[Federal Register Volume 62, Number 114 (Friday, June 13, 1997)]
[Rules and Regulations]
[Pages 32426-32432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-15463]
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_______________________________________________________________________
Part IV
Federal Retirement Thrift Investment Board
_______________________________________________________________________
5 CFR Part 1651
Death Benefits; Final Rule
Federal Register / Vol. 62, No. 114 / Friday, June 13, 1997 / Rules
and Regulations
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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
5 CFR Part 1651
Death Benefits
AGENCY: Federal Retirement Thrift Investment Board.
ACTION: Final rule.
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SUMMARY: The Executive Director of the Federal Retirement Thrift
Investment Board (Board) is publishing final regulations governing
death benefit payments from the Thrift Savings Plan (TSP). These
regulations set forth the Board's policies and procedures for
processing death benefit claims and death benefit payments under 5
U.S.C. 8433(e) and 8424(d).
DATES: This final rule is effective June 13, 1997.
FOR FURTHER INFORMATION CONTACT: John J. O'Meara (202) 942-1660.
SUPPLEMENTARY INFORMATION: The Board administers the TSP which was
established by the Federal Employees' Retirement System Act of 1986
(FERSA), Pub. L. 99-335, 100 Stat. 514. The provisions governing the
TSP are codified primarily in subchapters III and VII of Chapter 84 of
Title 5, United States Code (1994). The TSP is a tax-deferred
retirement savings plan for Federal employees that is similar to cash
or deferred arrangements established under section 401(k) of the
Internal Revenue Code. Sums in a participant's TSP account are held in
trust for that participant. 5 U.S.C. 8437(g).
The disbursement of death benefits from the TSP is governed by the
provisions of 5 U.S.C. 8433(e) and 8424(d). Under section 8433(e), if a
TSP participant dies before he or she has completed a withdrawal
election, the account is to be disbursed in accordance with the order
of precedence set forth at section 8424(d).
These regulations set forth the Board's policies and procedures for
processing death benefit claims and death benefit payments under 5
U.S.C. 8433(e) and 8424(d).
These regulations were published in proposed form on March 27, 1997
(62 FR 14653). No comments were received.
Section by Section Analysis
Section 1651.1 contains definitions of terms throughout these
regulations. A participant's domicile is important for a determination
of beneficiary under Sec. 1651.5 and Sec. 1651.9. Normally, the Board
would look to the participant's address at the time of death to
identify the participant's domicile; however, this practice presents
problems in the case of participants who are living overseas. In order
to permit the Board to look to the law of the United States in all
cases, the Board will use the state in which the participant is liable
for state income taxes. This information should be generally available
from the participant's agency.
Section 1651.2(a) sets forth the order of precedence as found in 5
U.S.C. 8424(d). Under the statutory order of precedence, payment is
made first to the beneficiary or beneficiaries designated by the
participant on a properly completed and filed designation of
beneficiary form. Form TSP-3, Designation of Beneficiary, has been
developed by the Board for that purpose. If the participant has elected
to withdraw his or her account in the form of certain types of
annuities (discussed below), the designation of beneficiary or
beneficiaries made on Form TSP-11-B, Beneficiary Designation for a TSP
Annuity, will supersede the statutory order of precedence. If the
participant does not designate a beneficiary, payment will be made as
provided by the remainder of 5 U.S.C. 8424(d). Each statutory category
of potential beneficiaries is addressed in a separate section of these
regulations.
Section 1651.2(b) addresses the payment of a death benefit after
the participant has completed a withdrawal election. Different rules
apply depending on the type of withdrawal election and, if applicable,
the type of annuity chosen. Paragraph (b)(1) addresses the situation in
which the participant dies after having completed an election to
withdraw his or her account in the form of a single payment or monthly
payments but before payment has been made. The account will be paid in
accordance with the statutory order of precedence, because the election
made by the participant provides no indication of his or her intended
beneficiaries.
Paragraphs (b)(2) through (b)(6) address situations in which the
participant dies after having completed an election to withdraw his or
her account in the form of certain types of annuities but before the
annuity has been purchased. Under paragraph (b)(2), if the participant
dies after having completed an election to withdraw his or her account
in the form of a joint life annuity but before the annuity has been
purchased, the account will be paid as a single payment to the joint
life annuitant. In this situation, the participant's election makes it
clear that the joint annuitant should be the beneficiary upon the
participant's death.
Under paragraph (b)(3), if both the participant and the joint
annuitant die after the participant has completed an election to
withdraw his or her account in the form of a joint life annuity but
before the annuity has been purchased, and the annuity election
included a cash refund, the account will be paid proportionally to the
beneficiary or beneficiaries designated on Form TSP-11-B, Beneficiary
Designation for a TSP Annuity. This result gives effect to the
participant's wishes as reflected by his or her annuity election. If
the annuity election did not include a cash refund, under paragraph
(b)(4), the account will be paid in accordance with the statutory order
of precedence.
