31670 Federal Register / Vol. 87, No. 100 / Tuesday, May 24, 2022 / Rules and Regulations 

FEDERAL RETIREMENT THRIFT 

INVESTMENT BOARD 

5 CFR Parts 1600, 1601, 1605, 1620, 

1631, 1640, 1645, 1650, 1651, 1653, 

1655, and 1690 

Transition to a New Recordkeeping 

System 

AGENCY: Federal Retirement Thrift 

Investment Board. 

ACTION: Final rule. 

SUMMARY: The Federal Retirement Thrift 

Investment Board (FRTIB) is amending 

its regulations to reflect new processes 

and terminology associated with the 

Thrift Savings Plan’s upcoming 

transition to a new recordkeeping 

system. 

DATES: Effective June 1, 2022. 

FOR FURTHER INFORMATION CONTACT: Kim 

Weaver, Office of External Affairs, (202) 

465–5220 or Laurissa Stokes, Office of 

General Counsel, (202) 308–7707. 

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 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 privatesector employees under section 401(k) 

of the Internal Revenue Code (26 U.S.C. 

401(k)). The provisions of FERSA that 

govern the TSP are codified, as 

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

8401–79. 

I. Background 

In November 2020, the FRTIB 

awarded a contract to a service provider 

that will maintain and operate 

technology platform(s) to deliver 

retirement plan recordkeeping services. 

Examples of retirement plan 

recordkeeping services include: (1) 

Maintaining eligibility records, (2) 

managing payroll data, (3) processing 

transactions such as contribution 

elections, investment elections, 

withdrawals, loans, and beneficiary 

designations, (4) issuing account 

statements to participants, (5) providing 

online account access, and (6) providing 

responsive customer support to TSP 

participants. 

The FRTIB is currently transitioning 

from its existing technology platforms to 

the technology platforms of its new 

record keeper. Following this transition, 

TSP participants will be able to take 

advantage of many new services and 

functionalities, such as a mobile app, 

electronic payment options, quick 

access to customer service support 

through an online live chat function, 

and the ability to complete most 

transactions entirely online instead of 

using paper forms. On March 1, 2022, 

the FRTIB published a proposed rule 

with a request for comments in the 

Federal Register (87 FR 11516) that 

would amend its regulations to reflect 

these and other new processes and 

update its vocabulary to reflect the 

terminology used by the new record 

keeper. 

The FRTIB received one or more 

comments from 13 commenters. As 

described in more detail below, the 

FRTIB is adopting the proposed rule as 

final without any substantive changes, 

except for one change related to postemployment distributions. 

II. Response to Public Comments 

A. 60-Day Waiting Period for PostEmployment Distributions 

The proposed rule would have 

increased the time period a TSP 

participant must be separated from 

government service before he or she is 

eligible for a post-employment 

distribution. Currently, a TSP 

participant need only be separated from 

government service for 31 calendar 

days. The proposed rule would have 

increased that time period to 60 

calendar days. We received comments 

from six commenters strongly opposing 

this change. 

While the intention behind the 

proposed increase in time was to limit 

the number of post-employment 

distribution requests by participants 

who are between Federal jobs and are 

not truly separated from government 

service, we recognize that it has the 

ancillary effect of making participants 

who truly have separated from 

government service wait a substantial 

amount of time to receive TSP 

distributions to which they are entitled. 

Upon reflecting on these comments, we 

have determined that the burden this 

60-day waiting period would impose on 

TSP participants who have actually 

separated from government service 

outweighs the benefit of limiting the 

number of erroneous post-employment 

distributions and, therefore, the final 

rule does not include this change. In 

order to reduce the number of postemployment distribution requests by 

participants who are merely between 

Federal jobs and not separated from 

government service, we will work with 

employing agencies to make sure they 

understand that a participant has not 

separated from government service until 

s/he has been separated for at least 31 

calendar days. 

B. Notarization of Spousal Consent 

We received four comments 

concerning our proposal to permit 

spouses of TSP participants to provide 

their written consent to distributions 

without the burden of finding and 

hiring a notary public. Two commenters 

supported the proposal. They described 

the existing notarization requirement as 

‘‘extremely inconvenient’’ and ‘‘very 

burdensome’’ and welcomed the 

proposed rule as an improvement to the 

efficiency of TSP services. The other 

two commenters opposed the proposal. 

They expressed concern that removing 

the notarization requirement will result 

in an increase in fraudulent 

withdrawals. 

The FRTIB has required spouses of 

TSP participants to notarize their 

written consent since 2003. See 68 FR 

35491. The notarization requirement 

was implemented as a measure to 

prevent fraud. There was not then, and 

is not today, any evidence showing that 

a notarization requirement decreases 

fraudulent TSP withdrawals. Our 

assumption that the security-related 

benefits of requiring notarization were 

appreciable enough to justify the 

burdens they impose on TSP 

participants and their spouses was 

grounded in speculation and custom. 

On April 17, 2020, we published an 

interim rule (85 FR 21311) that 

temporarily waived the notarization 

requirement to accommodate the fact 

that COVID–19 safety measures—which 

included mandatory business and 

school closures, stay-at-home/shelter-inplace orders, and quarantines—made it 

virtually impossible for many 

participants to find and access a notary 

in person. The interim rule went into 

effect immediately without the benefit 

of public comment, which is normally 

required by the Administrative 

Procedures Act. It was intended to be 

only temporary because we are mindful 

of the importance of public comment 

and the narrowness of exceptions to the 

Administrative Procedures Act. As 

such, we withdrew the interim rule on 

October 1, 2020. 

During the time period in which the 

temporary waiver of the notarization 

requirement was in effect—between 

April 17, 2020 and October 1, 2020—the 

TSP did not experience any appreciable 

increase in fraudulent withdrawals. We 

were, therefore, faced with evidence 

that challenged our long-standing 

assumptions concerning the role of the 

notarization requirement in preventing 

fraudulent withdrawals. 

Simultaneously, we were confronted 


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with the severity of the burden it places 

on TSP participants and their spouses 

during difficult times. Although the 

disruptive intensity of the COVID–19 

pandemic is subsiding, we continue to 

hear daily from participants (and 

spouses of participants), who are 

requesting distributions following 

natural disasters or medical 

emergencies. Accordingly, we sought 

public comments on a proposal to 

permanently remove the notarization 

requirement. 

One of the commenters suggested that 

remote notarization technologies 

provide a better alternative to removing 

the notarization requirement altogether. 

The TSP already permits participants 

and their spouses to use remote 

notarization to whatever extent that 

remote notarization is valid under the 

laws of the state in which they live. But 

not every state has laws permitting 

remote notarization, and not all state 

remote notarization laws are the same. 

The TSP has participants residing in 

every state, and over 1.3 million 

participants who are serving all over the 

world as members of the uniformed 

services. Removing the notarization 

requirement has the advantage of 

reducing time and expense burdens for 

all participants and their spouses 

equally, wherever they may live or 

serve. 

Having received no additional data 

from commenters, we are adopting the 

proposal to remove the notarization 

requirement as final. The FRTIB will 

continue to require written spousal 

consent in accordance with 5 U.S.C. 

8435. 

C. Child Support Court Orders 

The proposed rule would have 

amended FRTIB regulations to reflect a 

change to the child support court order 

(CSCO) review process. One commenter 

requested that we add regulatory 

language requiring the TSP record 

keeper to notify the relevant child 

support agency if a CSCO is rejected. 

The FRTIB currently notifies all parties 

when any court order or legal process is 

rejected and will continue to do so in 

the future. The final rule clarifies 

§ 1653.3(e) and § 1653.13(e) to that 

effect. 

Another commenter expressed the 

view that the $600 CSCO processing fee 

included in the proposed rule is overly 

burdensome. As noted in the proposed 

rule, the CSCO review process is a 

labor-intensive, costly one that is only 

utilized by certain TSP participants. In 

order to ensure that the associated costs 

are not subsidized by participants who 

never use these services, a $600.00 fee 

for each CSCO submitted for an account 

is necessary. We note that a $600.00 fee 

is on the lower end for the retirement 

plan industry, where court order review 

fees often exceed $1,000.00 per review. 

D. Miscellaneous 

We received five comments from two 

commenters on issues that are outside 

the scope of this rule. One individual 

requested the ability to convert a 

traditional balance to a Roth balance 

within the TSP. The FRTIB has, in the 

past, considered allowing in-plan Roth 

conversions and ultimately concluded 

that the tax complexities involved and, 

in particular, the potential irreversible 

financial pitfalls for participants, 

weighed against doing so. Revisiting 

this decision was outside the scope of 

the transition to a new recordkeeping 

system. This same individual requested 

that a participant be allowed to elect to 

withdraw amounts from his or her taxexempt balance only. Not only is this 

request out of the scope of this rule, a 

participant’s tax-exempt balance does 

not constitute a separate contract under 

26 U.S.C. 72(d) and, therefore, the 

FRTIB is prohibited by the Internal 

Revenue Code from offering this option. 

Another commenter requested that 

the proposed rule be changed to state 

that annual statements will continue to 

be sent to TSP participants by default. 

Our existing regulations do not address 

the default delivery method for annual 

statements and adding a provision 

addressing this issue is outside of the 

scope of this rule. The same commenter 

criticized the FRTIB for not providing 

penalties and remedies for violations of 

criminal laws that are designed to deter 

fraudulent misrepresentations. The 

FRTIB does not have the statutory 

authority to publish regulations for the 

purpose of enforcing or punishing 

violations of criminal law. The same 

commenter expressed concern that 

spouses of participants will no longer 

have access to account information 

necessary to draft a qualifying 

retirement benefits court order. Nothing 

in our proposed or final rule would 

change the amount or type of account 

information that spouses of participants 

are entitled to access. 

