This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

14653

Vol. 62, No. 59

Thursday, March 27, 1997

FEDERAL RETIREMENT THRIFT

INVESTMENT BOARD

5 CFR Part 1651

Death Benefits

AGENCY: Federal Retirement Thrift

Investment Board.

ACTION: Proposed rule.

SUMMARY: The Executive Director of the

Federal Retirement Thrift Investment

Board (Board) is publishing proposed

regulations governing death benefit

payments from the Thrift Savings Plan

(TSP). These proposed 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: Comments must be received on

or before May 27, 1997.

ADDRESSES: Comments may be sent to

John J. O’Meara, Federal Retirement

Thrift Investment Board, 1250 H Street,

N.W., Washington, DC 20005.

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 taxdeferred 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 proposed 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).

Section by Section Analysis

Section 1651.1 contains definitions of

terms throughout these regulations. In

particular, the Board invites comments

concerning the Board’s proposed

definition for ‘‘domicile.’’ A

participant’s domicile is important for a

determination of beneficiary under

§ 1651.5 and § 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 proposes to 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
14654 Federal Register / Vol. 62, No. 59 / Thursday, March 27, 1997 / Proposed Rules

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 recordkeeper 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

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).

In order to be a valid designation of

beneficiary, all Forms TSP–3 signed on

or after January 1, 1995, must be re

ceived by the TSP recordkeeper 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

recordkeeper 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 recordkeeper 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 recordkeeper to

determine whether they are valid,

despite the fact that they were received

by the agencies. Forms that the

recordkeeper 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

§ 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 recordkeeper 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 recordkeeper 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 stepparent adopted the participant.

Payment to the duly appointed

executor or administrator of the

participant’s estate is addressed in

§ 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 recordkeeper.

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, § 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
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the participant’s death in order to

receive a death benefit. Accordingly,

under § 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 × 50%)) and the

second remaining beneficiary would

receive 60% of the deceased

beneficiary’s share of the account (30%

+ (30/50 × 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 § 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 § 1651.10(c), if 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, 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, § 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,

§ 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 § 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

§ 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 recordkeeper 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

recordkeeper 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

recordkeeper 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

§ 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 recordkeeper 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
14656 Federal Register / Vol. 62, No. 59 / Thursday, March 27, 1997 / Proposed Rules

cooperate in the TSP recordkeeper’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.

The beneficiary of a TSP account may

disclaim his or her right to receive the

benefit in accordance with § 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,

tit. 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.

Dated: March 18, 1997.

Roger W. Mehle,

Executive Director, Federal Retirement Thrift

Investment Board.

For the reasons set out in the

preamble, the Federal Retirement Thrift

Investment Board proposes to amend

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).

§ 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 recordkeeper means the entity

that is engaged by the Board to perform

recordkeeping services for the Thrift

Savings Plan. As of [effective date of

final rule], the TSP recordkeeper 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.

§ 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 § 1651.3;

(2) If there is no designated

beneficiary, to the widow or widower of

the participant in accordance with

§ 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

§ 1651.6;

(4) If none of the above in paragraphs

(a)(1) through (a)(3) of this section, to
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the parents of the participant or the

surviving one of them in accordance

with § 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 § 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 § 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

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

participant 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.

§ 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 recordkeeper (or the Board) on or

before the participant’s date of death. A

Form TSP–3 submitted to the

participant’s employing agency after

December 31, 1994, will not be

considered valid unless it is also

received by the TSP recordkeeper (or

the Board) 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 recordkeeper

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 § 1651.4.

(b) Eligible beneficiaries. Any

individual, firm, corporation, 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

witnesses. 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.

§ 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 recordkeeper on or

before the date of death of the

participant under the same rules as set

forth in § 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 § 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 canceled. In order

to be effective, either of these

documents must be received by the TSP

recordkeeper on or before the date of

death of the participant in accordance

with the rules set forth in § 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.

§ 1651.5 Widow or widower.