Similarly, under paragraph (b)(5), if a participant dies after
having completed an election to withdraw his or her account in the form
of a single life annuity that includes either a cash refund or 10-year
certain feature, but before the annuity has been purchased, the account
will be paid proportionally to the beneficiary or beneficiaries
designated on Form TSP-11-B. If the annuity does not include either a
cash refund or 10-year certain feature, under paragraph (b)(6), the
account will be paid in accordance with the statutory order of
precedence.
Paragraph (b)(7) addresses the situation in which the participant
dies after the annuity has been purchased. In that situation, the
account will be paid in accordance with the annuity method selected.
Once the Board purchases the annuity elected by the participant,
responsibility for payment of the benefits shifts to the annuity
provider.
Section 1651.3 sets forth the requirements for a valid designation
of beneficiary on a Form TSP-3. In order to designate a beneficiary of
a TSP account, a participant must complete and send to the TSP record
keeper a Form TSP-3, Designation of Beneficiary, or Form TSP-11-B,
Beneficiary Designation for a TSP Annuity. Form TSP-11-B must be used
to designate a beneficiary when a participant elects to withdraw his or
her account in the form of a joint annuity with a cash refund feature
or a single life annuity with a cash refund feature or a 10 year
certain feature.
A will may not be used to designate a beneficiary of a TSP account.
The Board will also not honor a designation of beneficiary that is set
forth in a court decree of divorce, annulment, or legal separation or
in any court order or court-approved property settlement agreement
incident to such a decree that is issued under section 8435(c)(2) of
title 5 of the United States Code. Such designation is considered to be
an
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award of a future interest and, to the extent that a court order awards
an amount to be paid upon the occurrence of a future specified event,
the order is not a qualifying retirement benefits court order pursuant
to 5 CFR 1653.2(c).
All Forms TSP-3 signed on or after January 1, 1995, must be
received by the TSP record keeper on or before the participant's date
of death. This is a change in the procedures for processing Forms TSP-
3. Before January 1, 1995, active employees were required to submit
Forms TSP-3 to their employing agency, which, in turn, forwarded the
forms to the TSP record keeper when a participant died in service or
separated from service. Because of the change in the processing of
Forms TSP-3, the Board has instructed all agencies to send to the TSP
record keeper all Forms TSP-3 that are in employees' personnel files.
Any forms signed before January 1, 1995, which were received by the
agencies before the participant's death will be evaluated by the record
keeper to determine whether they are valid, despite the fact that they
were received by the agencies. Forms that the record keeper finds
invalid will be returned to the participant. A valid Form TSP-3 will
remain in effect until it is canceled or changed as described in
Sec. 1651.4.
In addition to being properly filed, a Form TSP-3 must be properly
completed in order to be valid. This means that the form must be signed
by the participant and two witnesses. The individuals signing as
witnesses must actually observe the participant signing the form, or
they must observe the participant acknowledge his or her signature on
the Form TSP-3. Witnesses should not be named as beneficiaries. A form
that contains a signature for a witness who is also a named beneficiary
is valid; however, the witness beneficiary will not be entitled to
receive his or her designated share of the account.
Section 1651.4 sets forth the requirements for changing or
canceling a designation of beneficiary. In order to change a
designation, the participant must complete and file another Form TSP-3.
The Form TSP-3 containing the changes must be valid and must be
received by the TSP record keeper on or before the date of death of the
participant. In order to cancel a prior designation, the participant
may complete and send another Form TSP-3 with a notation that all prior
designations are canceled. Alternatively, the participant may send a
letter, signed and dated by the participant and witnessed in the same
manner as a Form TSP-3, stating that prior designations are canceled. A
letter canceling a prior designation must also be received by the TSP
record keeper on or before the participant's date of death.
A participant may make, change, or cancel a designation of
beneficiary at any time and without the knowledge or consent of the
participant's spouse or any current or prior designated beneficiaries.
An intervening legal separation, divorce, or annulment of the marriage
of the participant does not automatically cancel a Form TSP-3 naming
the spouse or former spouse or anyone else as a beneficiary.
Sections 1651.5 through 1651.9 further describe the potential
beneficiaries under the statutory order of precedence. Section 1651.5
sets forth the rules for payment to the participant's spouse. It
explains that the widow or widower of the participant is the person to
whom the participant is married on the date of death. Whether the
participant was married will be determined in accordance with
applicable state laws, based upon the participant's domicile at the
time of death. A person is considered to be married even if the parties
are separated. The Board will make a payment to an individual who
claims to be the common law spouse of a participant only if the
requirements for a common law marriage under the applicable state law
have been met.