Regulatory Flexibility Act 

This regulation will not have a 

significant economic impact on a 

substantial number of small entities. 

This regulation will affect Federal 

employees, members of the uniformed 

services who participate in the TSP, and 

beneficiary participants. 

Paperwork Reduction Act 

This regulation does 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, 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 2 U.S.C. 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 

5 CFR Part 1600 

Claims, Government employees, 

Pensions, Retirement, Taxes. 

5 CFR Part 1601 

Government employees, Pensions, 

Retirement. 

5 CFR Part 1605 

Claims, Government employees, 

Pensions, Retirement. 

5 CFR Part 1620 

District of Columbia, Government 

employees, Pensions, Retirement. 

5 CFR Part 1631 

Courts, Freedom of information, 

Government employees. 

5 CFR Part 1640 

Government employees, Pensions, 

Retirement. 

5 CFR Part 1645 

Government employees, Pensions, 

Retirement. 

5 CFR Part 1650 

Alimony, Claims, Government 

employees, Pensions, Retirement. 

5 CFR Part 1651 

Claims, Government employees, 

Pensions, Retirement. 


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5 CFR Part 1653 

Alimony, Child support, Government 

employees, Pensions, Retirement. 

5 CFR Part 1655 

Credit, Government employees, 

Pensions, Retirement. 

5 CFR Part 1690 

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 1600—EMPLOYEE 

CONTRIBUTION ELECTIONS, 

INVESTMENT ELECTIONS, AND 

AUTOMATIC ENROLLMENT 

PROGRAM 

■ 1. The authority citation for part 1600 

continues to read as follows: 

Authority: 5 U.S.C. 8351, 8432(a), 8432(b), 

8432(c), 8432(j), 8432d, 8474(b)(5) and (c)(1), 

and 8440e. 

■ 2. The heading for part 1600 is revised 

to read as set forth above. 

■ 3. Amend § 1600.11, in paragraph (b), 

by revising the heading and removing 

‘‘TSP Funds’’ and adding in its place 

‘‘TSP core funds’’. 

The revision reads as follows: 

§ 1600.11 Types of elections. 

* * * * * 

(b) Investment election. * * * 

§ 1600.13 [Amended] 

■ 4. Amend § 1600.13 by removing and 

reserving paragraph (b). 

■ 5. Amend § 1600.14 by removing and 

reserving paragraph (b) and revising 

paragraph (d). 

The revision reads as follows: 

§ 1600.14 Effect of election to be covered 

by BRS. 

* * * * * 

(d) Agency automatic (1%) 

contributions for all members covered 

under this section and, if applicable, 

agency matching contributions 

attributable to employee contributions 

must begin at the time set forth in 

§ 1600.19(c). 

§ 1600.18 [Amended] 

■ 6. Amend § 1600.18, in the first 

sentence, by removing ‘‘TSP’’ and 

adding in its place ‘‘TSP record keeper’’. 

■ 7. Amend § 1600.19 as follows: 

■ a. Revise the headings for paragraphs 

(a) and (b); 

■ b. In paragraphs (c)(2)(i)(A) and 

(c)(2)(ii)(A), remove ‘‘Agency Automatic 

(1%) Contributions’’ and add in its 

place ‘‘Agency automatic (1%) 

contributions’’; 

■ c. In paragraphs (c)(2)(i)(B) and 

(c)(2)(ii)(B), remove ‘‘Agency Matching 

Contributions’’ and add in its place 

‘‘Agency matching contributions’’; 

■ d. In paragraph (c)(2)(i)(B), remove ‘‘2 

years’’ and add in its place ‘‘2 years and 

one day’’. 

The revisions read as follows: 

§ 1600.19 Employing agency 

contributions. 

(a) Agency automatic (1%) 

contributions. * * * 

(b) Agency matching contributions. 

* * * 

* * * * * 

■ 8. Amend § 1600.21 by revising the 

first sentence of paragraph (b) to read as 

follows: 

§ 1600.21 Contributions in whole 

percentages or whole dollar amounts. 

* * * * * 

(b) Uniformed services members may 

elect to contribute from basic pay and, 

if they elect to contribute from basic 

pay, special or incentive pay (including 

bonus pay) subject to the limits 

described in § 1600.22. * * * 

§ 1600.22 [Amended] 

■ 9. Amend § 1600.22, in paragraph (a), 

by removing ‘‘(26 U.S.C.)’’. 

■ 10. Revise subpart D to read as 

follows: 

Subpart D—Rollovers From Other Qualified 

Retirement Plans 

Sec. 

1600.30 Accounts eligible for rollover. 

1600.31 Methods for rolling over eligible 

rollover distribution to the TSP. 

1600.32 Treatment accorded rollover funds. 

1600.33 Combining uniformed services 

accounts and civilian accounts. 

Subpart D—Rollovers From Other 

Qualified Retirement Plans 

§ 1600.30 Accounts eligible for rollover. 

(a) A participant who has an open 

TSP account and is entitled to receive 

(or receives) an eligible rollover 

distribution from an eligible employer 

plan within the meaning of section 

402(c) of the Internal Revenue Code (26 

U.S.C. 402(c)), or from a traditional IRA 

may roll over that distribution into his 

or her existing TSP account in 

accordance with § 1600.31. 

(b) The only balances that the TSP 

record keeper will accept are balances 

that would otherwise be includible in 

gross income if the distribution were 

paid to the participant. The TSP record 

keeper will not accept any balances that 

have already been subjected to Federal 

income tax (after-tax monies) or 

balances from a uniformed services TSP 

account that will not be subject to 

Federal income tax (tax-exempt 

monies). 

(c) Notwithstanding paragraph (b) of 

this section, the TSP record keeper will 

accept Roth funds that are transferred 

via direct rollover from an eligible 

employer plan that maintains a 

qualified Roth contribution program 

described in section 402A of the 

Internal Revenue Code. 

(d) The TSP record keeper will accept 

a rollover only to the extent the rollover 

is permitted by the Internal Revenue 

Code. 

§ 1600.31 Methods for rolling over eligible 

rollover distribution to the TSP. 

(a) Direct rollover. (1) A participant 

may request that the administrator or 

trustee of an eligible employer plan or 

traditional IRA roll over any or all of his 

or her account directly to the TSP in the 

form and manner prescribed by the TSP 

record keeper. The administrator or 

trustee must provide to the TSP record 

keeper the distribution, information 

about the type of money included in the 

distribution (i.e., tax-deferred and/or 

Roth amounts), and sufficient evidence 

from which to reasonably conclude that 

a contribution is a valid rollover 

contribution (as defined by 26 CFR 

1.401(a)(31)–1, Q&A–14). By way of 

example, sufficient evidence to 

conclude a contribution is a valid 

rollover contribution includes a copy of 

the plan’s determination letter, a letter 

or other statement from the plan 

administrator or trustee indicating that 

it is an eligible employer plan or 

traditional IRA, a check indicating that 

the contribution is a direct rollover, a 

payment confirmation, distribution 

statement or a tax notice from the plan 

to the participant indicating that the 

participant could receive a rollover from 

the plan. 

(2) If the distribution is from a Roth 

account maintained by an eligible 

employer plan, the plan administrator 

must also provide to the TSP record 

keeper a statement indicating the first 

year of the participant’s Roth 5 year 

non-exclusion period under the 

distributing plan and either: 

(i) The portion of the direct rollover 

amount that represents Roth 

contributions (i.e., basis); or 

(ii) A statement that the entire amount 

of the direct rollover is a qualified Roth 

distribution (as defined by Internal 

Revenue Code section 402A(d)(2)). 

(b) Indirect rollover by participant. A 

participant who has already received a 


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distribution from an eligible employer 

plan or traditional IRA may request to 

roll over all or part of the distribution 

into the TSP in the form and manner 

prescribed by the TSP record keeper. 

However, the TSP record keeper will 

not accept a rollover by the participant 

of Roth funds distributed from an 

eligible employer plan. A distribution of 

Roth funds from an eligible employer 

plan may be rolled into the TSP by 

direct rollover only. The TSP record 

keeper will accept a rollover by the 

participant of tax-deferred amounts if 

the following requirements and 

conditions are satisfied: 

(1) The participant must request to 

roll over the amounts in the form and 

manner prescribed by the TSP record 

keeper. 

(2) The administrator or trustee must 

provide to the TSP record keeper 

information about the type of money 

included in the distribution (i.e., taxdeferred and/or Roth) and sufficient 

evidence from which to reasonably 

conclude that a contribution is a valid 

rollover contribution. By way of 

example, sufficient evidence to 

conclude a contribution is a valid 

rollover contribution includes a copy of 

the plan’s determination letter, a letter 

or other statement from the plan 

indicating that it is an eligible employer 

plan or traditional IRA, a check 

indicating that the contribution is a 

direct rollover, a payment confirmation, 

distribution statement or a tax notice 

from the plan to the participant 

indicating that the participant could 

receive a rollover from the plan. 

(3) The participant must submit a 

certified check, cashier’s check, 

cashier’s draft, money order, treasurer’s 

check from a credit union, or personal 

check, made out to the ‘‘Thrift Savings 

Plan,’’ for the entire amount of the 

rollover, along with any other 

information required by the TSP record 

keeper. 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 his or 

her eligible employer plan or traditional 

IRA. The transaction is not complete 

until the TSP record keeper receives the 

guaranteed funds for the amount to be 

rolled over, information sufficient to 

conclude that the amount is a valid 

rollover contribution, and any other 

information required by the TSP record 

keeper. 

