§ 1605.14 Misclassified retirement system coverage. ( a ) If a CSRS participant is misclassified by an employing agency as a FERS participant, when the misclassification is corrected: ( 1 ) Employee contributions that exceed the applicable contribution percentage for the pay period(s) involved may remain in the participant's account. The participant may request the return of excess employee contributions made on or after January 1, 2000; those contributed before January 1, 2000, must remain in the participant's account. If the participant requests a refund of employee contributions, the employing agency must submit a negative adjustment record to remove these funds under the procedure described in § 1605.12.
( 2 ) All agency contributions that were made to a CSRS participant's account will be forfeited. An employing agency may submit a negative adjustment record to request the return of an erroneous contribution that has been in the participant's account for less than one year.
( b ) If a FERS participant is misclassified by an employing agency as a CSRS participant, when the misclassification is corrected: ( 1 ) The participant may not elect to have the contributions made while classified as CSRS removed from his or her account;
( 2 ) The participant may, under the rules of § 1605.11, elect to make up contributions that he or she would have been eligible to make as a FERS participant during the period of misclassification;
( 3 ) The employing agency must, under the rules of § 1605.11, make agency automatic (1%) contributions and agency matching contributions on employee contributions that were made while the participant was misclassified;
( 4 ) If the retirement coverage correction is a FERCCA correction, the employing agency must submit makeup employee contributions on late payment records. The participant is entitled to breakage on contributions from all sources. Breakage will be calculated pursuant to § 1605.2. If the retirement coverage correction is not a FERCCA correction, the employing agency must submit makeup employee contributions on current payment records; in such cases, the employee is not entitled to breakage. Agency makeup contributions may be submitted on either current or late payment records; and
( 5 ) If employee contributions were made up before the Office of Personnel Management implemented its regulations on FERCCA correction, and the correction is considered to be a FERCCA correction, an amount to replicate TSP lost earnings will be calculated by the Office of Personnel Management pursuant to its regulations and provided to the employing agency for transmission to the TSP record keeper.
( c ) If a participant was misclassified as either FERS or CSRS and the retirement coverage is corrected to FICA only, the participant is no longer eligible to participate in the TSP. ( 1 ) Employee contributions in the account are subject to the rules in paragraph (a)(1) of this section.
( 2 ) Employer contributions in the account are subject to the rules in paragraph (a)(2) of this section.
( 3 ) The TSP record keeper will consider a participant to be separated from Government service for all TSP purposes and the employing agency must submit an employee data record to reflect separation from Government service. If the participant has an outstanding loan, it will be subject to the provisions of part 1655 of this chapter. The participant may make a TSP post-employment distribution election pursuant to 5 CFR part 1650, subpart B, and the distribution will be subject to the provisions of 5 CFR 1650.60(b).
( d ) If a FERS or CSRS participant is misclassified by an employing agency as FICA only, when the misclassification is corrected the participant may, pursuant to § 1605.11 of this part, elect to make up contributions that he or she would have been eligible to make as a FERS or CSRS participant during the period of misclassification. If the participant makes up employee contributions, the rules in paragraph (b)(5) of this section apply. If the participant is corrected to FERS, the rules in paragraphs (b)(3) and (b)(4) of this section also apply.
( e ) The provisions of paragraph (c) of this section shall apply to any TSP contributions relating to a period for which an employee elects retroactive Nonappropriated Fund retirement coverage.
( f ) If a BRS participant is misclassified by an employing agency as a non-BRS participant, when the misclassification is corrected: ( 1 ) The participant may not elect to have the contributions made while classified as non-BRS removed from his or her account;
( 2 ) The participant may, under the rules of § 1605.11, elect to make up contributions that he or she would have been eligible to make as a BRS participant during the period of misclassification;
( 3 ) The employing agency must, under the rules of § 1605.11, make agency automatic (1%) contributions and agency matching contributions on employee contributions that were made while the participant was misclassified; and
( 4 ) The employing agency must submit makeup employee contributions on current payment records and service makeup contributions may be submitted on either current or late payment records.
( g ) If a non-BRS participant is misclassified by an employing agency as a BRS participant, when the misclassification is corrected: ( 1 ) Employee contributions may remain in the participant's account. If the participant requests a refund of employee contributions, the employing agency must submit a negative adjustment record to remove these funds under the procedure described in § 1605.12.
( 2 ) All agency contributions that were made to a non-BRS participant's account will be forfeited. An employing service may submit a negative adjustment record to request the return of an erroneous contribution that has been in the participant's account for less than one year.
[66 FR 44277, Aug. 22, 2001, as amended at 68 FR 35500, June 13, 2003; 68 FR 74451, Dec. 23, 2003; 70 FR 32212, June 1, 2005; 72 FR 53414, Sept. 19, 2007; 77 FR 26426, May 4, 2012; 82 FR 60104, Dec. 19, 2017; 87 FR 31677, May 24, 2022]