[Federal Register Volume 60, Number 77 (Friday, April 21, 1995)]
[Rules and Regulations]
[Pages 19990-19992]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-9606]
[[Page 19989]]
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Part II
Federal Retirement Thrift Investment Board
_______________________________________________________________________
5 CFR Part 1620
Thrift Savings Plan, Continuation of Eligibility; Interim Final Rule
Federal Register / Vol. 60, No. 77 / Friday, April 21, 1995 / Rules
and Regulations
[[Page 19990]]
FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
5 CFR Part 1620
Thrift Savings Plan; Continuation of Eligibility
AGENCY: Federal Retirement Thrift Investment Board.
ACTION: Interim rule with request for comments.
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SUMMARY: The Executive Director of the Federal Retirement Thrift
Investment Board (Board) is publishing interim regulations concerning
the eligibility of certain individuals to have make-up contributions
credited to their Thrift Savings Plan (TSP) accounts and, in certain
cases, restore withdrawn funds and reestablish loan accounts. Section 4
of the Uniformed Services Employment and Reemployment Rights Act amends
Title 5 of the United States Code to add a new section 8432b that
addresses TSP benefits that apply to any Federal employee whose release
from military service, discharge from hospitalization related to that
service, or other similar event making the individual eligible to seek
restoration from leave-without-pay status or reemployment under 38
U.S.C. Chapter 43, occurs on or after August 2, 1990. This interim rule
governs retroactive participation in the TSP by these employees.
DATES: The interim rule is effective August 2, 1990. Comments must be
received by June 21, 1995.
ADDRESSES: Comments may be sent to: John J. O'Meara, Federal Retirement
Thrift Investment Board, 1250 H Street NW., Washington, DC 20005.
FOR FURTHER INFORMATION CONTACT:
John J. O'Meara (202) 942-1660.
SUPPLEMENTARY INFORMATION: These regulations are being given
retroactive effect to August 2, 1990, in order to provide eligible
employees an opportunity to seek and obtain TSP benefits from the
effective date of Public Law 103-353.
These regulations include provisions to ensure that all employees
are given the opportunity to make up any TSP contributions that were
not made to their TSP accounts because they separated (or were in a
leave-without-pay status) from Federal civilian employment to perform
military service. Employing agencies are required to deposit the
appropriate amount of Agency Matching Contributions to the accounts of
those employees covered by the Federal Employees' Retirement System
(FERS) who elect to make up missed contributions. In addition,
employing agencies are required to deposit to the accounts of eligible
FERS employees an amount equal to one percent of their basic pay for
the retroactive period. Subject to de minimis rules, lost earnings will
also be paid by the employing agencies on retroactive agency
contributions that are reported for investment.
Employing agencies are required to notify the TSP recordkeeper if
an employee's Agency Automatic (1%) Contributions and associated
earnings were forfeited because the employee was not vested when he or
she separated to perform military service. The employing agency will
request that these funds be restored.
Employees who are subject to the TSP automatic cashout provisions
(those employees whose account balances were $3,500 or less) and
employees who separated without eligibility for retirement benefits and
prior to March 1995 withdrew amounts greater than $3,500, may elect to
have the separation for military service treated as if it had never
occurred. These employees will be allowed to return amounts to the
Thrift Savings Plan that represent the full amount of the withdrawal.
In addition, in certain cases, if a taxable distribution was declared
on a Thrift Savings Plan loan and the employee returns the full amount
of the withdrawal to the Thrift Savings Plan, the taxable distribution
that was declared on a Thrift Savings Plan loan may be reversed. In
this case, the employee will be able to resume regular loan payments.
Regulatory Flexibility Act
I certify that these regulations will not have a significant
economic impact on a substantial number of small entities. They will
affect only Federal employees who leave, or have left, Federal civilian
service to perform military service and have, under certain conditions,
returned to Federal civilian service.
Paperwork Reduction Act
I certify that these regulations do not require additional
reporting under the Paperwork Reduction Act.
Waiver of Notice of Proposed Rulemaking and 30-Day Delay of Effective
Date
Under 5 U.S.C. 553(b)(B) and (d)(3), I find that good cause exists
for waiving the general notice of proposed rulemaking and for making
these regulations effective in less than 30 days. It is necessary for
these regulations to be effective as of August 2, 1990, which is the
day on which employees eligible under the regulations were first
eligible to obtain retroactive Thrift Savings Plan benefits.
