22092 Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Rules and Regulations

the entire amount of the rollover. A

participant may roll over the full

amount of the distribution by making

up, from his or her own funds, the

amount that was withheld from the

distribution for the payment of federal

taxes.

(4) The transaction must be completed

within 60 days of the participant’s

receipt of the distribution from the

retirement plan or conduit IRA. The

transaction is not complete until the

TSP recordkeeper receives the Form

TSP–60, executed by both the

participant and plan administrator or

IRA custodian, together with the

guaranteed funds for the amount to be

rolled over.

§ 1600.33 Treatment accorded transferred

funds.

(a) All funds transferred to the TSP

pursuant to §§ 1600.31 and 1600.32 will

be treated as employee contributions.

(b) All funds transferred to the TSP

pursuant to §§ 1600.31 and 1600.32 will

be invested in accordance with the

participant’s contribution allocation on

file at the time the transfer is completed.

(c) Funds transferred to the TSP

pursuant to §§ 1600.31 and 1600.32 are

not subject to the limits on

contributions described in § 1600.22.

[FR Doc. 01–10962 Filed 5–1–01; 8:45 am]

BILLING CODE 6760–01–U

FEDERAL RETIREMENT THRIFT

INVESTMENT BOARD

5 CFR Part 1601

Participants’ Choices of Investment

Funds

AGENCY: Federal Retirement Thrift

Investment Board

ACTION: Final rule.

SUMMARY: The Executive Director of the

Federal Retirement Thrift Investment

Board (Board) is amending the

regulations on participants’ choices of

investment funds. This amendment

implements a provision of the Thrift

Savings Plan Act of 1996, which added

two new investment funds to the Thrift

Savings Plan (TSP). It also implements

a decision by the Board to transfer the

processing of contribution allocations

from the employing agencies to the TSP

recordkeeper.

EFFECTIVE DATE: May 2, 2001.

FOR FURTHER INFORMATION CONTACT:

Salomon Gomez on (202) 942–1661;

Merritt A. Willing on (202) 942–1666; or

Patrick J. Forrest on (202) 942–1659.

FAX (202) 942–1676.

SUPPLEMENTARY INFORMATION: The Board

administers the TSP which was

established by the Federal Employees’

Retirement System Act of 1986

(FERSA), Public Law 99–335, 100 Stat.

514. The Thrift Savings Plan Act of

1996, Public Law 104–208, 110 Stat.

3009, amended FERSA to create two

new TSP investment funds. The TSP

provisions of FERSA have been

codified, as amended, largely at 5 U.S.C.

8351 and 8401–8479. The TSP is a taxdeferred retirement savings plan for

Federal employees, similar to cash or

deferred arrangements established

under section 401(k) of the Internal

Revenue Code. Sums in a TSP

participant’s account are held in trust

for that participant.

On March 26, 2001, the Board

published a proposed rule with a

request for comments in the Federal

Register (66 FR 16415). The Board

received no comment on the proposed

rule. Therefore, the Board is adopting

the provisions of the proposed rule as a

final rule without change.

Analysis

The final rule eliminates §§ 1601.2(a),

(c) and (d), 1601.4(b), and 1601.6

because those sections are obsolete.

Sections 1601.3 and 1601.7 have been

redesignated as § 1602.36; effective May

1, 2001, error correction will be

processed in accordance with part 1605.

Subpart A contains definitions

relevant to participants’ choices of

investment funds, as it does currently.

The definitions of allocation election,

election form, and election period in the

existing regulation are deleted as

unnecessary. Other definitions, such as

Board and CSRS, are deleted because

they are not specifically applicable to

participants’ choices of investment

funds.

In subpart B, the Board explains a

new process for making a contribution

allocation. Contribution allocations

apply to future TSP contributions and

loan payments. Currently, participants

make a contribution election and a

contribution allocation at the same time,

on Form TSP–1; this form is submitted

to the participant’s employing agency.

Participants will continue to use Form

TSP–1 to make contribution elections

and will submit that form to their

employing agency. However, on May 1,

2001, when the new funds are

implemented, contribution allocations

will be submitted to the TSP

recordkeeper following the procedures

described in Subpart B.