Section 1651.6 sets forth the rules for the death benefit payment
of a participant's TSP account to the participant's children or the
descendants of deceased children. A child includes a natural or adopted
child. Whether a child is the natural child of the participant will be
determined in accordance with applicable state law. State law will not
apply, however, in cases involving a natural child of a TSP participant
who was adopted by someone other than the spouse of the participant
during the lifetime of the participant. In those cases, these
regulations establish the general rule that the child will not be
treated as a child of the participant under this section.
Section 1651.7 sets forth the rules for the death benefit payment
of a participant's TSP account to the participant's parents. A step-
parent is not considered a parent unless the step-parent adopted the
participant.
Payment to the duly appointed executor or administrator of the
participant's estate is addressed in Sec. 1651.8. A duly appointed
executor or administrator of a participant's estate includes any person
appointed by a court to act in that capacity. Some states have
established statutory procedures for transferring the assets of estates
below a specified value. The Board will accept a person authorized
under those procedures to handle the affairs of the deceased
participant's estate as the ``duly appointed executor or
administrator'' of the participant's estate. This policy recognizes
that many states do not require, and may not even permit, estates below
a certain value to be probated formally through the state court system.
However, documentation establishing that the applicant is qualified
under the relevant state's small estate procedures must be submitted to
the TSP record keeper.
If the participant is not survived by a spouse, child, or parent,
and an executor or administrator is not appointed under state court or
statutory procedures, Sec. 1651.9 provides that payment will be made to
the participant's next of kin as determined under the state law of the
participant's domicile at the time of death.
Under 5 U.S.C. 8424(d), benefits will be paid to the individual or
individuals ``surviving the employee or Member and alive at the date
title to the payment arises.'' The Board interprets this phrase to mean
that the entitlement to a death benefit payment arises at the time of
the participant's death and, therefore, a beneficiary must be alive at
the time of the participant's death in order to receive a death
benefit. Accordingly, under Sec. 1651.10(a), if a beneficiary
designated on a Form TSP-3 or Form TSP-11-B dies before the
participant, the beneficiary's share will be paid to the other living
designated beneficiary(ies), if any, proportionally. For example, if
the deceased beneficiary was designated to receive 50% of the account
and the first living beneficiary was to receive 20% of the account and
the second remaining beneficiary was to receive 30% of the account, the
first living beneficiary would receive 40% of the deceased
beneficiary's share of the account (20% + (20/50 x 50%)) and the
second remaining beneficiary would receive 60% of the deceased
beneficiary's share of the account (30% + (30/50 x 50%)). If there
are no living designated beneficiaries, the account will be paid to the
person(s) determined to be the beneficiary(ies) under the statutory
order of precedence.
Under Sec. 1651.10(b), if a trust or other entity that has been
designated as the beneficiary of the participant's account does not
exist on the date of death of the participant or if it is not created
by will or other document to take effect upon the participant's death,
the account will be paid under the statutory order of precedence.
Under Sec. 1651.10(c), if a beneficiary by virtue of the order of
precedence dies
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before the participant, the beneficiary's share will be paid equally to
other living beneficiary(ies) bearing the same relationship to the
participant as the deceased beneficiary, unless the deceased
beneficiary is a child of the beneficiary. In that case, the
descendants of the deceased child would receive the deceased child's
share of the account. If there are no other beneficiaries bearing the
same relationship or there are no descendants of a deceased child, the
deceased beneficiary's share will be paid to the person(s) next in
line, according to the order of precedence.
Because a beneficiary's interest in the death benefit is created
upon the death of the participant, Sec. 1651.10(d) provides that if the
beneficiary dies after the participant but before payment is made, the
beneficiary's share will be paid to the beneficiary's estate.
Consistent with the requirement that the beneficiary survive the
participant, Sec. 1651.11 provides that if the participant and the
beneficiary die simultaneously, the Board considers the beneficiary to
have predeceased the participant and the account will be paid in the
manner set forth in Sec. 1651.10. Death is considered to be
simultaneous if the death certificate lists the same hour and minute
for the time of death. In common disaster situations, such as an
automobile or airplane crash, where a precise time of death cannot be
established, it will be presumed that the beneficiary(ies) and the
participant died simultaneously, unless the death certificate otherwise
indicates.
Section 1651.12 reflects the Board's policy of not paying the
beneficiary of a TSP participant if the beneficiary is convicted of a
crime in connection with the participant's death which would preclude
the beneficiary from inheriting under state law. In this regard, the
Board follows strong public policy which prohibits a person from
profiting from his or her wrongdoing. The Board will follow the law of
the state in which the participant was domiciled at the time of death
as that law is set forth in a civil court judgment or, in the absence
of such a judgment, will apply state law to the facts of the case after
all criminal appeals have been exhausted. The civil court judgment must
be one that, under the law of the state, would protect the Board from
double liability or payment. The Board will treat that beneficiary as
if he or she had predeceased the TSP participant and will determine the
beneficiary(ies) of the account according to the procedures described
in Sec. 1651.10. A plea of guilty to such a crime constitutes a
conviction for purposes of these regulations.