(c) Participant’s certification. When 

rolling over a distribution to the TSP by 

either a direct or indirect rollover, the 

participant must certify that the 

distribution is eligible for roll over into 

the TSP, as follows: 

(1) Distribution from an eligible 

employer plan. The participant must 

certify that the distribution: 

(i) Is not one of a series of 

substantially equal periodic payments 

made over the life expectancy of the 

participant (or the joint lives of the 

participant and designated beneficiary, 

if applicable) or for a period of 10 years 

or more; 

(ii) Is not a minimum distribution 

required by I.R.C. section 401(a)(9) (26 

U.S.C. 401(a)(9)); 

(iii) Is not a hardship distribution; 

(iv) Is not a plan loan that is deemed 

to be a taxed loan because of default; 

(v) Is not a return of excess elective 

deferrals; and 

(vi) If not rolled over, would be 

includible in gross income for the tax 

year in which the distribution is paid. 

This paragraph (c)(1)(vi) shall not apply 

to Roth funds distributed from an 

eligible employer plan. 

(2) Distribution from a traditional 

IRA. The participant must certify that 

the distribution: 

(i) Is not a minimum distribution 

required under I.R.C. section 401(a)(9) 

(26 U.S.C. 401(a)(9)); and 

(ii) If not rolled over, would be 

includible in gross income for the tax 

year in which the distribution is paid. 

§ 1600.32 Treatment accorded rollover 

funds. 

(a) All funds rolled over to the TSP 

pursuant to §§ 1600.30 and 1600.31 will 

be treated as employee contributions. 

(b) All funds rolled over to the TSP 

pursuant to §§ 1600.30 and 1600.31 will 

be invested in accordance with the 

participant’s investment election on file 

at the time the rollover is completed. 

(c) Funds rolled over to the TSP 

pursuant to §§ 1600.30 and 1600.31 are 

not subject to the limits on 

contributions described in § 1600.22. 

§ 1600.33 Combining uniformed services 

accounts and civilian accounts. 

Uniformed services TSP account 

balances and civilian TSP account 

balances may be combined (thus 

producing one account), subject to 

paragraphs (a) through (g) of this 

section: 

(a) An account balance can be 

combined with another once the TSP 

record keeper is informed (by the 

participant’s employing agency) that the 

participant has separated from 

Government service. 

(b) Tax-exempt contributions may not 

be transferred from a uniformed services 

TSP account to a civilian TSP account. 

(c) A traditional balance and a Roth 

balance cannot be combined. 

(d) Funds transferred to the gaining 

account will be allocated among the 

TSP core funds according to the 

investment election in effect for the 

account into which the funds are 

transferred. 

(e) Funds transferred to the gaining 

account will be treated as employee 

contributions and otherwise invested as 

described at 5 CFR part 1600. 

(f) A uniformed service member must 

obtain the consent of his or her spouse 

before combining a uniformed services 

TSP account balance with his or her 

civilian account, even if the civilian 

account is not subject to FERS spousal 

rights. A request for an exception to the 

spousal consent requirement will be 

evaluated under the rules explained in 

5 CFR part 1650. 

(g) A loan cannot be transferred 

between accounts. Before the accounts 

can be combined, any outstanding loans 

from the losing account must be closed 

as described in 5 CFR part 1655. 

§ 1600.35 [Amended] 

■ 11. Amend § 1600.35 as follows: 

■ a. In paragraph (a) introductory text, 

remove ‘‘must be made on’’ and add in 

its place ‘‘may be made on the TSP 

website or by completing’’; and 

■ b. In paragraph (d), remove ‘‘TSP’’ and 

add in its place ‘‘TSP record keeper’’. 

§ 1600.37 [Amended] 

■ 12. Amend § 1600.37 as follows: 

■ a. In the introductory text, remove 

‘‘The Board’’ and add in its place ‘‘The 

TSP record keeper’’; and 

■ b. In paragraph (c), remove ‘‘The 

fund’’ and ‘‘a contribution allocation’’, 

and add in their places ‘‘The TSP core 

fund’’ and ‘‘an investment election’’, 

respectively. 

PART 1601—PARTICIPANTS’ CHOICE 

OF TSP FUNDS 

■ 13. The authority citation for part 

1601 continues to read as follows: 

Authority: 5 U.S.C. 8351, 8432d, 8438, 

8474(b)(5) and (c)(1). 

■ 14. Amend § 1601.1, in paragraph (b), 

as follows: 

■ a. In the definition of 

‘‘Acknowledgment of risk’’, remove 

‘‘TSP Fund’’ and add in its place ‘‘TSP 

core fund’’; and 

■ b. Add definitions in alphabetical 

order for ‘‘Fund reallocation’’ and 

‘‘Fund transfer’’. 

The additions read as follows: 

§ 1601.1 Definitions. 

* * * * * 

(b) * * * 


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Fund reallocation means the total 

redistribution of a participant’s existing 

account balance among the TSP core 

funds. 

Fund transfer means either: 

(i) The transfer of money from one or 

more TSP core fund(s) to another TSP 

core fund(s); or 

(ii) The transfer of money from the 

TSP core funds to the mutual fund 

window (and vice versa). 

■ 15. Revise subpart B to read as 

follows: 

Subpart B—Investing Future Deposits 

Sec. 

1601.11 Applicability. 

1601.12 Investing future deposits in the 

TSP core funds. 

1601.13 Elections. 

Subpart B—Investing Future Deposits 

§ 1601.11 Applicability. 

This subpart applies only to the 

investment of future deposits to the TSP 

core funds, including contributions, 

loan payments, and rollovers from 

traditional IRAs and eligible employer 

plans; it does not apply to fund 

reallocations or fund transfers within 

the TSP core funds, which is covered in 

subpart C of this part, or fund transfers 

to and from the mutual fund window, 

which is covered in subpart F of this 

part. 

§ 1601.12 Investing future deposits in the 

TSP core funds. 

(a) Allocation. Future deposits in the 

TSP, including contributions, loan 

payments, and rollovers from traditional 

IRAs and eligible employer plans, will 

be allocated among the TSP core funds 

based on the most recent investment 

election on file for the participant. 

(b) TSP core funds availability. All 

participants may elect to invest all or 

any portion of their deposits in any of 

the TSP core funds. 

§ 1601.13 Elections. 

(a) Investment election. Each 

participant may indicate his or her 

choice of TSP core funds for the 

allocation of future deposits in the form 

and manner prescribed by the TSP 

record keeper. Paragraphs (a)(1) through 

(5) of this section apply to investment 

elections: 

(1) Investment elections must be made 

in one percent increments. The sum of 

the percentages elected for all of the 

TSP core funds must equal 100 percent. 

(2) The percentage elected by a 

participant for investment of future 

deposits in a TSP core fund will be 

applied to all sources of contributions 

and rollovers from traditional IRAs and 

eligible employer plans. A participant 

may not make different percentage 

elections for different sources of 

contributions. 

(3) The following default investment 

rules shall apply to civilian participants: 

(i) All deposits made on behalf of a 

civilian participant enrolled prior to 

September 5, 2015, who does not have 

an investment election in effect will be 

invested in the G Fund. A civilian 

participant who is enrolled prior to 

September 5, 2015, and subsequently 

rehired on or after September 5, 2015, 

and has a positive account balance will 

be considered enrolled prior to 

September 5, 2015 for purposes of this 

paragraph (a)(3)(i); and 

(ii) All deposits made on behalf of a 

civilian participant first enrolled on or 

after September 5, 2015, who does not 

have an investment election in effect 

will be invested in the age-appropriate 

TSP Lifecycle Fund. 

(iii) A civilian participant enrolled 

prior to September 5, 2015, who elects 

for the first time to invest in a TSP core 

fund other than the G Fund must 

execute an acknowledgement of risk in 

accordance with § 1601.33. 

(4) The default investment rule in 

paragraphs (a)(4)(i) through (iv) of this 

section apply to uniformed services 

participants: 

(i) All deposits made on behalf of a 

uniformed services participant who first 

entered service prior to January 1, 2018, 

has not elected to be covered by BRS, 

and does not have an investment 

election in effect will be invested in the 

G Fund. 

(ii) All deposits made on behalf of a 

uniformed services participant who first 

entered service on or after January 1, 

2018, and who does not have an 

investment election in effect will be 

invested in the age-appropriate TSP 

Lifecycle Fund. 

(iii) If a uniformed services 

participant makes an election to be 

covered by BRS as described in 5 CFR 

1600.14 and does not have an 

investment election in effect at the time 

of the election, then all deposits made 

after the date of such election will be 

invested in the age-appropriate TSP 

Lifecycle Fund. Deposits made prior to 

the date of the election will remain 

invested in the G Fund. 

(iv) A uniformed services participant 

who first entered service prior to 

January 1, 2018, and has not made an 

election to be covered by the BRS who 

elects for the first time to invest in a 

TSP core fund other than the G Fund 

must execute an acknowledgement of 

risk in accordance with § 1601.33. 

(5) Once an investment election 

becomes effective, it remains in effect 

until it is superseded by a subsequent 

investment election or the participant’s 

account balance is reduced to zero. If a 

rehired participant has a positive 

account balance and an investment 

election in effect, then the participant’s 

investment election will remain in effect 

until a new election is made. If, 

however, the participant (other than a 

participant described in paragraph 

(a)(4)(i) of this section) has a zero 

account balance, then the participant’s 

contributions will be allocated to the 

age-appropriate TSP Lifecycle Fund 

until a new investment election is made. 