Subpart B includes a transition rule

that explains how new contributions

will initially be invested upon

implementation of the new funds. This

transition rule will apply to

contributions and loan payments posted

after April 30, 2001. In particular,

§ 1601.12 provides that beginning on

May 1, 2001, contributions and loan

payments for each TSP account will be

invested based on the allocation of the

most recent contribution posted to a

participant’s account between March 15

and April 30, 2001. If there was none,

contributions and loan payments will be

invested based upon any interfund

transfer request pending for April 30,

2001. If there is no interfund transfer

request pending for April 30, 2001,

contributions and loan payments will be

allocated based upon the participant’s

March 31, 2001 month-end account

balance. If a participant’s March monthend account balance is zero, his or her

contributions and loan payments will be

invested in the G Fund. This derived

allocation will continue until a valid

contribution allocation is received and

processed.

For accounts first established on or

after May 1, 2001, contributions and

other deposits received will be invested

in the G Fund until the participant

makes a different contribution

allocation. The participant may

subsequently make a contribution

allocation to change the investment of

future contributions or an interfund

transfer to change the investment of his

or her existing account balance at any

time after he or she is notified by the

TSP recordkeeper that the account has

been established. Effective May 1, 2001,

all TSP participants may elect to invest

all or part of their new contributions

and loan payments in any of the five

investment funds.

Section 1601.13 explains that,

effective May 1, 2001, a participant may

make a contribution allocation by using

the TSP Web site, the ThriftLine, or by

completing a Form TSP–50, Investment

Allocation. Section 1601.13 also

explains the requirements for a valid

contribution allocation, largely

incorporating existing § 1601.2(b). It

also explains that participants will be

able to make contribution allocations in

increments of one percent instead of the

current five percent.

Subpart C describes the rules that a

participant must follow in order to make

an interfund transfer of his or her

existing TSP account balance. Section

1601.22 of the final regulation

essentially incorporates § 1601.5 of the

existing regulations and also provides

that, effective May 1, 2001, a participant

may use the TSP Web site, the

ThriftLine, or a Form TSP–50 to request

an interfund transfer.

Subpart D has been added to part

1601 to consolidate rules that apply to

Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Rules and Regulations 22093

participants’ choices of investment

funds for new contributions

(contribution allocations) and to

redistributing existing account balances

(interfund transfers). For example,

§ 1602.32 describes the timing and

posting dates for contribution

allocations and interfund transfer

requests. Section 1602.33 provides that

a participant who elects to make an

interfund transfer to the F Fund, C

Fund, S Fund, or I Fund must execute

an acknowledgment of risk (that the

investment is made at the participant’s

risk and the participant understands

that the TSP does not guarantee

investment returns or guarantee against

a loss in the value of the investment).

Section 1602.34 prescribes the rules for

giving effect to a Form TSP–50.

CROSS-REFERENCE TABLES

Old section New section

1601.1 ................................ 1601.1

1601.2(a), (c), (d) .............. Deleted.

1601.2(b) ........................... 1601.13

1601.3 ................................ 1601.36

Con’t. Con’t.

1601.4(a) ........................... 1601.21

1601.4(b) ........................... Deleted.

1601.5 ................................ 1601.22

1601.6 ................................ 1601.32

1601.7 ................................ 1601.36

1601.1 ................................ 1601.1

1601.11 .............................. New.

1601.12 .............................. New.

1601.13 .............................. 1601.2(b)

1601.21 .............................. New.

1601.22 .............................. 1601.5

1601.31 .............................. New.

1601.32 .............................. 1601.6

1601.33 .............................. New.

1601.34 .............................. New.

1601.35 .............................. New.

1601.36 .............................. 1601.3, 1601.7

Regulatory Flexibility Act

I certify that these regulations will not

have a significant economic impact on

a substantial number of small entities.

They will affect only employees of the

Federal Government.

Paperwork Reduction Act

I certify that these regulations do not

require additional reporting under the

criteria of the Paperwork Reduction Act

of 1980.

Unfunded Mandates Reform Act of

1995

Pursuant to the Unfunded Mandates

Reform Act of 1995, 2 U.S.C. 602, 632,

653, and 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. 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 prior to

publication of this rule in today’s

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 1601

Employment benefit plans,

Government employees, Pensions,

Retirement.

Roger W. Mehle,

Executive Director, Federal Retirement Thrift

Investment Board.

For the reasons set out in the

preamble, 5 CFR part 1601 is revised to

read as follows:

PART 1601—PARTICIPANTS’

CHOICES OF INVESTMENT FUNDS

Subpart A—General

Sec.