Section 1651.13 sets forth the procedure for applying for a death
benefit payment. In order for a death benefit payment to be processed,
the TSP record keeper must receive Form TSP-17, Application for Account
Balance of Deceased Participant, with a certified copy of the
participant's death certificate. A copy of a certified death
certificate contains a copy of the stamp or seal of the state agency
that is responsible for issuing death certificates. Form TSP-17 may be
submitted by any potential beneficiary or any interested party;
however, submission of an application does not entitle the applicant to
benefits.
Section 1651.14 explains how death benefit payments are made.
Before a payment can be made, each beneficiary will be sent a notice of
pending payment. That notice will contain information regarding the
portion of the account that will be paid to the beneficiary and will
provide information regarding the Federal tax consequences of the
payment. Payment is made by separate check to each beneficiary. If
payment is to the widow or widower of the participant, she or he may
transfer all or a portion of the payment to an Individual Retirement
Arrangement (IRA). The TSP record keeper will provide the widow or
widower with a Form TSP-13-S, Spouse Election to Transfer to IRA or
Other Eligible Retirement Plan, to request such a transfer. For
purposes of transferring the account, the TSP record keeper will not
accept forms from other institutions. If payment is to a minor child,
the check will be made payable directly to the child. If payment is to
the executor or administrator of an estate, the check will be made
payable to the estate of the deceased participant. A taxpayer
identification number (TIN) must be provided for any estate, regardless
of whether the estate is required to pay taxes. This is necessary to
allow the Board to fulfill its statutory reporting obligation to the
Internal Revenue Service. If payment is to a trust, the check will be
made payable to the trustee. A taxpayer identification number (TIN)
must be provided for the trust.
Certain types of issues relating to the processing of death cases
will be decided by the Board as set forth in Sec. 1651.15. Those cases
may involve conflicting claims to a participant's account, such as when
one applicant claims that the participant was married at the time of
death and another applicant claims that the participant was not married
at the time of death. Other cases may involve the accuracy of the Form
TSP-17 or the validity of Forms TSP-3, TSP-17, TSP-11-B, or a letter
canceling a designation. The Board will also review challenges made to
the legal status of a purported beneficiary. The Board may require that
issues regarding paternity, the validity of a participant's marriage on
the date of death, or other matters that traditionally fall under state
law, be resolved by a state court before the Board issues payment.
In some cases, the beneficiary of the account cannot be readily
located, such as when the Board does not have a correct address for an
estranged spouse or parent. These cases include both situations in
which the name of the beneficiary is known, but his or her whereabouts
are not, and situations in which the name of the beneficiary is not
known. Section 1651.16 sets forth the process that will be followed
when it appears that a beneficiary is missing.
The TSP record keeper will make reasonable efforts to locate the
missing beneficiary or to learn the name and location of a missing
beneficiary. If the beneficiary has not been located and at least one
year has passed since the date of death of the participant, that
beneficiary will be treated as having predeceased the participant.
However, if a potential beneficiary does not cooperate in the TSP
record keeper's efforts to locate a missing beneficiary(ies), the
missing beneficiary's share of the account will be treated as having
been abandoned and it will revert to the TSP. In such circumstances,
the missing beneficiary(ies) may reclaim the abandoned share of the
account at a later date by submitting a Form TSP-17 and providing
sufficient proof to establish his or her relationship to the
participant. However, earnings will not be credited to any funds that
have been abandoned.
If the total number of beneficiaries and their identities are known
and one or more, but not all, appear to be missing, payment of part of
the participant's account may be made to the beneficiary(ies) whose
location is known. If the Board is unable to locate any beneficiaries
of the account, the account will be abandoned and the funds will be
forfeited to the TSP. If a beneficiary is located at any time after the
funds are forfeited to the TSP, the beneficiary may claim the entire
account by submitting a Form TSP-17 and providing sufficient proof to
establish his or her identity and relationship to the participant.
However, earnings will not be credited to any funds that have been
abandoned.
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The beneficiary of a TSP account may disclaim his or her right to
receive the benefit in accordance with Sec. 1651.17. A disclaimer is
irrevocable. The disclaimant cannot direct to whom the disclaimant's
portion of the participant's account should be paid. The disclaimant
must disclaim the entire benefit, not a portion. The disclaimant will
be treated as having predeceased the participant for purposes of
determining to whom the disclaimant's portion of the account is to be
paid.
Section 1651.18 provides that payment to a beneficiary made in
accordance with these regulations bars any claim by another person.
Regulatory Flexibility Act
I certify that these regulations will not have a significant
economic impact on a substantial number of small entities.
Paperwork Reduction Act
I certify that these regulations do not require additional
reporting under the criteria of the Paperwork Reduction Act of 1980.