(b) Effect of rejection of investment 

election. If a participant does not 

correctly complete an investment 

election, the attempted investment 

election will have no effect. The TSP 

record keeper will provide the 

participant with a written statement of 

the reason the transaction was rejected. 

(c) Contribution elections. A 

participant may designate the amount or 

type of employee contributions he or 

she wishes to make to the TSP or may 

stop contributions only in accordance 

with 5 CFR part 1600. 

■ 16. Revise subpart C to read as 

follows: 

Subpart C—Fund Reallocations and Fund 

Transfers 

Sec. 

1601.21 Applicability. 

1601.22 Methods of requesting a fund 

reallocation. 

1601.23 Methods of requesting a fund 

transfer. 

Subpart C—Fund Reallocations and 

Fund Transfers 

§ 1601.21 Applicability. 

This subpart applies only to fund 

reallocations and fund transfers 

involving the movement of money from 

TSP core fund to one (or more) TSP core 

fund(s); it does not apply to the 

investment of future deposits, which is 

covered in subpart B of this part, nor 

does it apply to fund transfers involving 

the movement of money from the TSP 

core funds to the mutual fund window 

(and vice versa), which is covered in 

subpart F of this part. 

§ 1601.22 Methods of requesting a fund 

reallocation. 

(a) Participants may make a fund 

reallocation in the form and manner 

prescribed by the TSP record keeper. 

Paragraphs (a)(1) and (2) of this section 

apply to a fund reallocation request: 

(1) Fund reallocation requests must be 

made in whole percentages (one percent 

increments). The sum of the percentages 

elected for all of the TSP core funds 

must equal 100 percent. 


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(2) The percentages elected by the 

participant will be applied to the 

balances in each source of contributions 

and to both traditional and Roth 

balances and tax-deferred and taxexempt balances on the effective date of 

the fund reallocation. 

(b) A fund reallocation request has no 

effect on deposits made after the 

effective date of the fund reallocation 

request; subsequent deposits will 

continue to be allocated among the TSP 

core funds in accordance with the 

participant’s investment election made 

under subpart B of this part. 

(c) If a fund reallocation is found to 

be invalid pursuant to § 1601.34, the 

purported fund reallocation will not be 

made. 

§ 1601.23 Methods of requesting a fund 

transfer. 

(a) Participants may make a fund 

transfer from one or more TSP core fund 

to a different TSP core fund(s) in the 

form and manner prescribed by the TSP 

record keeper. Paragraphs (a)(1) and (2) 

of this section apply to a fund transfer 

request: 

(1) Fund transfer requests when 

selecting the TSP core funds to transfer 

out of, may be made in whole 

percentages or in dollars. When 

selecting the TSP core funds to transfer 

into, elections must be made in whole 

percentages (one percent increments). 

The sum of the percentages elected to 

transfer into for all of the TSP core 

funds must equal 100 percent. 

(2) The percentages elected by the 

participant will be applied to the 

balances in each source of contributions 

and to both traditional and Roth 

balances and tax-deferred and taxexempt balances on the effective date of 

the fund transfer. 

(b) A fund transfer request has no 

effect on deposits made after the 

effective date of the fund transfer 

request; subsequent deposits will 

continue to be allocated among the TSP 

core funds in accordance with the 

participant’s investment election made 

under subpart B of this part. 

(c) If a fund transfer is found to be 

invalid pursuant to § 1601.34, the 

purported fund transfer will not be 

made. 

■ 17. Revise subpart D to read as 

follows: 

Subpart D—Investment Elections and Fund 

Reallocation and Fund Transfer Requests 

Sec. 

1601.31 Applicability. 

1601.32 Timing and posting dates. 

1601.33 Acknowledgment of risk. 

1601.34 Error correction. 

Subpart D—Investment Elections and 

Fund Reallocation and Fund Transfer 

Requests 

§ 1601.31 Applicability. 

This subpart applies to investment 

elections made under subpart B of this 

part, fund reallocations and fund 

transfers made under subpart C of this 

part, and fund transfers made under 

subpart F of this part. 

§ 1601.32 Timing and posting dates. 

(a) Posting dates. The date on which 

an investment election or fund 

reallocation or fund transfer request 

(transaction request) is processed is 

subject to a number of factors, including 

some that are outside of the control of 

the TSP, such as power outages, the 

failure of telephone service, unusually 

heavy transaction volume, and acts of 

God. These factors also could affect the 

availability of the TSP website and the 

ThriftLine. Therefore, the TSP cannot 

guarantee that a transaction request will 

be processed on a particular day. 

However, the TSP will process 

transaction requests under ordinary 

circumstances described in paragraphs 

(a)(1) through (4) of this section: 

(1) A transaction request other than an 

investment election request entered into 

the TSP record keeping system by a 

participant who uses the TSP website or 

the ThriftLine, before 12 noon eastern 

time of any business day, will ordinarily 

be posted that business day. A 

transaction request other than an 

investment election request entered into 

the system at or after 12 noon eastern 

time of any business day will ordinarily 

be posted on the next business day. A 

transaction request that is an investment 

election request will ordinarily be 

posted immediately and be effective the 

next business day. 

(2) A transaction request made on the 

TSP website or the ThriftLine on a nonbusiness day will ordinarily be posted 

on the next business day. 

(3) A transaction request made on a 

paper TSP form will ordinarily be 

posted under the rules in paragraph 

(a)(1) of this section, based on when the 

TSP record keeper enters the form into 

the TSP system. The TSP record keeper 

ordinarily enters such forms into the 

system within 48 hours of their receipt. 

(4) In most cases, the share price(s) 

applied to a fund reallocation or fund 

transfer request is the value of the 

shares on the date the relevant 

transaction is posted. In some 

circumstances, such as error correction, 

the share price(s) for an earlier date will 

be used. 

(b) Limit. There is no limit on the 

number of investment election requests. 

A participant may make a total of two 

unrestricted fund reallocations and/or 

fund transfers per account (e.g., civilian 

or uniformed services), per calendar 

month. A fund reallocation or fund 

transfer will count toward the monthly 

total on the date posted by the TSP 

record keeper and not on the date 

requested by a participant. After a 

participant has made a total of two fund 

reallocations and/or fund transfers in a 

calendar month, the participant may 

make additional fund reallocations or 

fund transfers only into the G Fund 

until the first day of the next calendar 

month. 

§ 1601.33 Acknowledgment of risk. 

(a) Uniformed services participants 

who first entered service prior to 

January 1, 2018, and who have not 

elected to be covered by BRS and 

civilian participants who enrolled prior 

to September 5, 2015, must execute an 

acknowledgement of risk in order to 

invest in a TSP core fund other than the 

G 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 an 

investment election, a fund reallocation, 

or a fund transfer in the form and 

manner prescribed by the TSP record 

keeper. 

§ 1601.34 Error correction. 

Errors in processing investment 

elections and fund reallocation or fund 

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. 

■ 18. Revise § 1601.40 to read as 

follows: 

§ 1601.40 Lifecycle Funds. 

The Executive Director will establish 

TSP Lifecycle Funds, which are target 

date asset allocation portfolios. The TSP 

Lifecycle Funds will invest solely in the 

funds established pursuant to 5 U.S.C. 

8438(b)(1)(A)–(E). 

PART 1605—CORRECTION OF 

ADMINISTRATIVE ERRORS 

■ 19. The authority citation for part 

1605 continues to read as follows: 

Authority: 5 U.S.C. 8351, 8432a, 8432d, 

8474(b)(5) and (c)(1). Subpart B also issued 

under section 1043(b) of Public Law 104– 

106, 110 Stat. 186 and § 7202(m)(2) of Public 

Law 101–508, 104 Stat. 1388. 


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■ 20. Amend § 1605.1, in paragraph (b), 

as follows: 

■ a. Revise the definition of ‘‘Breakage’’; 

■ b. Add in alphabetical order a 

definition for ‘‘Earnings’’; 

■ c. Revise the definitions of ‘‘Error’’ 

and ‘‘Late contributions’’. 

The revisions and addition read as 

follows: 

§ 1605.1 Definitions. 

* * * * * 

(b) * * * 

Breakage means the loss incurred or 

the gain realized on makeup or late 

contributions. 

* * * * * 

Earnings means both positive and 

negative fund performance attributable 

to differences in TSP core fund share 

prices. 

Error means any act or omission by 

the Board, the TSP record keeper, or the 

participant’s employing agency that is 

not in accordance with applicable 

statutes, regulations, or administrative 

procedures that are made available to 

employing agencies and/or TSP 

participants. It does not mean an act or 

omission caused by events that are 

beyond the control of the Board, the 

TSP record keeper, or the participant’s 

employing agency. 

* * * * * 

Late contributions means: 

(i) Employee contributions that were 

timely deducted from a participant’s 

basic pay but were not timely reported 

to the TSP record keeper for investment; 

(ii) Employee contributions that were 

timely reported to the TSP record 

keeper but were not timely posted to the 

participant’s account by the TSP record 

keeper because the payment record on 

which they were submitted contained 

errors; 

(iii) Agency matching contributions 

attributable to employee contributions 

referred to in paragraph (i) or (ii) of this 

definition; and 

(iv) Delayed agency automatic (1%) 

contributions. 

* * * * * 

■ 21. Revise § 1605.2 to read as follows: 

§ 1605.2 Calculating, posting, and 

charging breakage on late contributions 

and loan payments. 

(a) General criteria. The TSP will 

calculate breakage on late contributions, 

makeup agency contributions, and loan 

payments as described by § 1605.15(b). 