List of Subjects in 5 CFR Part 1620
Employee benefit plans, Government employees, Retirement, Pensions.
Dated: April 13, 1995.
Roger W. Mehle,
Executive Director, Federal Retirement Thrift Investment Board.
Accordingly, 5 CFR Part 1620 is amended as follows:
PART 1620--CONTINUATION OF ELIGIBILITY
1. The authority citation for Part 1620 is revised to read as
follows:
Authority: 5 U.S.C. 8474 and 8432b; Pub. L. 99-591, 100 Stat.
3341; Pub. L. 100-238, 101 Stat. 1744; Pub. L. 100-659, 102 Stat.
3910.
2. Part 1620 is amended by adding subpart H, consisting of
Secs. 1620.100 through 1620.107, to read as follows:
Subpart H--Military Service
Sec.
1620.100 Scope.
1620.101 Definitions.
1620.102 Processing contribution elections.
1620.103 Processing lost earnings.
1620.104 Agency payments to recordkeeper; agency ultimately
responsible.
1620.105 Restoring forfeited Agency Automatic (1%) Contributions.
1620.106 Returning withdrawals.
1620.107 Agency responsibilities.
Subpart H--Military Service
Sec. 1620.100 Scope.
(a) General. To be covered by this subpart, an employee must have:
(1) Been separated from Federal civilian service or entered leave-
without-pay status in order to perform military service;
(2) Been reemployed; and
(3) Become eligible to seek reemployment by virtue of a release
from military service, discharge from hospitalization, or other similar
event that occurred on or after August 2, 1990.
(b) Other rules. Except as provided in this part, the rules
governing contributions to the TSP set forth in 5 CFR Part 1600 will
apply to persons reemployed under this subpart.
Sec. 1620.101 Definitions.
As used in this subpart:
(a) Basic pay has one of two meanings:
(1) For the portion of the retroactive period when an employee did
not receive a Federal civilian salary, the rate of basic pay is that
which would have been payable to the employee if the
[[Page 19991]] employee had remained continuously employed in the
position which he or she last held before separating (or entering
leave-without-pay status) to perform military service;
(2) For the portion of the retroactive period that occurs after the
employee is reemployed, his or her actual basic pay will be used to
calculate contributions.
(b) Current contributions means those contributions that are made
prospectively for any pay period after the employee has been
reemployed.
(c) Employee means any Federal employee whose release from military
service, discharge from hospitalization, or other similar event making
the individual eligible to seek restoration or reemployment under 38
U.S.C. chapter 43 occurs on or after August 2, 1990.
(d) Leave-without-pay means a temporary nonpay status and absence
from duty (including military furlough) to perform military service.
(e) Recordkeeper means the organization designated by the Federal
Retirement Thrift Investment Board as the Thrift Savings Plan's
recordkeeper.
(f) Reemployed or reemployment means reemployed in (or restored to)
a position pursuant to 38 U.S.C. chapter 43, which is subject to 5
U.S.C. chapter 84 or which entitles the employee to contribute to the
Thrift Savings Plan pursuant to 5 U.S.C. 8351.
(g) Retroactive period means the period for which an employee is
entitled to make up missed Employee Contributions and to receive
retroactive Agency Automatic (1%) Contributions and Agency Matching
Contributions.
(1) Beginning of retroactive period. For an employee who was
eligible to make contributions when military service began, the
retroactive period begins on the date following the effective date of
separation or, in the case of leave-without-pay, the date the employee
enters leave-without-pay status. For an employee who was not eligible
to make contributions when military service began, the retroactive
period begins on the first day of the first pay period in the election
period during which the employee would have been eligible to make
contributions had the employee remained in Federal civilian service.
(2) End of retroactive period. The retroactive period ends on the
earlier of the following two dates: the date before the first day of
the first election period during which a contribution election could
have been made effective after reemployment, or the last day of the pay
period before the pay period during which routine current contributions
are begun after the employee is reemployed (or restored). If an
employee who was making contributions when he or she separated elects
not to make routine current contributions, the ending date of the
retroactive period is the last day of the pay period during which the
employee elects to terminate contributions.
(h) Separation or separated means the period an employee was
separated from Federal civilian service (or entered a leave-without-pay
status) in order to perform military service.
Sec. 1620.102 Processing contribution elections.