Submission to Congress and the General Accounting Office
Under section 801(a)(1)(A) of the Administration Procedure Act
(APA), as amended by the Regulatory Enforcement Fairness Act of 1996,
Pub. L. 104-121, title II, 110 Stat. 847, 857-875 (5 U.S.C.
801(a)(1)(A)), the Board 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 the publication of this rule in today's Federal Register. This
rule is not a major rule as defined in section 804(2) of the APA as
amended (5 U.S.C. 804(2)).
Unfunded Mandates Reform Act of 1995
Pursuant to the Unfunded Mandates Reform Act of 1995, section 201,
Pub. L. 104-4, 109 Stat. 48, 64, the effect of this regulation on
State, local, and tribal governments and on the private sector has been
assessed. This regulation will not compel the expenditure in any one
year of $100 million or more by any State, local, and tribal
governments in the aggregate or by the private sector. Therefore, a
statement under section 202, 109 Stat. 48, 64-65, is not required.
List of Subjects in 5 CFR Part 1651
Employee benefit plans, Government employees, Pensions, Retirement.
Roger W. Mehle,
Executive Director, Federal Retirement Thrift Investment Board.
For the reasons set out in the preamble, the Federal Retirement
Thrift Investment Board amends Chapter VI of title 5 of the Code of
Federal Regulations by adding a new Part 1651 to read as follows:
PART 1651--DEATH BENEFITS
Sec.
1651.1 Definitions.
1651.2 Entitlement to benefits.
1651.3 Designation of beneficiary.
1651.4 Change or cancellation of a designation of beneficiary.
1651.5 Widow or widower.
1651.6 Child or children.
1651.7 Parent or parents.
1651.8 Participant's estate.
1651.9 Participant's next of kin.
1651.10 Deceased and non-existent beneficiaries.
1651.11 Simultaneous death.
1651.12 Homicide.
1651.13 How to apply for a death benefit.
1651.14 How payment is made.
1651.15 Claims referred to the Board.
1651.16 Missing and unknown beneficiaries.
1651.17 Disclaimer of benefits.
1651.18 Payment to one bars payment to another.
Authority: 5 U.S.C. 8424(d), 8433(e), 8435(c)(2), 8474(b)(5) and
8474(c)(1).
Sec. 1651.1 Definitions.
Terms used in this part shall have the following meanings:
Beneficiary means the person or legal entity who is entitled to
receive a death benefit from a deceased participant's TSP account;
Board means the Federal Retirement Thrift Investment Board;
Death benefit means all or a share of the deceased participant's
TSP account at the time of payment;
Domicile means the participant's place of residence for purposes of
state income tax liability;
Order of precedence means the order in which a death benefit will
be paid, as specified in 5 U.S.C. 8424(d);
Participant means any person with an account in the Thrift Savings
Fund;
Thrift Savings Fund means the Fund described in 5 U.S.C. 8437;
Thrift Savings Plan or TSP means the Federal Retirement Thrift
Savings Plan established by the Federal Employees' Retirement System
Act of 1986, codified in pertinent part at 5 U.S.C. 8431 et seq.;
TSP record keeper means the entity that is engaged by the Board to
perform record keeping service for the Thrift Savings Plan. As of June
13, 1997, the TSP record keeper is the National Finance Center, United
States Department of Agriculture, whose mailing address is National
Finance Center, TSP Service Office, P.O. Box 61135, New Orleans,
Louisiana 70161-1135;
Withdrawal election means a request for the payment of a
participant's vested account balance filed under 5 CFR 1650, subpart B.
Sec. 1651.2 Entitlement to benefits.
(a) Death benefit payments made before the participant has
completed a withdrawal election. If a participant dies before
completing a withdrawal election, the account will be paid to the
individual or individuals surviving the participant in the following
order of precedence:
(1) To the beneficiary or beneficiaries designated by the
participant on a properly completed and filed Form TSP-3, Designation
of Beneficiary, in accordance with Sec. 1651.3;
(2) If there is no designated beneficiary, to the widow or widower
of the participant in accordance with Sec. 1651.5;
(3) If none of the above in paragraphs (a)(1) and (a)(2) of this
section, to the child or children of the participant and descendants of
deceased children by representation in accordance with Sec. 1651.6;
(4) If none of the above in paragraphs (a)(1) through (a)(3) of
this section, to the parents of the participant or the surviving one of
them in accordance with Sec. 1651.7;
(5) If none of the above in paragraphs (a)(1) through(a)(4) of this
section, to the duly appointed executor or administrator of the estate
of the participant in accordance with Sec. 1651.8;
(6) If none of the above in paragraphs (a)(1) through (a)(5) of
this section, to the next of kin of the participant who are entitled
under the laws of the state of the participant's domicile at the date
of the participant's death in accordance with Sec. 1651.9.
