[Federal Register Volume 90, Number 55 (Monday, March 24, 2025)]
[Rules and Regulations]
[Pages 13407-13408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-04913]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 90, No. 55 / Monday, March 24, 2025 / Rules
and Regulations
[[Page 13407]]
FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
5 CFR Part 1653
Methodology for Calculating Earnings on Court-Ordered Payments
AGENCY: Federal Retirement Thrift Investment Board.
ACTION: Final rule.
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SUMMARY: The Federal Retirement Thrift Investment Board (FRTIB) adopts
as final, without changes, a proposed rule concerning the methodology
used to calculate earnings and losses in connection with court-ordered
payments to spouses, former spouses, children, or dependents (i.e.,
payees) of Thrift Savings Plan (TSP) participants.
DATES: The effective date is March 24, 2025.
FOR FURTHER INFORMATION CONTACT:
For press inquiries: James Kaplan, Office of External Affairs,
(202) 864-7150.
For information about this final rule: Laurissa Stokes, Office of
General Counsel, (202) 308-7707.
SUPPLEMENTARY INFORMATION: The FRTIB administers the TSP, which was
established by the Federal Employees' Retirement System Act of 1986
(FERSA), Public Law 99-335, 100 Stat. 514. The TSP is a retirement
savings plan for Federal civilian employees and members of the
uniformed services. It 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.
Section 8435(c) of FERSA requires the FRTIB to obey certain
domestic relations court orders requiring payments from a TSP
participant's account to the participant's spouse, former spouse,
child, or dependent. A TSP account can be divided by means of a court
decree of divorce, annulment, or legal separation; or a court order or
court-approved property settlement agreement resulting from such a
decree. A court order to divide a TSP account may be issued at any
stage of a divorce, annulment, or legal separation proceeding.
Court orders sometimes award the participant's spouse, former
spouse, child, or dependent (i.e., the payee) earnings that accrue
between the date used to calculate the payee's entitlement and the date
payment is made. Currently, when a court order awards earnings, the
FRTIB calculates the amount to which the payee is entitled by
determining the payee's award amount (e.g., the percentage or fraction
of the participant's account awarded by the court) and, based on the
participant's investment allocation as of the date used to calculate
the payee's entitlement, the number and composition of shares that the
payee's award amount would have purchased as of that date. The FRTIB
then multiplies the price per share as of the payment date by the
calculated number and composition of shares to determine the payee's
entitlement.
The FRTIB contracts with Accenture Federal Services to provide,
maintain, and operate the technology platforms necessary to deliver
retirement plan record keeping services to TSP participants. These
services include processing retirement benefits court orders. The FRTIB
updates its methodology for calculating court ordered earnings to align
with the methodology used by Accenture Federal Services. Accenture
Federal Services calculates earnings by using a money-weighted return
commonly referred to in the financial industry as the internal rate of
return. This methodology considers the influence of cash flows (for
example, contributions, withdrawals, loans, and loan payments) on asset
allocation, and the resulting effect on investment performance.
Specifically, the FRTIB will calculate earnings by (i) identifying
the beginning balance, ending balance, and the cash flows between the
two balances over the period of time between the entitlement date and
the payment date, (ii) calculating the rate of return that increases
(or reduces in the case of a loss) the balance at the beginning of the
period, accounting for all cash flows, to equal the balance at the end
of the period; and then (iii) multiplying the payee's award amount by
the resulting rate of return.
The methodology ensures that the payee's entitlement consists of an
award component and an earnings component that each reflects the
percentage or fraction specified in the court order. The award
component reflects the percentage or fraction of the participant's
account on the entitlement date as specified in the order. The earnings
component is based on the rate of return experienced on the
participant's account during the period from the entitlement date to
the payment date.
On November 26, 2024, the FRTIB published a proposed rule with
request for public comments in the Federal Register (89 FR 93223,
November 26, 2024). We received no comments. For the reasons explained
above, the FRTIB is adopting the proposed rule as final, without any
substantive changes.