1601.1 Definitions.

Subpart B—Investing Future Contributions

and Loan Payments

1601.11 Applicability.

1601.12 Investing future contributions and

loan payments in the TSP investment

funds.

1601.13 Elections.

Subpart C—Redistributing Participants’

Existing Account Balances

1601.21 Applicability.

1601.22 Methods of requesting an interfund

transfer.

Subpart D—Contribution Allocations and

Interfund Transfer Requests

1601.31 Applicability.

1601.32 Timing and posting dates.

1601.33 Acknowledgment of risk.

1601.34 Effectiveness of Form TSP–50.

1601.35 Posting of transaction requests.

1601.36 Error correction.

Authority: 5 U.S.C. 8351, 8438, 7474(b)(5)

and (c)(1).

Subpart A—General

§ 1601.1 Definitions.

As used in this part:

Account balance means the sum of

the dollar balances for each source of

contributions in each investment fund

for an individual account.

Acknowledgment of risk means an

acknowledgment that any investment in

the F Fund, C Fund, S Fund, or I Fund

is made at the participant’s risk, that the

participant is not protected by the

United States Government or the Board

against any loss on the investment, and

that neither the United States

Government nor the Board guarantees

any return on the investment.

C Fund means the Common Stock

Index Investment Fund established

under 5 U.S.C. 8438(b)(1)(C).

Contribution allocation means the

apportionment of a participant’s future

contributions and loan payments among

the TSP investment funds.

Day means calendar day, unless

otherwise stated.

Employing agency means the

organization that employs an individual

eligible to contribute to the TSP and that

has authority to make personnel

compensation decisions for the

individual.

F Fund means the Fixed Income

Investment Fund established under 5

U.S.C. 8438(b)(1)(B).

G Fund means the Government

Securities Investment Fund established

under 5 U.S.C. 8438(b)(1)(A).

I Fund means the International Stock

Index Investment Fund established

under 5 U.S.C. 8438(b)(1)(E).

Interfund transfer means the

reapportionment, under this part, of a

participant’s existing account balance

among the various TSP investment

funds.

Investment fund means any

investment fund authorized under 5

U.S.C. 8438.

S Fund means the Small

Capitalization Stock Index Fund

established under 5 U.S.C.

8438(b)(1)(D).

Source of contributions means

employee contributions, agency

automatic (1%) contributions, or agency

matching contributions.

ThriftLine means the automated voice

response system by which TSP

participants may, among other things,

access their accounts by telephone. The

ThriftLine can be reached at (504) 255–

8777.

TSP recordkeeper means the entity

that is engaged by the Board to perform

recordkeeping services for the Thrift

Savings Plan. The TSP recordkeeper is

the National Finance Center, United

States Department of Agriculture,

located in New Orleans, Louisiana.

TSP Web site means the Internet

location maintained by the Board,

which contains information about the

TSP and by which TSP participants

may, among other things, access their

accounts by computer. The TSP Web

site address is http://www.tsp.gov.

22094 Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Rules and Regulations

Subpart B—Investing Future

Contributions and Loan Payments

§ 1601.11 Applicability.

This subpart applies only to the

investment of future contributions and

loan payments in the TSP’s investment

funds; it does not apply to redistributing

participants’ existing account balances

among the investment funds, which is

covered in subpart C of this part.

§ 1601.12 Investing future contributions

and loan payments in the TSP investment

funds.

(a) Transition rule. Effective May 1,

2001, contributions and loan payments

will be allocated among the investment

funds based on the allocation of the

most recent contribution posted to the

account between March 15, 2001, and

April 30, 2001. If no contributions have

been posted to an account between

March 15, 2001, and April 30, 2001, the

allocation will be based on the

allocation shown on an interfund

transfer request pending for April 30,

2001. If there is no interfund transfer

pending for April 30, 2001, the

allocation will be based on the

allocation of the account as of the March

31, 2001, account balance. If the March

31, 2001, account balance is zero, the

contributions and loan payments will be

allocated 100% to the G Fund. The

allocation derived under this section

will be applied to all contributions and

loan payments posted as of a date after

April 30, 2001, until a new contribution

allocation is made by the participant

pursuant to § 1600.12.

(b) Investment fund availability.