(b) Death benefit payments made after the participant has completed
a withdrawal election. (1) The death benefit will be paid in accordance
with the order of precedence as set forth in paragraph (a) of this
section if the Board learns that the participant has died after having
completed an election to withdraw his or her TSP account balance in the
form of a single payment or monthly payments (whether or not the
participant has requested that all or part of such payments be
transferred to an eligible retirement plan), but the
[[Page 32430]]
account balance has not yet been paid out in accordance with such
election.
(2) The death benefit will be paid as a single payment to the joint
life annuitant if the Board learns that the participant has died after
having completed an election to withdraw his or her TSP account balance
in the form of a joint life annuity, but the annuity has not yet been
purchased.
(3) The death benefit will be paid pro rata as a single payment to
the beneficiary(ies) designated on Form TSP-11-B, Beneficiary
Designation for a TSP Annuity, if both the participant and the joint
annuitant die after the par ticipant has completed an election to
withdraw his or her TSP account balance in the form of a joint life
annuity that includes a cash refund, but before the annuity has been
purchased.
(4) The death benefit will be paid in accordance with the order of
precedence as set forth in paragraph (a) of this section, if the Board
learns that--
(i) Both the participant and the joint annuitant have died after
the participant has completed an election to withdraw his or her TSP
account balance in the form of a joint life annuity that does not
include a cash refund, but the annuity has not yet been purchased; or
(ii) Both the beneficiary(ies) named under a cash refund election
and the joint annuitant have died after the participant has completed
an election to withdraw, but the annuity has not yet been purchased.
(5) The death benefit will be paid pro rata to the beneficiary(ies)
designated on the Form TSP-11-B if the Board learns that the
participant has died after having completed an election to withdraw his
or her TSP account balance in the form of a single life annuity that
includes either a cash refund or 10-year certain feature, but the
annuity has not yet been purchased.
(6) The death benefit will be paid in accordance with the order of
precedence set forth in paragraph (a) of this section if the Board
learns that the participant and all beneficiaries designated on a Form
TSP-11-B have died after the participant has completed an election to
withdraw his or her TSP account balance in the form of a single life
annuity that includes either a cash refund or a 10-year certain
feature, but the annuity has not yet been purchased.
(7) The death benefit will be paid in accordance with the order of
precedence as set forth in paragraph (a) of this section if a
participant dies after having completed an election to withdraw his or
her TSP account balance in the form of a single life annuity that does
not include either a cash refund or 10-year certain feature, but before
the annuity has been purchased.
(8) If a participant dies after the annuity purchase has been
completed, benefit payments will be provided in accordance with the
annuity method selected.
Sec. 1651.3 Designation of beneficiary.
(a) Filing requirements. In order to designate a beneficiary of a
TSP account, the participant must complete and file Form TSP-3,
Designation of Beneficiary, unless Form TSP-11-B is used for this
purpose. All Forms TSP-3 and TSP-11-B signed on or after January 1,
1995, must be received by the TSP record keeper on or before the
participant's date of death. If the Form TSP-3 was received and
accepted by the participant's employing agency before January 1, 1995,
the TSP record keeper will process it and determine its validity when
it is received from the employing agency. A valid Form TSP-3 remains in
effect until it is properly canceled or changed as described in
Sec. 1651.4.
(b) Eligible beneficiaries. Any individual, firm, cor poration, or
legal entity, including the U.S. Government, may be designated as a
beneficiary. Any number of beneficiaries can be named to share the
death benefit. A beneficiary may be designated without the knowledge or
consent of the beneficiary or the knowledge or consent of the
participant's spouse.
(c) Validity requirements. In order to be valid, a Form TSP-3 must
be signed by the participant in the presence of two witnesses, or the
participant must acknowledge his or her signature on the Form TSP-3 in
the presence of two wit nesses. A witness must be age 21 or older, and
a witness designated as a beneficiary on the Form TSP-3 will not be
entitled to receive a death benefit payment. If a witness is the only
named beneficiary, the Form TSP-3 is invalid. If more than one
beneficiary is named, the share of the witness beneficiary will be
allocated among the remaining beneficiaries pro rata.
(d) Will. A will, or any document other than Form
TSP-3 or Form TSP-11-B, may not be used to designate a
beneficiary(ies) of a TSP account.
Sec. 1651.4 Change or cancellation of a designation of beneficiary.
(a) Change. In order to change a designation of beneficiary, the
participant must properly complete a new Form TSP-3, which must be
received by the TSP record keeper on or before the date of death of the
participant under the same rules as set forth in Sec. 1651.3(a). The
TSP record keeper will honor the Form TSP-3 with the latest date signed
by the participant which is otherwise valid under the rules set forth
in Sec. 1651.3. A change of beneficiary may be made at any time and
without the knowledge or consent of the participant's spouse or any
current or prior designated beneficiaries.