(a) Current contribution elections. Immediately upon reemployment,
an employee's agency will give an eligible employee the opportunity to
submit a contribution election form (Form TSP-1) to make current
contributions. The effective date of the current Form TSP-1 will be the
first day of the first full pay period in the most recent TSP election
period. If the employee is reemployed during a TSP Open Season but
before the election period, he or she can also submit an election form
that will become effective the first day of the first full pay period
in the following election period.
(b) Retroactive contribution elections. (1) An employee has the
following options for making retroactive contributions:
(i) If the employee had a valid contribution election form (Form
TSP-1) on file when he or she separated, that election form will be
reinstated for purposes of retroactive contributions upon the
employee's reemployment, unless a new contribution election form is
submitted to terminate all retroactive contributions or those
contributions that would have been made from the date of separation
through the end of the Open Season that occurred immediately after the
separation.
(ii) Instead of making the contributions for the retroactive period
under the reinstated contribution election form, the employee may
submit a new election form for any Open Season that occurred during the
retroactive period. However, the allocation election on each Form TSP-1
for the retroactive period must be the same as the allocation election
on the current Form TSP-1.
(2) An employee who terminated contributions within two months
before entering military service will be eligible to make a retroactive
contribution election effective for the first Open Season that occurs
after the effective date that the contributions were terminated. This
election may be made even if the termination was made outside of an
Open Season.
(3) Employees may not make any retroactive contributions that will
cause them to exceed the Internal Revenue Service's elective deferral
limit. If an employee's current contributions, when added to the make-
up contributions, will exceed the annual elective deferral limit, the
employing agency must suspend the make-up contributions in accordance
with 5 CFR 1605.2(b)(2)(ii).
Sec. 1620.103 Processing lost earnings.
(a) Agency Automatic (1%) Contributions. Subject to the de minimis
rules in 5 CFR part 1606, employing agencies are required to pay lost
earnings on the Agency Automatic (1%) Contributions that are made for
the retroactive period.
(b) Agency Matching Contributions. Subject to the de minimis rules
in 5 CFR part 1606, employing agencies are required to pay lost
earnings for the agency contributions that match make-up Employee
Contributions.
(c) Make-up Employee Contributions. Employing agencies may not pay
lost earnings for make-up Employee Contributions associated with the
retroactive period.
(d) Lost earnings calculation. Lost earnings will be calculated on
all retroactive agency contributions using the rates of return for the
Government Securities Investment Fund (G Fund), unless the employee
submitted one or more interfund transfer requests during the period of
separation. In the case of interfund transfer requests, the earnings
will be calculated using the G Fund rates of return until the first
interfund transfer was processed. The contribution that is subject to
lost earnings will be moved to the investment fund(s) the employee
requested and lost earnings will be calculated based on the earnings
for that fund(s). The amount of lost earnings calculated will be posted
to the investment fund(s) to which the contribution was moved. If there
were no interfund transfers processed during the lost earnings
calculation period, the amount of lost earnings calculated will be
posted to the employee's G Fund account.
Sec. 1620.104 Agency payments to recordkeeper; agency ultimately
chargeable.
(a) Agency making payments to recordkeeper. The current employing
agency will always be the agency responsible for making payments to the
recordkeeper for all contributions (both employee and agency) and lost
earnings, regardless of whether some of that expense is ultimately
chargeable to a prior employing agency. [[Page 19992]]
(b) Agency ultimately chargeable with expense. The agency
ultimately chargeable with the expense of agency contributions and lost
earnings attributable to the retroactive period is ordinarily the
agency that reemployed the employee. However, if an employee changed
agencies during the period between the date of reemployment and October
13, 1994, the employing agency as of October 13, 1994, is the agency
ultimately chargeable with the expense.
(c) Reimbursement by agency ultimately chargeable with expense. If
the agency that made the payments to the recordkeeper for agency
contributions and lost earnings is not the agency ultimately chargeable
with that expense, the agency that made the payments to the
recordkeeper may, but is not required to, obtain reimbursement from the
agency ultimately chargeable with the expense.
Sec. 1620.105 Restoring forfeited Agency Automatic (1%) Contributions.
If an employee's Agency Automatic (1%) Contributions were forfeited
because the employee was not vested when he or she separated to perform
military service, the employee must notify the employing agency that a
forfeiture occurred. Employing agencies will submit a written request
to the recordkeeper to restore any Agency Automatic (1%) Contributions
that were forfeited from an employee's account because he or she was
not vested at the time the employee separated to perform military
service.