For purposes of payment under

§ 1651.2(a)(2), the widow or widower of

the participant is the person to whom

the participant is married on the date of
14658 Federal Register / Vol. 62, No. 59 / Thursday, March 27, 1997 / Proposed Rules

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.

§ 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 § 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.

§ 1651.7 Parent or parents.

If the account is to be paid to the

participant’s parent or parents under

§ 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 stepparent adopted the participant.

§ 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

§ 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

recordkeeper.

§ 1651.9 Participant’s next of kin.

If the account is to be paid to the

participant’s next of kin under

§ 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.

§ 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 § 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.

§ 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 pre-deceased

the participant and the account will be

paid in accordance with § 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.

§ 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 § 1651.10.

§ 1651.13 How to apply for a death benefit.

In order for a deceased participant’s

account to be disbursed, the TSP

recordkeeper 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

recordkeeper. 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

recordkeeper does not entitle the

applicant to benefits.

§ 1651.14 How payment is made.

(a) Notice. The TSP recordkeeper 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 recordkeeper in writing by the

beneficiary. All beneficiaries must

provide the TSP recordkeeper with a

taxpayer identification number (TIN)

except for nonresident alien

beneficiaries.

(c) Payment to widow or widower. The

widow or widower of the participant
Federal Register / Vol. 62, No. 59 / Thursday, March 27, 1997 / Proposed Rules 14659

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

recordkeeper 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 documentation 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.

§ 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

recordkeeper 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.

§ 1651.16 Missing and unknown

beneficiaries.

(a) Locate and identify beneficiaries.

(1) The TSP recordkeeper 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 § 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.

§ 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 recordkeeper 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 § 1651.10.

§ 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. 97–7661 Filed 3–26–97; 8:45 am]

BILLING CODE 6760–01–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[CA 184–0031b; FRL–5709–4]

Approval and Promulgation of State

Implementation Plans; California State

Implementation Plan Revision, San

Diego County Air Pollution Control

District

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: EPA is proposing to approve

revisions to the California State

Implementation Plan (SIP). This action

is an administrative change which

revises the definition of volatile organic

compounds (VOC) and updates the

Exempt Compound list in rules from the

San Diego County Air Pollution Control

District (SDCAPCD).

The intended effect of proposing

approval of this action is to incorporate

changes to the definition of VOC and to

update the Exempt Compound list in

SDCAPCD rules to be consistent with

the revised federal and state VOC

definitions. EPA is proposing approval

of these revisions to be incorporated

into the California SIP for the

attainment of the national ambient air

quality standards (NAAQS) for ozone

under title I of the Clean Air Act (CAA

or the Act). In the Final Rules Section

of this Federal Register, the EPA is

approving the state’s SIP revisions as a

direct final rule without prior proposal

because the Agency views these

administrative changes as

noncontroversial revision amendments

and anticipates no adverse comments. A

detailed rationale for this approval is set

forth in the direct final rule. If no

adverse comments are received in

response to this proposed rule, no

further activity is contemplated in

relation to this rule. If EPA receives

adverse comments, the direct final rule

will be withdrawn and all public

comments received will be addressed in

a subsequent final rule based on this

proposed rule. The EPA will not

institute a second comment period on

this document. Any parties interested in

commenting on this action should do so

at this time.

DATES: Comments on this proposed rule

must be received in writing by April 28,

1997.

ADDRESSES: Written comments on this

action should be addressed to: Andrew

Steckel, Rulemaking Office [Air–4], Air

Division, U.S. Environmental Protection

Agency, Region 9, 75 Hawthorne Street,

San Francisco, CA 94105–3901.

Copies of the rules and EPA’s

evaluation report of the rules are

available for public inspection at EPA’s

Region 9 office during normal business

hours. Copies of the submitted rules are

also available for inspection at the

following locations:

California Air Resources Board,

Stationary Source Division, Rule

Evaluation Section, 2020 ‘‘L’’ Street,

Sacramento, CA 95814.

San Diego County Air Pollution Control

District, 9150 Chesapeake Drive, CA

92123.