[Federal Register Volume 64, Number 120 (Wednesday, June 23, 1999)]
[Proposed Rules]
[Pages 33429-33431]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15686]
-----------------------------------------------------------------------
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Parts 831 and 841
RIN 3206-AH62
State Income Tax Withholding and Allotments
AGENCY: Office of Personnel Management.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Office of Personnel Management (OPM) is proposing
regulations to permit expansion of the State income tax withholding and
the voluntary allotment program under the Civil Service Retirement
System (CSRS) and the Federal Employees' Retirement System (FERS).
These regulations would simplify the current State income tax
withholding program, continue the currently-authorized programs
established by regulation, and allow OPM to add additional allotment
programs for the convenience of annuitants.
DATES: Comments must be received on or before August 23, 1999.
ADDRESSES: Send comments to Mary E. Wilson, Chief, Retirement Policy
Division; Retirement and Insurance Service; Office of Personnel
Management; PO Box 57; Washington, DC 20044; or deliver to OPM, Room
4351, 1900 E Street NW., Washington, DC. Comments may also be submitted
by electronic mail to combox@opm.gov.
FOR FURTHER INFORMATION CONTACT: Patricia A. Rochester, (202) 606-0299.
SUPPLEMENTARY INFORMATION: We propose to amend Title 5, Code of Federal
Regulations, to allow for expansion of our voluntary allotment program.
In the past, technological constraints in OPM's automated systems
limited the range of allotments offered to annuitants and survivors.
Recent improvements in OPM's automated systems now make a broader range
of allotments possible. In the future, additional allotments will be
considered for inclusion in the program. Key considerations will be
needed improvements in banking technology that will assure that
allotments are processed and appropriate information provided to the
allotees concerning the amount to be credited in each individual case,
as well as the allotees' acceptance of responsibility for timely
crediting of the allotment to the appropriate account on its records.
OPM in its sole discretion, will determine if such allotments will be
processed, pursuant to our statutory authority to make such
determinations.
There will be an immediate expansion in our program of State income
tax withholding and full implementation of our pilot U.S. Savings Bonds
allotment program. Participation in these programs will be entirely
voluntary.
As we have already stated, these regulations will also allow us to
expand our voluntary allotment program to other areas such as
allotments to checking and savings accounts. Other types of allotments
are also under consideration; however, our ability to make some
allotment programs available to annuitants and survivors will be
dependent upon advancements in banking technology within the small,
independent banking communities. Changes have already been proposed by
the National Automated Clearing House Association (NACHA) to require
the banking community to accept and pass on addendum information
necessary to credit allotments to the proper accounts. As these changes
become effective and more financial institutions are able to handle
allotment transactions, we will determine which programs we consider
appropriate for addition to the allotments program.
1. State Income Tax Withholding
Sections 8345(k) and 8469 of title 5, United States Code, require
OPM to provide State income tax withholding from Civil Service
Retirement System (CSRS) and Federal Employees Retirement System (FERS)
annuities. The statutes provide that the withholding will be made in
accordance with an agreement between the State and OPM and require
certain conditions in that agreement, including that the withholding be
limited to annuitants who voluntarily request such withholding in
writing, that the amounts withheld be retained in the Fund and
disbursed to the States quarterly, and other administrative items
concerning the frequency and timing of State tax changes that an
annuitant may request. The current implementing regulations, contained
in subpart S of part 831 (CSRS) and subpart J of part 841 (FERS) of
Title 5, Code of Federal Regulations, require annuitants who want State
income tax withholding to contact the State. The State prepares a list
of taxpayers and amounts to be withheld and submits that list monthly
to OPM via magnetic tape.
The expanded State income tax withholding program will streamline
the current withholding process by allowing our annuitants to
communicate directly with OPM (instead of the individual States).
Annuitants will be able to initiate or change State income tax
withholding by writing or calling OPM. Current participants' State
income tax withholdings from annuity will continue without
interruption. OPM has already notified annuitants of the availability
of the expanded program.
Under the expanded program, States that wish to receive annuitant
tax withholdings will no longer have to obtain election forms from
annuitants and maintain their accounts. States need only execute an
agreement with OPM. OPM will then assume administrative responsibility
for the State income tax withholding program and permit annuitants to
initiate or change their withholding by specifying a specific dollar
amount.