This breakage calculation is subject to 

the criteria in paragraphs (a)(1) and (2) 

of this section: 

(1) The TSP record keeper will not 

calculate breakage if contributions or 

loan payments are posted within 30 

days of the ‘‘as of’’ date, or if the total 

amount on a late payment record or the 

total agency contributions on a current 

payment record is less than $1.00; and 

(2) The TSP record keeper will not 

take the participant’s fund reallocations 

and fund transfers into account when 

determining breakage. 

(b) Calculating breakage. The TSP 

record keeper will calculate breakage for 

all contributions or loan payment 

corrections as follows: 

(1) Use the participant’s investment 

election on file for the ‘‘as of’’ date to 

determine how the funds would have 

been invested, going back to the earliest 

daily share prices available. If there is 

no investment election on file, or one 

cannot be derived based on the 

investment of contributions, the TSP 

record keeper will consider the funds to 

have been invested in the default 

investment fund in effect for the 

participant on the ‘‘as of’’ date; 

(2) Determine the number of shares of 

the applicable investment funds the 

participant would have received had the 

contributions or loan payments been 

made on time. If the ‘‘as of’’ date is 

before TSP account balances were 

converted to shares, this determination 

will be the number of shares the 

participant would have received on the 

conversion date, and will include the 

daily earnings the participant would 

have received had the contributions or 

loan payments been made on the ‘‘as of’’ 

date; 

(3) Determine the dollar value on the 

posting date of the number of shares the 

participant would have received had the 

contributions or loan payments been 

made on time. If the contributions or 

loan payments would have been 

invested in a Lifecycle fund that is 

retired on the posting date, the share 

price of the L Income Fund will be used. 

The dollar value shall be the number of 

shares the participant would have 

received had the contributions or loan 

payments been made on time multiplied 

by the share price; and 

(4) The difference between the dollar 

value of the contribution or loan 

payment on the posting date and the 

dollar value of the contribution or loan 

payment on the ‘‘as of’’ date is the 

breakage. 

(c) Posting contributions and loan 

payments. Makeup and late 

contributions, late loan payments, and 

breakage, will be posted to the 

participant’s account according to his or 

her investment election on file for the 

posting date. If there is no investment 

election on file for the posting date, they 

will be posted to the default investment 

fund in effect for the participant. 

(d) Charging breakage. If the dollar 

amount posted to the participant’s 

account is greater than the dollar 

amount of the makeup or late 

contribution or late loan payment, the 

TSP record keeper will charge the 

agency the additional amount. If the 

dollar amount posted to the 

participant’s account is less than the 

dollar amount of the makeup or late 

contribution, or late loan payment, the 

difference between the amount of the 

contribution and the amount posted will 

be forfeited to the TSP. 

(e) Posting of multiple contributions. 

If the TSP record keeper posts multiple 

makeup or late contributions or late 

loan payments with different ‘‘as of’’ 

dates for a participant on the same 

business day, the amount of breakage 

charged to the employing agency or 

forfeited to the TSP will be determined 

separately for each transaction, without 

netting any gains or losses attributable 

to different ‘‘as of’’ dates. In addition, 

gains and losses from different sources 

of contributions or different TSP core 

funds will not be netted against each 

other. Instead, breakage will be 

determined separately for each as-of 

date, TSP core fund, and source of 

contributions. 

§ 1605.3 [Amended] 

■ 22. Amend § 1605.3 as follows: 

■ a. In paragraph (a), remove ‘‘TSP’’ and 

add in its place ‘‘TSP record keeper’’, 

remove ‘‘contribution allocation’’ and 

add in its place ‘‘investment election’’, 

and remove ‘‘interfund transfer’’ and 

add in its place ‘‘fund reallocation and 

fund transfer’’; and 

■ b. In paragraphs (b) and (c), remove 

‘‘TSP’’ and add in its place ‘‘TSP record 

keeper’’. 

§ 1605.11 [Amended] 

■ 23. Amend § 1605.11 as follows: 

■ a. In paragraph (a), remove ‘‘Board’’ 

and add in its place ‘‘Board and/or the 

TSP record keeper’’; 

■ b. In paragraph (b) introductory text, 

remove ‘‘Agency Automatic (1%) 

Contributions’’ and add in its place 

‘‘agency automatic (1%) contributions’’ 

and remove ‘‘Agency Matching 

Contributions’’ and add in its place 

‘‘agency matching contributions’’; 

■ c. In paragraph (b)(2), remove ‘‘TSP’’ 

and add in its place ‘‘TSP record 

keeper’’; 

■ d. In paragraph (c)(1), remove 

‘‘agency’’ and add in its place 

‘‘employing agency’’; 

■ e. In paragraph (c)(4), remove the last 

two sentences. 

■ f. In paragraph (c)(5), remove 

‘‘contribution allocation’’ and add in its 

place ‘‘investment election’’ and remove 


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‘‘TSP Fund’’ and add in its place ‘‘TSP 

core fund’’; 

■ g. In paragraph (c)(9), in the second to 

last sentence, remove ‘‘matching 

contributions’’ and add in its place 

‘‘agency matching contributions’’; and 

■ h. In paragraph (c)(13), remove ‘‘TSP’’ 

and add in its place ‘‘TSP record 

keeper’’. 

■ 24. Amend § 1605.12 as follows: 

■ a. Revise paragraphs (a), (b) 

introductory text, (c) introductory text, 

(c)(1) introductory text, (c)(1)(i), (c)(2) 

introductory text, (c)(2)(ii), and (d)(4); 

■ b. Add a heading for paragraph (f); 

and 

■ c. Revise paragraph (f)(1). 

The revisions and addition read as 

follows: 

§ 1605.12 Removal of erroneous 

contributions. 

(a) Applicability. This section applies 

to the removal of funds erroneously 

contributed to the TSP. This action is 

called a negative adjustment, and 

agencies may only request negative 

adjustments of erroneous contributions 

made on or after January 1, 2000. Excess 

contributions addressed by this section 

include, for example, excess employee 

contributions that result from 

employing agency error and excess 

employer contributions. This section 

does not address excess contributions 

resulting from a FERCCA correction; 

those contributions are addressed in 

§ 1605.14. 

(b) Method of correction. Negative 

adjustment records must be submitted 

by employing agencies in accordance 

with this part and any other procedures 

provided by the Board and/or the TSP 

record keeper. 

* * * * * 

(c) Processing negative adjustments. 

To determine current value, a negative 

adjustment will be allocated among the 

TSP core funds as it would have been 

allocated on the attributable pay period 

(as reported by the employing agency). 

The TSP record keeper will, for each 

source of contributions and TSP core 

fund: 

(1) If the attributable pay date for the 

erroneous contribution is on or before 

the date TSP accounts were converted to 

shares (and on or after January 1, 2000), 

the TSP record keeper will, for each 

source of contributions and investment 

fund: 

(i) Determine the dollar value of the 

amount to be removed by using the 

daily returns for the applicable TSP core 

fund; 

* * * * * 

(2) If the attributable pay date of the 

negative adjustment is after the date 

TSP accounts were converted to shares, 

the TSP record keeper will, for each 

source of contributions and TSP core 

fund: 

* * * * * 

(ii) Multiply the price per share on the 

date the adjustment is posted by the 

number of shares calculated in 

paragraph (c)(2)(i) of this section. If the 

contribution was erroneously 

contributed to a Lifecycle fund that is 

retired on the date the adjustment is 

posted, the share price of the L Income 

Fund will be used. 

(d) * * * 

(4) If all employee contributions are 

removed from a participant’s account 

under the rules set forth in this section, 

the earnings attributable to those 

contributions will remain in the account 

until the participant removes them with 

a TSP withdrawal. If the participant is 

not eligible to maintain a TSP account, 

the employing agency must submit an 

employee data record to the TSP record 

keeper indicating that the participant 

has separated from Government service 

(this will allow the TSP-ineligible 

participant to make a post-employment 

distribution election). 

* * * * * 

(f) Multiple negative adjustments. (1) 

If multiple negative adjustments for the 

same attributable pay date for a 

participant are posted on the same 

business day, the amount removed from 

the participant’s account and used to 

offset TSP administrative expenses, or 

returned to the employing agency, will 

be determined separately for each 

adjustment. Earnings and losses for 

erroneous contributions made on 

different dates will not be netted against 

each other. In addition, for a negative 

adjustment for any attributable pay date, 

gains and losses from different sources 

of contributions or different TSP core 

funds will not be netted against each 

other. Instead, for each attributable pay 

date each source of contributions and 

each TSP core fund will be treated 

separately for purposes of these 

calculations. The amount computed by 

applying the rules in this section will be 

removed from the participant’s account 

pro rata from all funds, by source, based 

on the allocation of the participant’s 

account among the TSP core funds 

when the transaction is posted; and 

* * * * * 

■ 25. Amend § 1605.13 as follows: 

■ a. In paragraph (a)(3), remove 

‘‘contribution allocation’’ and add in its 

place ‘‘investment election’’; 

■ b. In paragraph (b)(3), remove 

‘‘contribution allocation’’ and add in its 

place ‘‘investment election’’; and 

■ c. Revise paragraphs (d) and (e). 

The revisions read as follows: 

§ 1605.13 Back pay awards and other 

retroactive pay adjustments. 

* * * * * 

(d) Prior withdrawal of TSP account. 

If a participant has received a postemployment distribution in any form 

other than an annuity, and the 

separation from Government service 

upon which the post-employment 

distribution was based is reversed, 

resulting in reinstatement of the 

participant without a break in service, 

the participant will have the option to 

restore the amount distributed to his or 

her TSP account. The right to restore the 

distributed funds will expire if the 

participant does not notify the TSP 

record keeper within 90 days of 

reinstatement. If the participant returns 

the funds that were distributed, the 

number of shares purchased will be 

determined by using the share price of 

the applicable investment fund on the 

posting date. Restored funds will not 

incur breakage. 