Effective May 1, 2001, all participants

may elect to invest all or any portion of

their future contributions and loan

payments in any of the TSP’s five

investment funds.

§ 1601.13 Elections.

(a) Contribution allocation. Effective

May 1, 2001, each participant may

indicate his or her choice of investment

funds for the allocation of future

contributions and loan payments by

using the TSP Web site or the

ThriftLine, or completing Form TSP–50,

Investment Allocation. The following

rules apply to contribution allocations:

(1) Contribution allocations must be

made in one percent increments. The

sum of the percentages elected for all of

the investment funds must equal 100%;

(2) The percentage elected by a

participant for investment of future

contributions in an investment fund

will be applied to all sources of

contributions and loan payments. A

participant may not make different

percentage elections for different

sources of contributions or for loan

payments;

(3) A participant who elects for the

first time to invest contributions and

loan payments in the F Fund, C Fund,

S Fund, or I Fund must execute an

acknowledgment of risk in accordance

with § 1601.33;

(4) All contributions and loan

payments made on behalf of a

participant who does not have a

contribution allocation in effect will be

invested in the G Fund;

(5) Once a contribution allocation

becomes effective, it remains in effect

until it is superseded by a subsequent

contribution allocation. If a separated

participant is rehired, his or her last

contribution allocation before

separation from service will be given

effect until a new allocation is made.

(b) Effect of rejection of form. If a

Form TSP–50 is rejected, the purported

contribution allocation made on the

form will have no effect. The TSP will

provide the participant with a written

statement of the reason the form was

rejected.

(c) Contribution elections. A

participant may designate the amount of

employee contributions he or she

wishes to make to the TSP or may stop

contributions only in accordance with 5

CFR part 1600.

Subpart C—Redistributing

Participants’ Existing Account

Balances

§ 1601.21 Applicability.

This subpart applies only to

redistributing participants’ existing

account balances among the TSP’s

investment funds; it does not apply to

the investment of future contributions

and loan payments, which is covered in

subpart B of this part.

§ 1601.22 Methods of requesting an

interfund transfer.

(a) Effective May 1, 2001, participants

may make an interfund transfer using

the TSP Web site or the ThriftLine, or

by completing a Form TSP–50,

Investment Allocation. The following

rules apply to an interfund transfer

request:

(1) Interfund transfer requests must be

made in one percent increments. The

sum of the percentages elected for all of

the investment funds must equal 100%;

(2) The percentages elected by the

participant will be applied to the

balances from each source of

contributions that make up the

participant’s total account balance on

the effective date of the interfund

transfer;

(3) Any participant who elects to

invest in the F Fund, C Fund, S Fund,

or I Fund for the first time must execute

an acknowledgment of risk in

accordance with § 1601.33.

(b) An interfund transfer request has

no effect on contributions and loan

payments made after the effective date

of the interfund transfer request;

subsequent contributions and loan

payments will continue to be allocated

among the investment funds in

accordance with the participant’s

contribution allocation made under

subpart B of this part.

Subpart D—Contribution Allocations

and Interfund Transfer Requests

§ 1601.31 Applicability.

This subpart applies both to

contribution allocations made under

subpart B of this part and interfund

transfers made under subpart C of this

part.

§ 1601.32 Timing and posting dates.

(a) Posting dates. (1) A contribution

allocation will ordinarily be posted

within 2 business days after it is

received.

(2) An interfund transfer request

received by midnight (central time) on

the 15th of the month will be posted to

a participant’s account as of the last day

of the month. (If the 15th of the months

falls on a weekend, holiday, or other

nonbusiness day, the deadline will be

the next business day.) Requests

received after the deadline will be

posted to a participant’s account as of

the last day of the following month.

(b) Limit. There is no limit on the

number of contribution allocations or

interfund transfer requests that may be

made by a participant; however, only

one interfund transfer will be processed

per month.

(c) Multiple contribution allocations

or interfund transfer requests. (1) If two

or more contribution allocations or two

or more interfund transfer requests with

different dates are received for a

participant and would be posted on the

same day under the rules set forth in

paragraph (a) of this section, only the

last contribution allocation or interfund

transfer request with the latest date will

be posted.

