[Federal Register Volume 90, Number 90 (Monday, May 12, 2025)]
[Proposed Rules]
[Pages 20132-20133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-08221]
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Proposed Rules
Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 90, No. 90 / Monday, May 12, 2025 / Proposed
Rules
[[Page 20132]]
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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
5 CFR Part 1655
Curing Missed Loan Payments
AGENCY: Federal Retirement Thrift Investment Board.
ACTION: Proposed rule.
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SUMMARY: The Federal Retirement Thrift Investment Board (FRTIB)
proposes to update its regulations regarding the methods available to
participants to cure missed loan payments. The proposed change will
also clarify the number of missed payments which must be brought back
into compliance by the last day of the quarter following the quarter in
which the payment was missed to avoid triggering a deemed distribution.
DATES: Comments must be received on or before July 11, 2025.
ADDRESSES: You may submit comments using one of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Office of General Counsel, Attn: Dharmesh Vashee,
Federal Retirement Thrift Investment Board, 77 K Street NE, Suite 1000,
Washington, DC 20002.
Comments will be made available to the public online at https://www.regulations.gov. Do not include any personally identifiable or
confidential information that you do not want publicly disclosed.
Anonymous comments are acceptable.
FOR FURTHER INFORMATION CONTACT: For press inquiries: James Kaplan at
(202) 809-2625. For information about how to comment on this proposed
rule: Elizabeth Harris at (202) 913-5300.
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.
The FRTIB proposes to update its regulations regarding the methods
available to participants to cure missed loan payments to include
recurring payroll loan deductions. The FRTIB also proposes to clarify
the number of missed payments which must be cured to avoid triggering a
deemed distribution.
Currently, under FRTIB regulations when a participant misses a loan
payment, the participant cannot make up the missed payment through a
scheduled payroll deduction. TSP will only accept a one-time payment in
the form of a check, guaranteed funds, or direct debit from a personal
savings or checking account. The FRTIB proposes to update its
regulation to allow participants to use recurring payroll loan
deductions to make up missed payments. This proposed change will
provide participants with greater flexibility when a loan payment is
missed due to a temporary change in payroll status, transfer to another
federal agency with a different pay schedule, or other circumstance.
When a participant elects to use a recurring payroll loan deduction
to make up a missed payment, the payroll deduction will shift or roll
the missed loan payment to the following month. For example, if a
participant misses a loan payment in March and restarts payroll loan
deductions in April, the April payroll deduction will satisfy the
missed March payment. However, the April payment will now be considered
missed. When a participant makes up a missed payment through a
subsequent month's payroll deduction, the participant will remain
behind on their loan repayment schedule by one payment until one of the
following occur: a one-time payment is submitted; the maximum loan term
is reached, and a deemed distribution occurs; or the participant misses
additional payment(s) and a deemed distribution is triggered.
The FRTIB further proposes to amend its regulations regarding the
number of missed payments which must be cured to avoid a deemed
distribution. IRS regulations provide flexibility to plan sponsors to
permit a cure period for missed loan payments that lasts no later than
the last day of the calendar quarter following the calendar quarter in
which the required installment payment was due. Currently, TSP
regulations are more stringent than the IRS requires, and TSP treats a
loan as a deemed distribution in instances where a participant has not
made up all missed payments by the end of the calendar quarter
following the calendar quarter in which the first payment was missed.
The FRTIB proposes to align its regulation with the maximum period
permitted under IRS regulations to reduce the instances where a
participant loan is treated as a deemed distribution in accordance with
section 72(p) of the Internal Revenue Code.
Regulatory Flexibility Act
This proposed 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 TSP.
Paperwork Reduction Act
This proposed 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.
List of Subjects in 5 CFR Part 1655
Credit, Government employees, Pensions, Retirement.
Ravindra Deo,
Executive Director, Federal Retirement Thrift Investment Board.
For the reasons stated in the preamble, the FRTIB proposes to amend
5 CFR chapter VI as follows:
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PART 1655--LOAN PROGRAM
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1. The authority citation for part 1655 continues to read as follows:
Authority: 5 U.S.C. 8432d, 8433(g), 8439(a)(3) and 8474.
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2. In Sec. 1655.14 amend by revising paragraph (e) to read as follows:
Sec. 1655.14 Loan payments.
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(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. The
participant can make-up the missed payment in the form of a check,
guaranteed funds, a one-time payment via loan direct debit from his or
her personal savings or checking account, or by resuming scheduled
loans payments by payroll deduction. If the participant does not make
up the missed payment by the end of the calendar quarter following the
calendar quarter in which the 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.
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[FR Doc. 2025-08221 Filed 5-9-25; 8:45 am]
BILLING CODE 6760-01-P