(e) Reinstating a loan. Participants 

who are covered by paragraph (d) of this 

section and who elect to return funds 

that were distributed may also elect to 

reinstate a loan which was previously 

declared to be a loan foreclosure. 

■ 26. Amend § 1605.14 by revising 

paragraphs (a)(2), (b)(4), (c)(3), (f)(3), 

and (g)(2) to read as follows: 

§ 1605.14 Misclassified retirement system 

coverage. 

(a) * * * 

(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) * * * 

(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 

* * * * * 

(c) * * * 

(3) The TSP record keeper will 

consider a participant to be separated 


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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). 

* * * * * 

(f) * * * 

(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 

* * * * * 

(g) * * * 

(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. 

§ 1605.15 [Amended] 

■ 27. Amend § 1605.15 as follows: 

■ a. In paragraph (b), remove ‘‘TSP’’ and 

add in its place ‘‘TSP record keeper’’; 

and 

■ b. In paragraph (d), remove ‘‘TSP’’ and 

add in its place ‘‘TSP record keeper’’. 

■ 28. Amend § 1605.16 by revising 

paragraphs (a)(1) and (2) and (b)(1) and 

(2) to read as follows: 

§ 1605.16 Claims for correction of 

employing agency errors; time limitations. 

(a) * * * 

(1) Upon discovery of an error made 

within the past six months involving the 

correct or timely remittance of payments 

to the TSP record keeper (other than a 

retirement system misclassification 

error, as covered in paragraph (c) of this 

section), an employing agency must 

promptly correct the error on its own 

initiative. If the error was made more 

than six months before it was 

discovered, the agency may exercise 

sound discretion in deciding whether to 

correct it, but, in any event, the agency 

must act promptly in doing so. 

(2) For errors involving incorrect 

dates of birth caused by employing 

agency error that result in default 

investment in the wrong L Fund, the 

employing agency must promptly notify 

the TSP record keeper that the 

participant is entitled to breakage if the 

error is discovered within 30 days of 

either the date the TSP record keeper 

provides the participant with a notice 

reflecting the error or the date the TSP 

or its record keeper makes available on 

its website a participant statement 

reflecting the error, whichever is earlier. 

If it is discovered after that time, the 

employing agency may use its sound 

discretion in deciding whether to pay 

breakage, but, in any event, must act 

promptly in doing so. 

(b) * * * 

(1) If an agency fails to discover an 

error of which a participant has 

knowledge involving the correct or 

timely remittance of a payment to the 

TSP record keeper (other than a 

retirement system misclassification 

error as covered by paragraph (c) of this 

section), the participant may file a claim 

with his or her employing agency to 

have the error corrected without a time 

limit. The agency must promptly correct 

any such error for which the participant 

files a claim within six months of its 

occurrence; if the participant files a 

claim to correct any such error after that 

time, the agency may do so at its sound 

discretion. 

(2) For errors involving incorrect 

dates of birth that result in default 

investment in the wrong L Fund of 

which a participant or beneficiary has 

knowledge, he or she may file a claim 

for breakage with the employing agency 

no later than 30 days after either the 

date the TSP record keeper provides the 

participant with a notice reflecting the 

error or the date the TSP or its record 

keeper makes available on its website a 

participant statement reflecting the 

error, whichever is earlier. The 

employing agency must promptly notify 

the TSP record keeper that the 

participant is entitled to breakage. 

* * * * * 

■ 29. Amend § 1605.17 by revising 

paragraphs (b) and (c)(1) through (3) to 

read as follows: 

§ 1605.17 Redesignation and 

recharacterization. 

* * * * * 

(b) Method of correction. The 

employing agency must promptly 

submit a redesignation record or a 

recharacterization record in accordance 

with this part and the procedures 

provided to employing agencies by the 

Board and/or the TSP record keeper in 

bulletins or other guidance. 

(c) * * * 

(1) Upon receipt of a properly 

submitted redesignation record, the TSP 

record keeper shall treat the erroneously 

submitted contribution (and associated 

positive earnings) as if the contribution 

had been made to the correct balance on 

the date that it was contributed to the 

wrong balance. The TSP record keeper 

will adjust the participant’s traditional 

balance and the participant’s Roth 

balance accordingly. The TSP record 

keeper will also adjust the participant’s 

Roth initiation date as necessary. 

(2) Upon receipt of a properly 

submitted recharacterization record or 

recharacterization request, the TSP 

record keeper will update the tax 

characterization of the erroneously 

characterized contribution. 

(3) Agency automatic (1%) 

contributions and agency matching 

contributions cannot be redesignated as 

Roth contributions or recharacterized as 

tax-exempt contributions. 

* * * * * 

■ 30. Revise § 1605.21 to read as 

follows: 

§ 1605.21 Plan-paid breakage and other 

corrections. 

(a) Plan-paid breakage. (1) Subject to 

paragraph (a)(3) of this section, if, 

because of an error committed by the 

Board or the TSP record keeper, a 

participant’s account is not credited or 

charged with the investment gains or 

losses the account would have received 

had the error not occurred, the account 

will be credited accordingly. 

(2) Errors that warrant the crediting of 

breakage under paragraph (a)(1) of this 

section include, but are not limited to: 

(i) Delay in crediting contributions or 

other money to a participant’s account; 

(ii) Improper issuance of a loan or 

TSP withdrawal payment to a 

participant or beneficiary which 

requires the money to be restored to the 

participant’s account; and 

(iii) Investment of all or part of a 

participant’s account in the wrong 

investment fund(s). 

(3) A participant will not be entitled 

to breakage under paragraph (a)(1) of 

this section if the participant had the 

use of the money on which the 

investment gains would have accrued. 

(4) If the participant continued to 

have a TSP account, or would have 

continued to have a TSP account but for 

the Board or TSP record keeper’s error, 

the TSP record keeper will compute 

gains or losses under paragraph (a)(1) of 

this section for the relevant period 

based upon the investment funds in 

which the affected money would have 

been invested had the error not 

occurred. If the participant did not have, 

and should not have had, a TSP account 

during this period, then the TSP will 

use the rate of return set forth in 

§ 1605.2(b) for the relevant period and 

return the money to the participant. 

(b) Other corrections. The Executive 

Director may, in his or her discretion 


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and consistent with the requirements of 

applicable law, correct any other errors 

not specifically addressed in this 

section, including payment of breakage, 

if the Executive Director determines that 

the correction would serve the interests 

of justice and fairness and equity among 

all participants of the TSP. 

§ 1605.22 [Amended] 

■ 31. Amend § 1605.22, in the last 

sentence of paragraph (d)(1), by 

removing ‘‘record keeper’s’’ and adding 

in its place ‘‘TSP record keeper’s’’. 

■ 32. Amend § 1605.31 by revising 

paragraphs (c)(1) through (5) and (d) to 

read as follows: 

§ 1605.31 Contributions missed as a result 

of military service. 

* * * * * 

(c) * * * 

(1) The employee is entitled to receive 

the agency automatic (1%) contributions 

that he or she would have received had 

he or she remained in civilian service or 

pay status. Within 60 days of the 

employee’s reemployment or restoration 

to pay status, the employing agency 

must calculate the makeup agency 

automatic (1%) contributions and report 

those contributions to the record keeper, 

subject to any reduction in agency 

automatic (1%) contributions required 

by paragraph (c)(5) of this section. 

(2) An employee who contributed to 

a uniformed services TSP account 

during the period of military service is 

also immediately entitled to receive 

makeup agency matching contributions 

to his or her civilian account for the 

employee contributions to the 

uniformed services account that were 

deducted from his or her basic pay, 

subject to any reduction in agency 

matching contributions required by 

paragraph (c)(4) of this section. 

However, an employee is not entitled to 

receive makeup agency matching 

makeup contributions on contributions 

that were deducted from his or her 

incentive pay or special pay, including 

bonus pay, while performing military 

service. 

(3) An employee who makes up 

missed contributions is entitled to 

receive attributable makeup agency 

matching contributions (unless the 

employee has already received the 

maximum amount of matching 

contributions, as described in 

paragraphs (c)(2) and (4) of this section). 

(4) If the employee received 

uniformed services agency matching 

contributions, the makeup agency 

matching contributions will be reduced 

by the amount of the uniformed services 

agency matching contributions. 

(5) If the employee received 

uniformed services agency automatic 

(1%) contributions, the agency 

automatic (1%) contributions will be 

reduced by the amount of the uniformed 

services agency automatic (1%) 

contributions. 

(d) Breakage. The employee is 

entitled to breakage on agency 

contributions made under paragraph (c) 

of this section. Breakage will be 

calculated based on the investment 

election(s) on file for the participant 

during the period of military service. 

PART 1620—EXPANDED AND 

CONTINUING ELIGIBILITY 

■ 33. The authority citation for part 

1620 continues to read as follows: 

Authority: 5 U.S.C. 8474(b)(5) and (c)(1). 

Subpart C also issued under 5 U.S.C. 

8440a(b)(7), 8440b(b)(8), and 8440c(b)(8). 

Subpart D also issued under sec. 1043(b) of 

Pub. L. 104–106, 110 Stat. 186, and sec. 

7202(m)(2) of Pub. L. 101–508, 104 Stat. 

1388. Subpart E also issued under 5 U.S.C. 

8432b(1) and 8440e. 

■ 34. Revise § 1620.3 to read as follows: 

§ 1620.3 Contributions. 