(2) If two or more contribution

allocations or two or more interfund

transfer requests with the same date are

received for a participant and would be

posted on the same day, the following

rules will apply:

(i) If one or more of the contribution

allocations or interfund transfer requests

are submitted through the TSP Web site

or the ThriftLine and one or more are

made on a Form TSP–50 and would be

posted on the same day, only the latest

Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Rules and Regulations 22095

contribution allocation or interfund

transfer request made through the TSP

Web site or the ThriftLine will be

posted;

(ii) If one or more of the contribution

allocations or interfund transfer requests

are made through the TSP Web site or

the ThriftLine, only the contribution

allocation or interfund transfer request

entered at the latest time will be posted;

and

(iii) If the contribution allocations or

interfund transfer requests are

submitted using Form TSP–50, all of the

forms will be rejected unless the

percentage allocations among the

investment funds are identical, in which

case one will be accepted.

(3) For purposes of determining the

date and time of a contribution

allocation or an interfund transfer

request, the following rules apply:

(i) The date of a contribution

allocation or interfund transfer request

made through the TSP Web site or the

ThriftLine, is the date the participant

enters the investment percentages;

(ii) The date of a contribution

allocation or interfund transfer request

made on Form TSP–50 is the date the

form is signed by the participant; and

(iii) Central time is used for

determining the date and time on which

a transaction is entered and confirmed

through the TSP Web site or the

ThriftLine.

(d) Cancellation of contribution

allocation or interfund transfer request.

(1) A contribution allocation or an

interfund transfer request may be

canceled only through the TSP Web site,

the ThriftLine, or through written

correspondence.

(2) Cancellation on the TSP Web site

or ThriftLine. A contribution allocation

or an interfund transfer request may be

canceled by entering the cancellation on

the TSP Web site or the ThriftLine only

up to the deadline, described in

paragraph (a) of this section, that is

applicable to the original request. If a

change or cancellation is received after

the deadline, the original request will be

processed as scheduled. The second

request will then be processed in turn.

(3) Cancellation by correspondence. A

participant may also cancel a

contribution allocation or an interfund

transfer request by submitting a letter to

the TSP recordkeeper requesting

cancellation. To be accepted, the

cancellation letter must be signed and

dated and must contain the participant’s

name, Social Security number, and date

of birth. To be effective, the cancellation

must be received by the deadline

described in paragraph (a) of this

section. Unless the letter states

unambiguously the specific contribution

allocation or interfund transfer request

it seeks to cancel, the written

cancellation will apply to any

contribution allocation or interfund

transfer request with a date (as

determined under paragraph (c)(3) of

this section) before the date of the

cancellation letter. If the date of a

cancellation letter is the same as the

date of a contribution allocation or an

interfund transfer request and the

request was made on Form TSP–50, the

form will be canceled. If the request was

made on the TSP Web site or ThriftLine,

it will only be canceled if the written

cancellation specifies the date of the

TSP Web site or ThriftLine request to be

canceled.

§ 1601.33 Acknowledgment of risk.

(a) A participant who wants to invest

in any investment fund other than the

G Fund must execute an

acknowledgment of risk for that fund. If

a required acknowledgment of risk has

not been executed, no transactions

involving the fund(s) for which the

acknowledgment is required will be

accepted.

(b) The acknowledgment of risk may

be executed in association with a

contribution allocation or an interfund

transfer using the TSP Web site, the

ThriftLine, or Form TSP–50.

§ 1601.34 Effectiveness of Form TSP–50.

(a) A Form TSP–50 will not be

effective if:

(1) It is not signed and dated;

(2) It is missing a Social Security

number or date of birth;

(3) The contribution allocation or

interfund transfer percentages do not

total 100%; or

(4) The form is otherwise not properly

completed in accordance with the

instructions on the form.

(b) If a Form TSP–50 is rejected, the

TSP will provide the participant with a

written statement of the reason the form

was rejected.

§ 1601.35 Posting of transaction requests.

The Board fully expects to meet the

standards of § 1601.32. However, the

Board cannot and does not guarantee

that the TSP Web site or the ThriftLine

will always be available to accept and

process transaction requests.

§ 1601.36 Error correction.

Errors in processing contribution

allocations and interfund transfer

requests, or errors that otherwise cause

money to be invested in the wrong

investment fund, will be corrected in

accordance with the error correction

regulations found at 5 CFR part 1605.

[FR Doc. 01–10963 Filed 5–1–01; 8:45 am]

BILLING CODE 6760–01–U