2. Voluntary Allotments
Sections 8345(h) and 8465(b) of title 5, United States Code,
authorize an individual entitled to benefits from the Fund to make
allotments from an annuity for such purposes as OPM considers
appropriate. Under subpart O of part 831 of Title 5, Code of Federal
Regulations, we issued regulations limiting the availability of
allotments under this authority to payments to large national
organizations existing primarily for the purpose of representing
employees or annuitants. Using new technology, we are prepared to offer
an expanded allotment program without eliminating the program
applicable to current participants. The current program will be
continued for participating organizations for 3 years from the date of
publication of final regulations in order to give the organizations in
the current program time to make the adjustments necessary to utilize
the expanded program proposed by these regulations.
The Savings Bond allotment program offers annuitants, for the first
time, the opportunity to purchase U.S. Savings Bonds in a manner
similar to the payroll-savings plan available to employees, except that
the full purchase price of the bond must be paid each month. Series EE
bonds are currently available in denominations of $100, $200, and $500.
We have also added Series I bonds in denominations of $50, $75, $100,
$500, $1,000, or $5,000. Other options may be added as they become
available.
[[Page 33430]]
Regulatory Flexibility Act
I certify that this regulation will not have a significant economic
impact on a substantial number of small entities because the regulation
only provides information about the increased responsibility OPM will
assume in providing certain allotment services to annuitants, survivors
and former spouses.
Lists of Subjects in 5 CFR Parts 831 and 841
Administrative practice and procedure, Air traffic controllers,
Alimony, Claims, Disability benefits, Firefighters, Government
employees, Income taxes, Intergovernmental relations, Law enforcement
officers, Pensions, Retirement.
U.S. Office of Personnel Management,
Janice R. LaChance,
Director.
Accordingly, under 5 U.S.C. 8347, 8461, and as discussed in the
preamble, OPM proposes to amend Title 5, Code of Federal Regulations
Parts 831 and 841, as follows:
PART 831--RETIREMENT
1. The authority citation for part 831 is revised to read as
follows:
Authority: 5 U.S.C. 8347; Sec. 831.102 also issued under 5
U.S.C. 8334; Sec. 831.106 also issued under 5 U.S.C. 552a;
Sec. 831.108 also issued under 5 U.S.C. 8336(d)(2);
Sec. 831.201(b)(1) also issued under 5 U.S.C. 8347(g);
Sec. 831.201(b)(6) also issued under 5 U.S.C. 7701(b)(2);
Sec. 831.201(g) also issued under sections 11202(f), 11232(e), and
11246(b) of Pub. L. 105-33, 111 Stat. 251; Sec. 831.204 also issued
under section 102(e) of Pub. L. 104-8, 109 Stat. 102, as amended by
section 153 of Pub. L. 104-134, 110 Stat. 1321; Sec. 831.303 also
issued under 5 U.S.C. 8334(d)(2); Sec. 831.502 also issued under 5
U.S.C. 8337; Sec. 831.502 also issued under section 1(3), E.O.
11228, 3 CFR 1964-1965 Comp.; Sec. 831.663 also issued under 5
U.S.C. 8339(j) and (k)(2); Secs. 831.663 and 831.664 also issued
under Pub. L. 103-66, 107 Stat. 412; Sec. 831.682 also issued under
section 201(d) of Pub. L. 99-251, 100 Stat. 23; subpart V also
issued under 5 U.S.C. 8343a and section 6001 of Pub. L. 100-203, 101
Stat. 1330-275; Sec. 831.2203 also issued under section 7001(a)(4)
of Pub. L. 101-508; 104 Stat. 1388-328.
Secs. 831.1501, 831.1511 and 831.1521 (Subpart O) [Removed and
reserved]
2. Subpart O of consisting of Secs. 831.1501, 831.1511, and
831.1521, of part 831 is removed and reserved.
Secs. 831.1901-831.1907 (Subpart S) [Removed and reserved]
3. Subpart S, consisting of Secs. 831.1901 through 831.1907, of
part 831 is removed and reserved.
PART 841--FEDERAL EMPLOYEES RETIREMENT SYSTEM--GENERAL
ADMINISTRATION
4. The authority citation for part 841 is revised to read as
follows:
Authority: 5 U.S.C. 8461; Sec. 841.108 also issued under 5
U.S.C. 552a; subpart D also issued under 5 U.S.C. 8423; Sec. 841.504
also issued under 5 U.S.C. 8422; Sec. 841.506 also issued under 5
U.S.C. 7701(b)(2); Sec. 841.507 also issued under section 505 of
Pub. L. 99-335; Sec. 841.508 also issued under section 505 of Pub.