Sec. 1620.106 Returning withdrawals.
(a) General. Employees who are subject to the TSP automatic cashout
provisions (employees whose account balances were $3,500 or less) and
employees who separated without eligibility for retirement benefits and
prior to March 1995 withdrew amounts greater than $3,500, may elect to
have the separation for military service treated as if it had never
occurred. These employees will be allowed to return amounts to the
Thrift Savings Plan that represent the full amount of the withdrawal.
Eligible employees must notify the recordkeeper by April 21, 1996, or
one year from the date of reemployment, whichever is later, of their
intent to return the withdrawn funds.
(b) Documentation. An eligible employee who elects to return the
full amount of a withdrawal under this section must provide
documentation of reemployment to the recordkeeper. The recordkeeper
will notify the employee of the amount of funds to be returned and the
deadline for making that payment. The employee must provide the funds
in a single payment to the recordkeeper within 90 days after the
recordkeeper sends the employee the notice advising of the amount and
procedures for returning the funds.
(c) Earnings. Employees will not receive retroactive earnings on
any amounts withdrawn that they later return to their accounts.
(d) Taxable distribution reversed. Employees who return withdrawn
funds under this section may be eligible to have a taxable distribution
associated with a loan reversed. At the time the recordkeeper notifies
the employee of the amount required to return the withdrawn funds, it
will notify the employee whether he or she is eligible to have a
taxable distribution reversed.
Sec. 1620.107 Agency responsibilities.
(a) General. Each employing agency must establish procedures for
implementing these regulations. These procedures must at a minimum,
require agency personnel to identify and notify eligible employees
concerning their options under these regulations and tell them the time
period within which those options must be exercised. For employees who
are reemployed on or after August 2, 1990, and before April 21, 1995,
the agency must perform these functions by June 20, 1995. For employees
who are reemployed on or after April 21, 1995, employing agencies must
perform these functions within 60 days of the employee's reemployment.
An employee must submit a written request to the employing agency to
make up Employee Contributions for the retroactive period on or before
April 21, 1996, or one year from the date the employee was reemployed,
whichever is later, or forfeit the right to make up these
contributions.
(b) Agency records; procedure for reimbursement. The agency that is
making the payments to the recordkeeper for all contributions (both
employee and agency) and lost earnings will obtain from prior employing
agencies whatever information is necessary in order to make accurate
payments. If a prior employing agency is ultimately chargeable under
Sec. 1620.104(b) for all or part of the expense of agency contributions
and lost earnings, the agency making the payments to the recordkeeper
will determine the procedure to follow in order to collect amounts owed
to it by the agency ultimately chargeable with the expense.
(c) Payment schedule; matching contributions report. Agencies will,
with the employee's consent, prepare a payment schedule for making
retroactive Employee Contributions. In addition, the employing agencies
will calculate the Agency Matching Contributions that will be reported
for investment to the recordkeeper in equal installments for each pay
period covered by the payment schedule. The employing agency may impose
limits on the maximum amount of time during which an employee may make
up the missed contributions. This maximum amount of time may be no less
than two times and no more than four times the number of pay periods
that were covered by the period of missed contributions. An employee
may decide to terminate the make-up contributions; however, such a
decision is irrevocable.
(d) Agency Automatic (1%) Contributions. Employing agencies must
calculate the Agency Automatic (1%) Contributions for all reemployed
FERS employees, report these contributions to the recordkeeper, and
submit lost earnings records to cover the retroactive period by June
20, 1995, or 60 days from the date of reemployment, whichever is later.
(e) Forfeiture restoration. When notified by an employee that a
forfeiture of the Agency Automatic (1%) Contributions occurred after
the employee separated to perform military service, the employing
agency must submit a written request to the recordkeeper to restore
these funds.
(f) Thrift Savings Plan Service Computation Date. The agencies must
review the Thrift Savings Plan Service Computation Date for all
reemployed Federal Employees' Retirement System employees for purposes
of crediting military service performed during the separation period.
If the period of military service has not been credited, the agency
must submit a corrected Thrift Savings Plan Service Computation Date to
the recordkeeper.
[FR Doc. 95-9606 Filed 4-20-95; 8:45 am]
BILLING CODE 6760-01-M
