[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





-----------------------------------------------------------------------





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]]


-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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

[[Page 31673]]

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