This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

76419 

Vol. 85, No. 230 

Monday, November 30, 2020 

FEDERAL RETIREMENT THRIFT 

INVESTMENT BOARD 

5 CFR Part 1650 

Methods of Withdrawing Funds From 

the Thrift Savings Plan 

AGENCY: Federal Retirement Thrift 

Investment Board. 

ACTION: Direct final rule. 

SUMMARY: The Federal Retirement Thrift 

Investment Board (FRTIB) is amending 

its regulations to remove certain 

restrictions with respect to the election 

of installment payments calculated 

based on life expectancy. 

DATES: This rule is effective without 

further action on January 11, 2021, 

unless significant adverse comment is 

received by December 30, 2020. If 

significant adverse comment is received, 

the FRTIB will publish a timely 

withdrawal of the rule in the Federal 

Register. 

ADDRESSES: You may submit comments 

using one of the following methods: 

• Federal Rulemaking Portal: http://

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. 

• Facsimile: Comments may be 

submitted by facsimile at (202) 942– 

1676. 

Since March 23, 2020, the FRTIB has 

been operating in mandatory telework 

status due to the coronavirus pandemic, 

which has limited the ability to timely 

monitor mail and facsimiles. Therefore, 

we strongly encourage using the Federal 

Rulemaking Portal to submit comments. 

FOR FURTHER INFORMATION CONTACT: 

Austen Townsend at (202) 864–8647. 

SUPPLEMENTARY INFORMATION: The 

FRTIB administers the Thrift Savings 

Plan (TSP), which was established by 

the Federal Employees’ Retirement 

System Act of 1986 (FERSA), Public 

Law 99–335, 100 Stat. 514. The TSP 

provisions of FERSA are codified, as 

amended, largely at 5 U.S.C. 8351 and 

8401–79. The TSP is a tax-deferred 

retirement savings plan for Federal 

civilian employees and members of the 

uniformed services. The TSP 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)). 

Post-Separation Withdrawals 

TSP participants who have separated 

from service have three basic methods 

of withdrawing money from their TSP 

accounts: (1) Installment payments; (2) 

single withdrawals; and (3) annuity 

purchases. A separated participant who 

elects to receive all or a portion of his 

or her account balance in the form of 

installment payments must choose the 

frequency of those payments (monthly, 

quarterly, or annual) and whether to 

receive fixed dollar payments or 

payments calculated based on life 

expectancy. 

Restrictions on Life-Expectancy-Based 

Installment Payments 

Currently, a separated TSP participant 

may change the amount and frequency 

of his or her fixed dollar installment 

payments at any time throughout the 

year. This includes the ability of a 

participant to make a one-time election 

to change from installment payments 

calculated based on life expectancy to 

fixed dollar installment payments. 

However, under existing rules, once a 

participant makes an election to receive 

fixed dollar installment payments, he or 

she may not switch to life-expectancybased installment payments. In 

addition, although a TSP participant 

receiving installment payments may 

stop these payments at any time, if he 

or she stops life-expectancy-based 

installment payments, the participant 

may not elect to restart life-expectancybased installment payments at a later 

date. 

Need for Removal of Restrictions 

Internal Revenue Service (‘‘IRS’’) 

rules regarding required minimum 

distributions (‘‘RMDs’’) apply to TSP 

participants. Under these rules, a TSP 

participant must receive RMDs 

beginning on April 1 of the year 

following the year in which the 

participant reaches age 72 and is 

separated from service and annually 

thereafter. However, on March 27, 2020, 

the President signed the Coronavirus 

Aid, Relief, and Economic Security 

(CARES) Act, Public Law 116–136 (134 

Stat. 281). Among other things, the 

CARES Act waives the requirement for 

any RMD that is required to be paid in 

2020. 

The COVID–19 pandemic caused a 

steep and sudden decline in the stock 

markets and put a severe strain on many 

household budgets. In order to give time 

for TSP account balances to recover, as 

authorized by the CARES Act, the TSP 

will not send any automatic RMD 

payments for 2020. However, the TSP 

will continue to send elected 

installment payments in 2020 unless the 

participant makes an affirmative 

election to stop installment payments. 

Many separated TSP participants who 

are required to receive RMDs elect to 

receive life-expectancy-based 

installment payments as a way to ensure 

they satisfy this requirement. The 

existing restrictions on life-expectancybased installment payments put these 

participants in an untenable situation— 

they must either continue to receive 

payments and forego the chance to let 

their account balances recover, or stop 

their payments and forego the ability to 

restart life-expectancy-based payments 

in the future. Moreover, over the years, 

separated participants of all ages have 

expressed a desire for more flexibility to 

change between fixed dollar and lifeexpectancy-based installment payments. 

Therefore, effective January 1, 2021, the 

FRTIB is removing the restrictions on 

life-expectancy-based installment 

payments described above. 

The removal of these restrictions 

allows TSP participants who are eligible 

for installment payments to elect to 

receive payments based on life 

expectancy whether or not they 

previously started and then stopped 

installment payments. In order for a TSP 

participant who is currently receiving 

fixed dollar installment payments to 

receive installment payments calculated 

based on life expectancy, the participant 

must first stop his or her existing 

installment payments. The participant 

can then make a new withdrawal 

election to receive life-expectancy-based 

installment payments. (Participants who 

are currently receiving payments based 

on life expectancy will continue to have 

the ability to switch to fixed dollar 

payments simply by requesting a 


TKELLEY on DSKBCP9HB2PROD with RULES
76420 Federal Register / Vol. 85, No. 230 / Monday, November 30, 2020 / Rules and Regulations 

specific dollar amount.) This new 

withdrawal election is subject to the 

spousal consent rules set forth at 5 

U.S.C. 8435(a)(1)(B). 