(b) Cancellation. A participant may cancel all prior designations
of beneficiaries by sending the TSP record keeper either a new valid
Form TSP-3 or a letter, signed and dated by the participant and
witnessed in the same manner as a Form TSP-3, stating that all prior
designations are can celed. In order to be effective, either of these
documents must be received by the TSP record keeper on or before the
date of death of the participant in accordance with the rules set forth
in Sec. 1651.3(a). The filing of either of these documents will cancel
all earlier designations.
(c) Will. A will, or any document other than Form TSP-3 or Form
TSP-11-B, may not be used to change or cancel a beneficiary(ies) of a
TSP account.
Sec. 1651.5 Widow or widower.
For purposes of payment under Sec. 1651.2(a)(2), the widow or
widower of the participant is the person to whom the participant is
married on the date of death. A person is considered to be married even
if the parties are separated, unless a court decree of divorce or
annulment has been entered. State law of the participant's domicile
will be used to determine whether the participant was married at the
time of death.
Sec. 1651.6 Child or children.
If the account is to be paid to the child or children, or to
descendants of deceased children by representation, as provided in
Sec. 1651.2(a)(3), the following rules apply:
(a) Child. A child includes a natural or adopted child of the
deceased participant.
(b) Descendants of deceased children. ``By representation'' means
that, if a child of the participant dies before the participant, all
descendants of the deceased child at the same level will equally divide
the deceased child's share of the participant's account.
(c) Adoption by another. A natural child of a TSP participant who
has been adopted by someone other than the participant during the
participant's lifetime will not be considered the child of the
participant, unless the adopting parent is the spouse of the TSP
participant.
[[Page 32431]]
Sec. 1651.7 Parent or parents.
If the account is to be paid to the participant's parent or parents
under Sec. 1651.2(a)(4), the following rules apply:
(a) Amount. If both parents are alive at the time of the
participant's death, each parent will be separately paid fifty percent
of the account. If only one parent is alive at the time of the
participant's death, he or she will receive the entire account balance.
(b) Step-parent. A step-parent is not considered a parent unless
the step-parent adopted the participant.
Sec. 1651.8 Participant's estate.
If the account is to be paid to the duly appointed executor or
administrator of the participant's estate under Sec. 1651.2(a)(5), the
following rules apply:
(a) Appointment by court. The executor or administrator must
provide documentation of court appointment.
(b) Appointment by operation of law. If state law provides
procedures for handling small estates, the Board will accept the person
authorized to dispose of the assets of the deceased participant under
those procedures as a duly appointed executor or administrator.
Documentation which demonstrates that the person is properly authorized
under state law must be submitted to the TSP record keeper.
Sec. 1651.9 Participant's next of kin.
If the account is to be paid to the participant's next of kin under
Sec. 1651.2(a)(6), the next of kin of the participant will be
determined in accordance with the state law of the participant's
domicile at the time of death.
Sec. 1651.10 Deceased and non-existent beneficiaries.
(a) Designated beneficiary dies before participant. The share of
any beneficiary designated on a Form TSP-3 or Form TSP-11-B who
predeceases the participant will be paid pro rata to other designated
beneficiary(ies). If there are no designated beneficiaries who survive
the participant, the account will be paid to the person(s) determined
to be the beneficiary(ies) under the order of precedence set forth in
Sec. 1651.2(a).
(b) Trust designated as beneficiary but not in existence. If a
trust or other entity that has been designated as a beneficiary does
not exist on the date of death of the participant, or if it is not
created by will or other document that is effective upon the
participant's death, the amount will be paid in accordance with the
rules of paragraph (a) of this section, as if the trust were a
beneficiary that predeceased the participant.
(c) Non-designated beneficiary dies before participant. If a
beneficiary other than a beneficiary designated on a Form TSP-3 or a
Form TSP-11-B (i.e., a beneficiary by virtue of the order of
precedence) dies before the participant, the beneficiary's share will
be paid equally to other living beneficiary(ies) bearing the same
relationship to the participant as the deceased beneficiary. However,
if the deceased beneficiary is a child of the participant, payment will
be made to the deceased child's descendants, if any. If there are no
other beneficiaries bearing the same relationship or, in the case of
children, there are no descendants of deceased children, the deceased
beneficiary's share will be paid to the person(s) next in line
according to the order of precedence.
(d) Beneficiary dies after participant but before payment. If a
beneficiary dies after the participant, the beneficiary's share will be
paid to the beneficiary's estate.
(e) Death certificate. A copy of a beneficiary's certified death
certificate is required in order to establish that the beneficiary has
died.
Sec. 1651.11 Simultaneous death.
If a beneficiary dies at the same time as the participant, the
beneficiary will be treated as if he or she predeceased the participant
and the account will be paid in accordance with Sec. 1651.10. The same
time is considered to be the same hour and minute as indicated on a
death certificate. If the participant and beneficiary are killed in the
same event, death is presumed to be simultaneous, unless evidence is
presented to the contrary.