L. 99-335; subpart J also issued under 5 U.S.C 8345(k), 8345(h),
8465(b), and 8469.
5. Subpart J of part 841 is revised to read as follows:
Subpart J--Voluntary Allotments for State Income Tax Withholding and
for Other Purposes
Sec.
841.1001 Purpose and scope.
841.1002 Definitions.
841.1003 State income tax withholding.
841.1004 Other voluntary allotments.
841.1005 Limitations.
Subpart J--Voluntary Allotments for State Income Tax Withholding
and for Other Purposes
Sec. 841.1001 Purpose and scope.
This subpart consolidates regulations pertaining to the Civil
Service Retirement System (CSRS) and the Federal Employees Retirement
System (FERS) on--
(a) The State income tax withholding program required under
sections 8345(k) and 8469 of title 5, United States Code; and
(b) The program that OPM uses to honor annuitant requests for such
other voluntary allotments as OPM may decide to allow from annuity
payments under CSRS and FERS pursuant to sections 8345(h) and 8465(b)
of title 5, United States Code.
Sec. 841.1002 Definitions.
In this subpart--
Allotment means a specified amount an annuitant voluntarily
authorizes to be paid to an allottee.
Allottee means the institution, organization or individual to which
the allotment is paid. Annuitant means an individual who is a retiree,
a former spouse, or a survivor.
Annuity payment means the net monthly annuity payment due an
annuitant after all authorized deductions (such as those for health
benefits, Federal income tax, overpayment of annuity, indebtedness to
the Government) have been made.
Former spouse means an individual who is receiving recurring
payments under CSRS or FERS based on a court order under part 838 of
this chapter.
Retiree means a former employee or Member who is receiving
recurring payments under CSRS or FERS based on his or her service as an
employee.
Survivor means a widow, widower, child, former spouse, or person
with an insurable interest who is receiving recurring payments under
CSRS or FERS based on the death of an employee, Member, or retiree.
Sec. 841.1003 State income tax withholding.
(a) Agreements with States. OPM will maintain a program under which
an annuitant may voluntarily request State income tax withholding for a
State with which OPM has an agreement for withholding State income
taxes from CSRS and FERS annuities.
(b) Agreements between OPM and a State will establish each party's
responsibilities in the process of withholding for State income taxes
from CSRS and FERS annuities.
(c) Agreements for State income tax withholding may be modified or
terminated--
(1) By OPM or the State in accordance with the terms of the
agreement; or
(2) By OPM in accordance with appropriate rulemaking procedures
pursuant to title 5 of the United States Code.
Sec. 841.1004 Other voluntary allotments.
(a) General. An annuitant may make an allotment from annuity
payments for any purpose OPM deems appropriate.
(b) Effective dates. A request for an allotment is effective when
processed by OPM. OPM will process each request no later than the 1st
day of the second month following the month in which it is received,
but incurs no liability or indebtedness to the annuitant or allottee by
its failure to do so.
(c) Disputes. A dispute regarding any authorized allotment properly
paid by OPM is a matter between the annuitant and the allotee.
Sec. 841.1005 Limitations.
(a) The total amount of any allotments may not exceed the annuity
payment due.
(b) Allotments--State income tax withholdings excepted-- are paid
only on the regularly designated paydays of the annuitant.
(c) Payment of an allotment will be discontinued when annuity
payments are terminated or suspended by OPM. OPM is not responsible for
any interest or penalties incurred when allotments are discontinued due
to the termination or suspension of annuity payments.
(d)(1) If annuity payments are made beyond the date the annuitant's
entitlement to annuity ceases, the
[[Page 33431]]
annuitant must repay any allotments paid after the date annuity
payments should have ceased.
(2) If annuity payments are made after the annuitant's death, OPM
will recover from--
(i) His or her estate; or,
(ii) In an appropriate case, from any survivor benefits payable
based on the annuitant's service; or
(iii) If there is neither an estate nor a survivor annuity payable,
from the allottee.
(f) Allotments, except allotments to large organizations under
agreements established prior to the effective date of these
regulations, may only be made to a valid electronic-funds-transfer
address established under part 210 of title 31, Code of Federal
Regulations.
[FR Doc. 99-15686 Filed 6-22-99; 8:45 am]
BILLING CODE 6325-012-P