Tax Implications 

The FRTIB recognizes the value of 

giving TSP participants more flexibility 

with respect to installment payments. 

However, TSP participants should be 

aware of potential tax consequences 

mandated by the Internal Revenue Code 

(Code) that may result from stopping 

installment payments calculated based 

on life expectancy. 

TSP participants who separate from 

service before the age of 55 and choose 

to receive installment payments may be 

subject to a 10% early withdrawal 

penalty under Code section 72(t). 

Installment payments based on life 

expectancy are an exception to the rule. 

However, the penalty can be applied 

retroactively if the participant does any 

of the following within five years of 

beginning payments or before reaching 

age 591⁄2: (1) Stopping life-expectancybased payments; (2) switching lifeexpectancy-based payments to 

payments of a fixed dollar amount; or 

(3) withdrawing money in addition to 

the life-expectancy based payments. 

Doing any of these things in that period 

of time will make the participant liable 

for the penalty tax on the payments he 

or she previously received. These tax 

consequences are mandated by the Code 

and are not eliminated by this FRTIB 

rule change. 

Direct Final Rulemaking 

The FRTIB is publishing this 

regulation as a direct final rule. In a 

direct final rulemaking, an agency 

publishes its rule in the Federal 

Register along with a statement that the 

rule will become effective unless the 

agency receives significant adverse 

comment within a specified period. 

The content of this direct final rule 

relieves a restriction on a TSP 

participant’s ability to make a postseparation withdrawal election to 

receive installment payments based on 

life expectancy. Therefore, pursuant to 5 

U.S.C. 553, notice and comment are not 

required, and this rule may become 

effective after publication in the Federal 

Register without public comment. 

Nevertheless, the FRTIB appreciates 

that members of the public may have 

perspectives or information that could 

impact the FRTIB’s views with respect 

to the removal of these restrictions. The 

FRTIB, therefore, is providing a 30-day 

public comment period, and intends to 

consider all comments submitted during 

that period. The FRTIB will withdraw 

the rule if it receives significant adverse 

comment. Comments that are not 

adverse may be considered for 

modifications to part 1650 at a future 

date. If no significant adverse comment 

is received, the rule will become 

effective 40 days after publication, 

without additional notice. 

Regulatory Flexibility Act 

I certify that this regulation will not 

have a significant economic impact on 

a substantial number of small entities. 

This regulation will affect Federal 

employees and members of the 

uniformed services who participate in 

the Thrift Savings Plan, which is a 

Federal defined contribution retirement 

savings plan created under the Federal 

Employees’ Retirement System Act of 

1986 (FERSA), Public Law 99–335, 100 

Stat. 514, and which is administered by 

the FRTIB. 

Paperwork Reduction Act 

I certify that these regulations do 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, 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 section 1532 is not 

required. 

Submission to Congress and the 

General Accounting Office 

Pursuant to 5 U.S.C. 810(a)(1)(A), the 

FRTIB 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 

publication of this rule in the Federal 

Register. This rule is not a major rule as 

defined at 5 U.S.C. 804(2). 

List of Subjects in 5 CFR Part 1650 

Alimony, Claims, Government 

employees, Pensions, Retirement. 

Ravindra Deo, 

Executive Director, Federal Retirement Thrift 

Investment Board. 

For the reasons stated in the 

preamble, the FRTIB amends 5 CFR 

Chapter VI as follows: 

PART 1650—METHODS OF 

WITHDRAWING FUNDS FROM THE 

THRIFT SAVINGS PLAN 

■ 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). 

■ 2. Amend § 1650.13 by revising 

paragraph (b) to read as follows: 

§ 1650.13 Installment Payments. 

* * * * * 

(b) A participant can make the 

following changes at any time as 

described in § 1650.17(c): 

(1) A participant receiving installment 

payments calculated based on life 

expectancy can elect to change to fixed 

dollar installment payments; 

(2) A participant receiving installment 

payments based on a fixed dollar 

amount can elect to stop these payments 

and make a new election to receive 

installment payments calculated based 

on life expectancy; 

(3) A participant receiving installment 

payments based on a fixed dollar 

amount can elect to change the amount 

of his or her fixed payments; and 

(4) A participant receiving fixed 

dollar installment payments can elect to 

change the frequency of his or her 

installment payments. 

* * * * * 

[FR Doc. 2020–26339 Filed 11–25–20; 11:15 am] 

BILLING CODE 6760–01–P 

DEPARTMENT OF AGRICULTURE 

Federal Crop Insurance Corporation 

7 CFR Parts 407 and 457 

RIN 0563–AC70 

[Docket ID FCIC–20–0008] 

Area Risk Protection Insurance 

Regulations; Common Crop Insurance 

Policy Basic Provisions; Common 

Crop Insurance Regulations, 

Sunflower Seed Crop Insurance 

Provisions; and Common Crop 

Insurance Regulations, Dry Pea Crop 

Insurance Provisions 

AGENCY: Federal Crop Insurance 

Corporation, USDA. 

ACTION: Final rule with request for 

comments. 

SUMMARY: The Federal Crop Insurance 

Corporation (FCIC) amends the Area 

Risk Protection Insurance (ARPI) 

Regulations; Common Crop Insurance 

Policy (CCIP), Basic Provisions; 

Common Crop Insurance Regulations, 

Sunflower Seed Crop Insurance 


TKELLEY on DSKBCP9HB2PROD with RULES