by the TSP record keeper.
0
129. Revise Sec. 1655.21 to read as follows:
Sec. 1655.21 Loan fee.
The TSP will charge a participant a $50.00 loan fee when it
disburses a general purpose loan and a $100.00 loan fee when it
disburses a residential loan and will deduct the applicable fee from
the proceeds of the loan.
PART 1690--THRIFT SAVINGS PLAN
0
130. The authority citation for part 1690 continues to read as follows:
Authority: 5 U.S.C. 8474.
0
131. Amend Sec. 1690.1 as follows:
0
a. Remove the definitions of ``Account or individual account'' and
``Account balance'';
0
b. Remove the definition of ``Agency Automatic (1%) Contributions'' and
add in its place a definition for ``Agency automatic (1%)
contributions'';
0
c. Remove the definition of ``Contribution allocation'';
0
d. Revise the definitions of ``Employer contributions'' and ``In-
service withdrawal request'';
0
e. Add in alphabetical order definitions for ``Investment election'',
``L Fund'', and ``Post-employment distribution request'';
0
f. Remove the definition of ``Post-employment withdrawal request'';
0
g. Revise the definitions of ``Roth balance'', paragraph (1)(iii) of
the definition of ``Roth initiation'', the definition of ``Source of
contributions'', paragraph (1) of the definition of ``Tax-deferred
balance'', and the definition of ``Traditional balance'';
0
h. Remove the definition of ``Trustee-to-trustee transfer or
transfer'';
0
i. Add in alphabetical order a definition for ``TSP core fund'';
0
j. Remove the definition of ``TSP Fund'';
0
k. Revise the definition of ``TSP record keeper''; and
0
l. Remove the definition of ``TSP website'' and add a definition for
``TSP website'' in its place.
The revisions and additions read as follows:
Sec. 1690.1 Definitions.
* * * * *
Agency automatic (1%) contributions means any contributions made
under 5 U.S.C. 8432(c)(1) and (c)(3). It also includes service
automatic (1%) contributions made under 5 U.S.C. 8440e(e)(3)(A).
Agency matching contributions means any contributions made under 5
U.S.C. 8432(c)(2). It also includes service matching contributions
under 5 U.S.C. 8440e(e)(3)(B).
* * * * *
Employer contributions means agency automatic (1%) contributions
under 5 U.S.C. 8432(c)(1), 8432(c)(3), or 5 U.S.C. 8440e(e)(3)(A) and
agency matching contributions under 5 U.S.C. 8432(c)(2) or 5 U.S.C.
8440e(e)(3)(B).
* * * * *
In-service withdrawal request means a properly completed withdrawal
election for either an age-based in-service withdrawal under 5 CFR
1650.41 or a financial hardship in-service withdrawal under 5 CFR
1650.42.
Investment election means the participant's apportionment of his or
her future contributions, loan payments, and rollovers from eligible
employer plans or traditional IRAs among the TSP core funds.
L Fund means the Lifecycle Funds described in 5 CFR part 1601,
subpart E.
* * * * *
Post-employment distribution request means a properly completed
distribution withdrawal election under 5 CFR 1650.24.
* * * * *
Roth balance means the sum of:
(1) Roth contributions and associated earnings; and
(2) Amounts rolled over to the TSP from a Roth account maintained
by an eligible employer plans and earnings on those amounts.
* * * * *
Roth initiation date * * *
(1) * * *
(iii) The date used, by a plan from which the participant directly
rolled over Roth money into the TSP, to measure the participant's Roth
5 year non-exclusion period.
* * * * *
Source of contributions means traditional contributions, Roth
contributions, agency automatic (1%) contributions, or agency matching
contributions. All amounts in a participant's account are attributed to
one of these four sources. Catch-up contributions, rollovers, and loan
payments are included in the traditional contribution source or the
Roth contribution source.
* * * * *
Tax-deferred balance * * *
(1) All contributions and rollovers in a participant's traditional
balance that would otherwise be includible in gross income if paid
directly to the participant and earnings on those amounts; and
* * * * *
Traditional balance means the sum of:
(1) Tax-deferred contributions and associated earnings;
(2) Tax-deferred amounts rolled over into the TSP and associated
earnings;
(3) Tax-exempt contributions and associated earnings;
(4) Agency matching contributions and associated earnings;
(5) Agency automatic (1%) contributions and associated earnings.
* * * * *
TSP core fund means an investment fund established pursuant to 5
U.S.C. 8438(b)(1)(A)-(E) and (c)(2).
TSP record keeper means the entities the Board engages to perform
record keeping and administration services for the Thrift Savings Plan.