Sec. 1651.12 Homicide.
If the participant's death is the result of a homicide, a
beneficiary will not be paid as long as the beneficiary is under
investigation by local, state or Federal law enforcement authorities as
a suspect. If the beneficiary is convicted of, or pleads guilty to, a
crime in connection with the participant's death which would preclude
the beneficiary from inheriting under state law, the beneficiary will
not be entitled to receive any portion of the participant's account.
The Board will follow the state law of the participant's domicile as
that law is set forth in a civil court judgment (that, under the law of
the state, would protect the Board from double liability or payment)
or, in the absence of such a judgment, will apply state law to the
facts after all criminal appeals are exhausted. The Board will treat
the beneficiary as if he or she predeceased the participant and the
account will be paid in accordance with Sec. 1651.10.
Sec. 1651.13 How to apply for a death benefit.
In order for a deceased participant's account to be disbursed, the
TSP record keeper must receive Form TSP-17, Application for Account
Balance of Deceased Participant. Any potential beneficiary or other
individual can file Form TSP-17 with the TSP record keeper. The
individual submitting Form TSP-17 must attach a copy of a certified
death certificate of the participant to the application. The acceptance
of an application by the TSP record keeper does not entitle the
applicant to benefits.
Sec. 1651.14 How payment is made.
(a) Notice. The TSP record keeper will send notice of pending
payment to each beneficiary.
(b) Payment. Payment is made separately to each entitled
beneficiary. It will be sent to the address that is provided on Form
TSP-3, unless a more recent address is provided on Form TSP-17, or is
otherwise provided to the TSP record keeper in writing by the
beneficiary. All beneficiaries must provide the TSP record keeper with
a taxpayer identification number; i.e., Social Security number (SSN),
employee identification number (EIN), or individual taxpayer
identification number (ITIN), as appropriate.
(c) Payment to widow or widower. The widow or widower of the
participant may request that the TSP transfer all or a portion of the
payment to an Individual Retirement Arrangement (IRA). In order to
request such a transfer, a spouse must file with the TSP record keeper
Form TSP-13-S, Spouse Election to Transfer to IRA and Other Eligible
Retirement Plan.
(d) 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 documen tation
showing his or her appointment as guardian.
(e) 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 TIN must be provided for all estates.
(f) Payment to trust. If payment is to a trust, the check will be
made payable to the trustee. A TIN must be provided for the trust.
[[Page 32432]]
Sec. 1651.15 Claims referred to the Board.
(a) Contested claims. Any challenge to a proposed death benefit
payment must be filed in writing with the TSP record keeper before
payment. All contested claims will be referred to the Board. The Board
may also consider issues on its own.
(b) Payment deferred. No payment will be made until the Board has
resolved the claim.
Sec. 1651.16 Missing and unknown beneficiaries.
(a) Locate and identify beneficiaries. (1) The TSP record keeper
will attempt to identify and locate all potential beneficiaries.
(2) If a beneficiary is not identified and located, and at least
one year has passed since the date of the participant's death, the
beneficiary will be treated as having predeceased the participant and
the beneficiary's share will be paid in accordance with Sec. 1651.10
(b) Payment to known beneficiaries. If all potential beneficiaries
are known but one or more beneficiaries (and not all) appear to be
missing, payment of part of the participant's account may be made to
the known beneficiaries. The lost or unidentified beneficiary's share
may be paid in accordance with paragraph (a) of this section at a later
date.
(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 Board'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 fund is abandoned. The beneficiary
will be required to submit Form TSP-17 and may be required to submit
proof of his or her identity and relationship to the participant.
Sec. 1651.17 Disclaimer of benefits.
(a) Disclaimer criteria. The beneficiary of a TSP account may
disclaim his or her right to receive the account. In order to be
effective, the following criteria must be met:
(1) The disclaimer must be in writing. The writing must state
specifically that the beneficiary is disclaiming his or her right to
receive a death benefit payment from the TSP account of the
participant.
(2) The disclaimer must be irrevocable.
(3) The disclaimer must be received by the TSP record keeper before
payment is made.
(4) The disclaimant cannot direct to whom the disclaimant's portion
of the participant's account should be paid.
(5) The disclaimant must disclaim the entire benefit, not a
portion.
(b) Treatment of disclaimed share. The disclaimant will be treated
as having predeceased the participant and his or her share will be paid
in accordance with Sec. 1651.10.
Sec. 1651.18 Payment to one bars payment to another.
Payment made to a beneficiary(ies) in accordance with this part,
based upon information received before payment, bars any claim by any
other person.
[FR Doc. 97-15463 Filed 6-12-97; 8:45 am]
BILLING CODE 6760-01-P