Regulatory Flexibility Act
I certify that this regulation will not have a significant economic
impact on a substantial number of small entities. This regulation will
affect Federal employees and members of the uniformed services who
participate in the Thrift Savings Plan, which is a Federal defined
contribution retirement savings plan created under the Federal
Employees' Retirement System Act of 1986 (FERSA), Public Law 99-335,
100 Stat. 514, and which is administered by the FRTIB.
Paperwork Reduction Act
I certify that these regulations do 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, 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
section 1532 is not required.
[[Page 13408]]
Submission to Congress and the General Accountability Office
Pursuant to 5 U.S.C. 801(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 Government Accountability
Office 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 in 5 CFR Part 1653
Alimony, Child support, 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 1653--COURT ORDERS AND LEGAL PROCESSES AFFECTING THRIFT
SAVINGS PLAN ACCOUNTS
0
1. 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).
0
2. Amend Sec. 1653.1 in paragraph (b) by adding in alphabetical order
the definition of ``Entitlement date'' and revising the definition of
``Payment date'' to read as follows:
Sec. 1653.1 Definitions.
* * * * *
(b) * * *
Entitlement date means the date determined in accordance with Sec.
1653.4(b) and (c).
Payment date refers to the date on which a temporary account is
established for the payee in the Thrift Savings Plan (TSP).
* * * * *
0
3. Amend Sec. 1653.3 by revising paragraph (f)(4)(ii) to read as
follows:
Sec. 1653.3 Processing retirement benefits court orders.
* * * * *
(f) * * *
(4) * * *
(ii) The anticipated payment date;
* * * * *
0
4. Amend Sec. 1653.4 by revising paragraphs (a), (c), (d)(2), and (f)
to read as follows:
Sec. 1653.4 Calculating entitlements.
(a) For purposes of computing the amount of a payee's entitlement
under this section, a participant's TSP account balance will include
any loan balance outstanding as of the entitlement date unless the
court order provides otherwise.
* * * * *
(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 effective date of the court order.
(d) * * *
(2) The vested account balance on the payment 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.
(2) If earnings are awarded, the TSP record keeper will calculate
earnings by:
(i) Identifying the beginning balance, ending balance, and the cash
flows between the two balances over the period of time between the
entitlement date and the payment date;
(ii) Calculating the rate of return that increases (or reduces in
the case of a loss) the balance at the beginning of the period,
accounting for all cash flows, to equal the balance at the end of the
period; and
(iii) Multiplying the payee's award amount by the resulting rate of
return.
* * * * *
0
5. Amend Sec. 1653.5 by revising paragraphs (d) and (h) to read as
follows:
Sec. 1653.5 Payment.
* * * * *
(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 payment date. 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.
* * * * *
(h) If the payee dies before a payment is disbursed from the TSP,
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 the payment date, the order will
be honored so long as it is submitted to the TSP record keeper before
the TSP account has been closed.
* * * * *
0
6. Revise Sec. 1653.14 to read as follows:
Sec. 1653.14 Calculating entitlements.
A qualifying legal process can only require the payment of a
specified dollar amount from the TSP. Payment pursuant to a qualifying
legal process will be calculated in accordance with Sec. 1653.4(a),
(d), (f), and (g), except that the term ``payment date'' shall mean the
date the payment is disbursed from the TSP.
0
7. Revise Sec. 1653.15 to read as follows:
Sec. 1653.15 Payment.
Payment pursuant to a qualifying legal process will be made in
accordance with Sec. 1653.5, except the term ``payment date'' shall
mean the date the payment is disbursed from the TSP.
0
8. Amend Sec. 1653.34 by revising paragraph (d)(4)(ii) to read as
follows:
Sec. 1653.34 Processing Federal tax levies and criminal restitution
orders.
* * * * *
(d) * * *
(4) * * *
(ii) The anticipated date of disbursement.
[FR Doc. 2025-04913 Filed 3-21-25; 8:45 am]
BILLING CODE 6760-01-P