The employing agency is responsible 

for transmitting to the TSP record 

keeper, in accordance with the TSP 

record keeper’s procedures, any 

employee and employer contributions 

that are required by this part. 

§ 1620.14 [Amended] 

■ 35. Amend § 1620.14 as follows: 

■ a. In the section heading, remove 

‘‘record keeper’’ and add in its place 

‘‘TSP record keeper’’; and 

■ b. In paragraph (b), remove ‘‘Board’’ 

and add in its place ‘‘its’’. 

§ 1620.22 [Amended] 

■ 36. Amend § 1620.22 as follows: 

■ a. In paragraph (a) introductory text, 

remove ‘‘withdrawal’’ and add in its 

place ‘‘distribution’’; and 

■ b. In paragraph (a)(2) introductory 

text, remove ‘‘withdrawal’’ and add in 

its place ‘‘distribution’’. 

■ 37. Revise § 1620.35 to read as 

follows: 

§ 1620.35 Loan payments. 

NAF instrumentalities must deduct 

and transmit TSP loan payments for 

employees who elect to be covered by 

CSRS or FERS to the TSP record keeper 

in accordance with 5 CFR part 1655 and 

the TSP record keeper’s procedures. 

Loan payments may not be deducted 

and transmitted for employees who 

elect to be covered by the NAF 

retirement system. Such employees will 

be considered to have separated from 

Government service and may continue 

making loan repayments in accordance 

with 5 CFR part 1655 and the TSP 

record keeper’s procedures. 

§ 1620.42 [Amended] 

■ 38. Amend § 1620.42, in paragraph 

(c)(1), by removing the word ‘‘form’’. 

§ 1620.43 [Amended] 

■ 39. Amend § 1620.43, in the section 

heading and paragraphs (a) and (c), by 

removing ‘‘record keeper’’ and adding in 

its place ‘‘TSP record keeper’’. 

■ 40. Revise § 1620.45 to read as 

follows: 

§ 1620.45 Suspending TSP loans, 

restoring post-employment distributions, 

and reversing loan foreclosures. 

(a) Suspending TSP loans during 

nonpay status. If the TSP record keeper 

is notified that an employee entered into 

a nonpay status to perform military 

service, any outstanding TSP loan from 

a civilian TSP account will be 

suspended, that is, it will not be 

declared a loan foreclosure while the 

employee is performing military service. 

(1) Interest will accrue on the loan 

balance during the period of 

suspension. When the employee returns 

to civilian pay status, the employing 

agency will resume deducting loan 

payments from the participant’s basic 

pay and the TSP record keeper will 

reamortize the loan (which will include 

interest accrued during the period of 

military service). The maximum loan 

repayment term will be extended by the 

employee’s period of military service. 

Consequently, when the employee 

returns to pay status, the TSP record 

keeper must receive documentation to 

show the beginning and ending dates of 

military service. 

(2) The TSP record keeper may close 

the loan account and declare it to be a 

loan foreclosure if the TSP record 

keeper does not receive documentation 

that the employee entered into nonpay 

status. However, this can be reversed in 

accordance with paragraph (c) of this 

section. 

(b) Restoring post-employment 

distributions. An employee who 

separates from civilian service to 

perform military service and who 

receives an automatic payment pursuant 

to § 1650.11 may return to the TSP an 

amount equal to the amount of the 

payment. The employee must notify the 

TSP record keeper of his or her intent 

to return the distributed funds within 90 

days of the date the employee returns to 

civilian service or pay status; if the 

employee is eligible to return a 

distribution, the TSP record keeper will 


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then inform the employee of the actions 

that must be taken to return the funds. 

(c) Reversing loan foreclosures. An 

employee may request that a loan 

foreclosure be reversed it resulted from 

the employee’s separation or placement 

in nonpay status to perform military 

service. The TSP record keeper will 

reverse the loan foreclosure under the 

process described as follows: 

(1) An employee who received a postemployment distribution when he or 

she separated to perform military 

service can have a loan foreclosure 

reversed only if the distributed amount 

is returned as described in paragraph (b) 

of this section; 

(2) A loan foreclosure can be reversed 

either by reinstating the loan or by 

repaying it in full. The TSP loan can be 

reinstated only if the employee agrees to 

repay the loan within the maximum 

loan repayment term plus the length of 

military service, and if, after 

reinstatement of the loan, the employee 

will have no more than two outstanding 

loans, only one of which is a residential 

loan; and 

(3) The employee must notify the TSP 

record keeper of his or her intent to 

reverse a loan foreclosure within 90 

days of the date the employee returns to 

civilian service or pay status; if the 

employee is eligible to reverse a loan 

foreclosure, the TSP record keeper will 

then inform the employee of the actions 

that must be taken to reverse the 

distribution. 

(d) Breakage. Employees will not 

receive breakage on amounts returned to 

their accounts under this section. 

§ 1620.46 [Amended] 

■ 41. Amend § 1620.46, in paragraphs 

(b) an (d), by removing ‘‘record keeper’’ 

and adding in its place ‘‘TSP record 

keeper’’. 

PART 1631—AVAILABILITY OF 

RECORDS 

Subpart A—Production or Disclosure 

of Records Under the Freedom of 

Information Act, 5 U.S.C. 552 

■ 42. The authority citation for subpart 

A of part 1631 continues to read as 

follows: 

Authority: 5 U.S.C. 552. 

■ 43. Amend § 1631.3 by revising 

paragraphs (a)(3) and (7) through (11) 

and removing paragraph (a)(12) to read 

as follows: 

§ 1631.3 Organization and functions. 

(a) * * * 

(3) The Office of Participant Services; 

* * * * * 

(7) The Office of Planning and Risk; 

(8) The Office of External Affairs; 

(9) The Office of Chief Financial 

Officer; 

(10) The Office of Resource 

Management; and 

(11) The Office of Technology 

Services. 

* * * * * 

PART 1640—PERIODIC PARTICIPANT 

STATEMENTS 

■ 44. The authority citation for part 

1640 continues to read as follows: 

Authority: 5 U.S.C. 8439(c)(1) and (c)(2), 5 

U.S.C. 8474(b)(5) and (c)(1). 

§ 1640.2 [Amended] 

■ 45. Amend § 1640.2 by removing 

‘‘Board’’ and adding in its place ‘‘TSP or 

its record keeper’’. 

■ 46. Revise § 1640.3 to read as follows: 

§ 1640.3 Statement of individual account. 

In the quarterly statements, the TSP or 

its record keeper will furnish each 

participant with the following 

information concerning the participant’s 

individual account: 

(a) Name and account number under 

which the account is established. 

(b) Statement whether the participant 

has a beneficiary designation on file 

with the TSP record keeper. 

(c) Investment election that is current 

at the end of the statement period. 

(d) Beginning and ending dates of the 

period covered by the statement. 

(e) The following information for and, 

as of the close of business on the ending 

date of, the period covered by the 

statement: 

(1) The total account balance and taxexempt balance, if applicable; 

(2) The account balance for each 

source of contributions; 

(3) The account balance and activity 

in each TSP core fund, including the 

dollar amount of the transaction, the 

share price, and the number of shares; 

(4) Loan information and activity, if 

applicable; and 

(5) The mutual fund window account 

balance, if applicable. 

(f) Any other information concerning 

the account that the Executive Director 

determines should be included in the 

statement. 

■ 47. Revise § 1640.4 to read as follows: 

§ 1640.4 Account transactions. 

(a) Where relevant, the following 

transactions will be reported in each 

individual account statement: 

(1) Contributions; 

(2) Withdrawals; 

(3) Forfeitures; 

(4) Loan disbursements and 

repayments; 

(5) Fund reallocations and fund 

transfers among TSP core funds; 

(6) Adjustments to prior transactions; 

(7) Rollovers from traditional 

individual retirement accounts (IRAs) 

and eligible employer plans within the 

meaning of section 402(c) of the Internal 

Revenue Code (26 U.S.C. 402(c)); and 

(8) Any other transaction that the 

Executive Director determines will 

affect the status of the individual 

account. 

(b) Where relevant, the statement will 

contain the following information 

concerning each transaction identified 

in paragraph (a) of this section: 

(1) Type of transaction; 

(2) TSP core funds affected; 

(3) Amount of the transaction (in 

dollars); and 

(4) Any other information the 

Executive Director deems relevant. 

■ 48. Revise § 1640.5 to read as follows: 

§ 1640.5 TSP core fund information. 

The TSP or its record keeper will 

provide to each participant each 

calendar year information concerning 

each of the TSP core funds, including: 

(a) A summary description of the type 

of investments made by the fund, 

written in a manner that will allow the 

participant to make an informed 

decision; and 

(b) The performance history of the 

type of investments made by the fund, 

covering the five-year period preceding 

the date of the evaluation. 

■ 49. Revise § 1640.6 to read as follows: 

§ 1640.6 Methods of providing information. 

The TSP or its record keeper will 

furnish the information described in 

this part to participants by making it 

available on the TSP website. A 

participant can request paper copies of 

that information by calling the 

ThriftLine, submitting a request through 

the TSP website, or by writing to the 

TSP record keeper. 

PART 1645—CALCULATION OF 

SHARE PRICES 

■ 50. The authority citation for part 

1645 continues to read as follows: 

Authority: 5 U.S.C. 8439(a)(3) and 8474. 

■ 51. Revise § 1645.2 to read as follows: 

§ 1645.2 Posting of transactions. 

Contributions, loan payments, loan 

disbursements, withdrawals, fund 

reallocations, fund transfers, and other 

transactions will be posted in dollars 

and in shares by source and by TSP core 

fund to the appropriate individual 

account by the TSP record keeper, using 

the share price for the date the 

transaction is posted. 


