[Federal Register Volume 90, Number 197 (Wednesday, October 15, 2025)]
[Proposed Rules]
[Pages 48267-48268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-19538]
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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. 197 / Wednesday, October 15, 2025 /
Proposed Rules
[[Page 48267]]
FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
5 CFR Part 1650
RIN 3222-AA00
Roth In-Plan Conversions
AGENCY: Federal Retirement Thrift Investment Board.
ACTION: Proposed rule.
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SUMMARY: The Federal Retirement Thrift Investment Board (FRTIB)
proposes to amend its regulations to permit participants in the Thrift
Savings Plan (TSP) to convert amounts in their traditional TSP account
balances to amounts in their Roth TSP account balances, subject to
applicable tax consequences.
DATES: Comments must be received on or before November 14, 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: Jim Kaplan at
(202) 864-7150. For information about how to comment on this proposed
rule: Laurissa Stokes at (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
8401-80.
Since the introduction of Roth TSP contributions in 2012,
participants have expressed interest in converting traditional balances
to Roth balances within the plan. The 2024 TSP Participant Satisfaction
Survey asked participants about their interest in a Roth in-plan
conversion feature. Thirty-five percent of respondents replied that
they are ``likely'' or ``extremely likely'' to use an in-plan
conversion feature if offered in the TSP.
This proposed rule would permit all TSP participants (active and
separated), as well spouse beneficiaries, to convert amounts in their
traditional balance to amounts their Roth balance. In accordance with
the Internal Revenue Code, the converted amount would be treated as a
distribution from the traditional account that is taxable in the year
the conversion is done.
Under the proposed rule, in-plan conversion requests would be
subject to conditions designed to discourage frequent, small
transactions and simplify administrative operations. For example, each
conversion must be at least $500, and the number of conversions per
calendar year would be capped by the TSP record keeper.
The FRTIB believes that offering Roth in-plan conversions will
improve participant satisfaction and provide valuable retirement
planning flexibility while maintaining the TSP's low administrative
costs.
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, members of the uniformed services, and spouse
beneficiaries 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 1650
Alimony, Claims, Government employees, Pensions, Retirement.
Ravindra Deo,
Executive Director, Federal Retirement Thrift Investment Board.
The FRTIB proposes to amend 5 CFR chapter VI as follows:
PART 1650--METHODS OF WITHDRAWING FUNDS FROM THE THRIFT SAVINGS
PLAN
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1. 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).
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2. Amend Part 1650 by revising Subpart F to read as follows:
Subpart F--Roth In-Plan Conversions
Sec. 1650.60 Eligibility and general rules for Roth in-plan
conversions
(a) A participant or beneficiary participant may request Roth in-
plan conversions, subject to a maximum number of conversion requests
per calendar year, as determined by the TSP record keeper.
(b) To be eligible for a Roth in-plan conversion, the participant
or beneficiary participant must have a vested account balance of at
least $500 at the time of the request.
(c) The total amount of a conversion request must be at least $500.
(d) Participants must retain at least $500 in each of their tax-
deferred employee contribution, tax-exempt contribution, agency
automatic (1%) contribution, and agency matching contribution balances.
(e) Amounts invested in the Mutual Fund Window cannot be converted
unless those amounts are first transferred back into one or more of the
TSP core funds.
(f) Administrative holds placed pursuant to section 1690.15 will
restrict
[[Page 48268]]
an individual from requesting a Roth in-plan conversion.
[FR Doc. 2025-19538 Filed 10-14-25; 8:45 am]
BILLING CODE 6760-01-P