TSP website means the internet location(s) maintained by the TSP
and/or its record keeper, which contain(s) information about the TSP
and by which TSP participants may, among other things, access their
accounts by computer.
* * * * *
0
132. Revise Sec. 1690.12 to read as follows:
Sec. 1690.12 Power of attorney.
(a) A participant or beneficiary can appoint an agent to conduct
business with the TSP on his or her behalf by using a power of attorney
(POA). The agent is called an attorney-in-fact. The TSP record keeper
must approve a POA before the agent can conduct business with the TSP;
however, the TSP record keeper will accept a document that was signed
by the agent before the TSP record keeper approved the POA. The TSP
record keeper will approve a POA if it meets the following conditions:
(1) The POA must give the agent either general or specific powers,
as explained in paragraphs (b) and (c) of this section;
(2) The POA must be signed by the participant;
[[Page 31696]]
(3) The POA must provide the names and addresses of the participant
and the agent;
(4) The POA must meet the state law requirements of the
participant's state of domicile as determined by the address on file
with the TSP record keeper;
(5) The POA must be a complete document; and
(6) The POA must be submitted to the TSP record keeper for
approval.
(b) A general POA gives an agent unlimited authority to conduct
business with the TSP, including the authority to sign any TSP-related
document. Additional information regarding general powers of attorney
can be accessed at https://www.tsp.gov.
(c) A specific power of attorney gives an agent the authority to
conduct specific TSP transactions. A specific POA must expressly
describe the authority it grants. Additional information regarding
specifical powers of attorney, as well as a sample form, can be
accessed at https://www.tsp.gov.
0
133. Revise Sec. 1690.13 to read as follows:
Sec. 1690.13 Guardianship and conservatorship orders.
(a) A court order can authorize an agent to conduct business with
the TSP on behalf of an incapacitated participant or beneficiary. The
agent is called a guardian or conservator and the incapacitated person
is called a ward. The TSP record keeper must approve a court order
before an agent can conduct business with the TSP; however, the TSP
record keeper will accept a document that was signed by the agent
before the TSP record keeper approved the court order. The TSP record
keeper will approve a court order appointing an agent if the following
conditions are met:
(1) A court of competent jurisdiction (as defined at Sec. 1690.1)
must have issued the court order;
(2) The court order must give the agent either general or specific
powers, as explained in paragraphs (b) and (c) of this section; and
(3) The agent must demonstrate that he or she meets any
precondition specified in the court order, such as a bonding
requirement.
(b) A general grant of authority gives a guardian or conservator
unlimited authority to conduct business with the TSP, including the
authority to sign any TSP-related document. By way of example, an order
gives a general grant authority by appointing a ``guardian of the
ward's estate,'' by permitting a guardian to ``conduct business
transactions'' for the ward, or by authorizing a guardian to care for
the ward's ``personal property'' or ``Federal Government retirement
benefits.''
(c) A specific grant of authority gives a guardian or conservator
authority to conduct specific TSP transactions. Such an order must
expressly describe the authority it grants. By way of example, an order
may authorize an agent to ``obtain information about the ward's TSP
account'' or ``borrow or withdraw funds from the ward's TSP account.''
0
134. Amend Sec. 1690.14 by revising paragraph (b) to read as follows:
Sec. 1690.14 Checks made payable to the Thrift Savings Plan.
* * * * *
(b) TSP payment address. The TSP record keeper has established an
address for the receipt of specified TSP payments. The TSP record
keeper will not answer correspondence mailed to that payment address.
0
135. Revise Sec. 1690.15 to read as follows:
Sec. 1690.15 Freezing an account--administrative holds.
(a) The TSP record keeper may freeze (e.g., place an administrative
hold on) a participant's account for any of the following reasons:
(1) Pursuant to a qualifying retirement benefits court order as set
forth in part 1653 of this chapter;
(2) Pursuant to a request from the Department of Justice under the
Mandatory Victims Restitution Act;
(3) Upon the death of a participant;
(4) Upon suspicion or knowledge of fraudulent account activity or
identity theft;
(5) In response to litigation pertaining to an account;
(6) For operational reasons (e.g., to correct a processing error or
to stop payment on a check when account funds are insufficient);
(7) Pursuant to a written request from a participant made in the
manner prescribed by the TSP record keeper; and
(8) For any other reason necessary to ensure the integrity of TSP
accounts or compliance with law.
(b) [Reserved]
[FR Doc. 2022-10875 Filed 5-23-22; 8:45 am]
BILLING CODE 6760-01-P