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§ 1645.3 [Amended] 

■ 52. Amend § 1645.3 as follows: 

■ a. In the section heading and 

paragraph (a), remove ‘‘TSP Fund’’ and 

add in its place ‘‘TSP core fund’’; and 

■ b. In paragraph (c), remove ‘‘each TSP 

fund’’ and add in its place ‘‘each TSP 

core fund’’. 

■ 53. Amend § 1645.4 by revising the 

section heading, introductory text, and 

paragraphs (a) and (c) to read as follows: 

§ 1645.4 Administrative expenses 

attributable to each TSP core fund. 

A portion of the administrative 

expenses accrued during each business 

day will be charged to each TSP core 

fund. A fund’s respective portion of 

administrative expenses will be 

determined as follows: 

(a) Accrued administrative expenses 

(other than those described in paragraph 

(b) of this section) will be reduced by: 

(1) Accrued forfeitures; 

(2) The fees described in §§ 1601.53(a) 

(relating to the mutual fund window), 

1655.21 (relating to loans), 1653.6 

(relating to retirement benefits court 

orders), and 1653.16 (relating to child 

support court orders) of this chapter; 

and 

(3) Accrued earnings on forfeitures, 

abandoned accounts, unapplied 

deposits, and fees described in 

paragraph (a)(2) of this section. 

* * * * * 

(c) The amount of accrued 

administrative expenses not covered by 

forfeitures, fees, and earnings under 

paragraph (a) of this section, and not 

described in paragraph (b) of this 

section, will be charged on a pro rata 

basis to all TSP core funds, based on the 

respective fund balances on the last 

business day of the prior month end. 

§ 1645.5 [Amended] 

■ 54. Amend § 1645.5, in paragraph (a), 

as follows: 

■ a. Remove ‘‘TSP Fund’’ and adding in 

its place ‘‘TSP core fund’’; and 

■ b. Remove ‘‘two decimal places’’ and 

add in its place ‘‘four decimal places’’. 

§ 1645.6 [Amended] 

■ 55. Amend § 1645.6 by removing 

‘‘TSP Fund’’ and adding in its place 

‘‘TSP core fund’’. 

PART 1650—METHODS OF 

WITHDRAWING FUNDS FROM THE 

THRIFT SAVINGS PLAN 

■ 56. 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). 

■ 57. Amend § 1650.1, in paragraph (b), 

as follows: 

■ a. Remove the definition of ‘‘Postemployment withdrawal’’; and 

■ b. Add in alphabetical order 

definitions for ‘‘Post-employment 

distribution’’ and ‘‘TSP withdrawal’’. 

The additions read as follows: 

§ 1650.1 Definitions. 

* * * * * 

(b) * * * 

Post-employment distribution means a 

distribution from the TSP that is 

available to a participant who is 

separated from Government service. 

* * * * * 

TSP withdrawal means a postemployment distribution and/or an inservice withdrawal. 

■ 58. Amend § 1650.2 by revising 

paragraphs (a) through (c), (f), and (h) to 

read as follows: 

§ 1650.2 Eligibility and general rules for a 

TSP withdrawal. 

(a) A participant who is separated 

from Government service can elect a 

distribution of all or a portion of his or 

her account balance by one or a 

combination of the distribution methods 

described in subpart B of this part. 

(b) A post-employment distribution 

will not be paid unless TSP records 

indicate that the participant is separated 

from Government service. The TSP 

record keeper will, when possible, 

cancel a pending post-employment 

distribution election upon receiving 

information from an employing agency 

that a participant is no longer separated. 

(c) A participant cannot make a full 

post-employment distribution of his or 

her account until any outstanding TSP 

loan has either been repaid in full or 

declared to be a loan foreclosure. An 

outstanding TSP loan will not affect a 

participant’s eligibility for a partial postemployment distribution or an inservice withdrawal. 

* * * * * 

(f) A participant can elect to have any 

portion of a single or installment 

payment that is not rolled over to an 

eligible employer plan, traditional IRA, 

or Roth IRA deposited directly, by 

electronic funds transfer (EFT), into a 

savings or checking account at a 

financial institution in the United 

States. 

* * * * * 

(h) A participant may elect to have his 

or her TSP withdrawal distributed from 

the participant’s traditional balance 

only, Roth balance only, or pro rata from 

the participant’s traditional and Roth 

balances. Any distribution from the 

traditional balance will be prorated 

between the tax-deferred balance and 

any tax-exempt balance. Any 

distribution from the Roth balance will 

be prorated between contributions in 

the Roth balance and earnings in the 

Roth balance. In addition, all TSP 

withdrawals will be distributed pro rata 

from all TSP core funds in which the 

participant’s account is invested. All 

prorated amounts will be based on the 

balances in each TSP core fund or 

source of contributions on the day the 

TSP withdrawal is processed. 

■ 59. Revise § 1650.3 to read as follows: 

§ 1650.3 Frozen accounts. 

(a) All distributions from the TSP are 

subject to the rules relating to spousal 

rights (found in subpart G of this part) 

and to domestic relations orders, 

alimony and child support legal 

process, and child abuse enforcement 

orders (found in 5 CFR part 1653). 

(b) A participant may not take a 

distribution of any portion of his or her 

account balance if the account is frozen 

due to a pending retirement benefits 

court order, an alimony or child support 

enforcement order, or a child abuse 

enforcement order, or because a freeze 

has been placed on the account by the 

TSP record keeper for another reason. 

■ 60. Revise § 1650.4 to read as follows: 

§ 1650.4 Certification of truthfulness. 

By completing a TSP withdrawal 

request, the participant certifies, under 

penalty of perjury, that all information 

provided to the TSP record keeper 

during the withdrawal process is true 

and complete, including statements 

concerning the participant’s marital 

status and, where applicable, the 

spouse’s email or physical address at 

the time the application is filed or the 

current spouse’s consent to the 

withdrawal. 

■ 61. Revise § 1650.5 to read as follows: 

§ 1650.5 Returned funds. 

If a TSP withdrawal is returned as 

undeliverable, the TSP record keeper 

will attempt to locate the participant. If 

the participant does not respond within 

90 days, the returned funds will be 

forfeited to the TSP. The participant can 

claim the forfeited funds, although they 

will not be credited with TSP 

investment fund returns. 

■ 62. Revise § 1650.6 to read as follows: 

§ 1650.6 Deceased participant. 

(a) The TSP record keeper will cancel 

a pending TSP withdrawal request if it 

receives notice, in the form and manner 

prescribed by the TSP record keeper, 

that a participant is deceased. The TSP 

record keeper will also cancel an 

annuity purchase made on or after the 

participant’s date of death but before 

annuity payments have begun, and the 


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annuity vendor will return the funds to 

the TSP. 

(b) If the TSP record keeper processes 

a TSP withdrawal request before being 

notified that a participant is deceased, 

the funds cannot be returned to the TSP. 

■ 63. Revise § 1650.11 to read as 

follows: 

§ 1650.11 Post-employment distribution 

elections. 

(a) Subject to the restrictions in this 

subpart, participants may elect a 

distribution of all or a portion of their 

TSP accounts in a single payment, a 

series of installment payments, a life 

annuity, or any combination of these 

options. 

(b) If a participant’s account balance 

is less than $5.00 when he or she 

separates from Government service, the 

balance will automatically be forfeited 

to the TSP. The participant can reclaim 

the money by contacting the TSP record 

keeper and requesting the amount that 

was forfeited; however, TSP investment 

earnings will not be credited to the 

account after the date of the forfeiture. 

(c) Provided that the participant has 

not submitted a post-employment 

distribution election prior to the date 

the automatic payment is processed, if 

a participant’s vested account balance is 

less than $200 when he or she separates 

from Government service, the TSP 

record keeper will automatically pay the 

balance in a single payment to the 

participant at his or her TSP address of 

record. The participant will not be 

eligible for any other payment option or 

be allowed to remain in the TSP. 

(d) Only one post-employment 

distribution election per account will be 

processed in any 30-calendar-day 

period. 

■ 64. Revise § 1650.12 to read as 

follows: 

§ 1650.12 Single payment. 

Provided that, in the case of a partial 

distribution, the amount elected is not 

less than $1,000, a participant can elect 

a distribution of all or a portion of his 

or her account balance in a single 

payment. 

■ 65. Amend § 1650.13 by revising 

paragraphs (a) introductory text, (a)(2), 

(f), and (g) to read as follows: 

§ 1650.13 Installment payments. 

(a) A participant can elect a 

distribution of all or a portion of the 

account balance in a series of 

substantially equal installment 

payments, to be paid on a monthly, 

quarterly, or annual basis in one of the 

following manners: 

* * * * * 

(2) An installment payment amount 

calculated based on life expectancy. 

Payments based on life expectancy are 

determined using the factors set forth in 

the Internal Revenue Service life 

expectancy tables codified at 26 CFR 

1.401(a)(9)–9(b) and (c). The installment 

payment amount is calculated by 

dividing the account balance by the 

factor from the IRS life expectancy 

tables based upon the participant’s age 

as of his or her birthday in the year 

payments are to begin. This amount is 

then divided by the number of 

installment payments to be made per 

calendar year to yield the installment 

payment amount. In subsequent years, 

the installment payment amount is 

recalculated in January by dividing the 

prior December 31 account balance by 

the factor in the IRS life expectancy 

tables based upon the participant’s age 

as of his or her birthday in the year 

payments will be made. There is no 

minimum amount for an installment 

payment calculated based on this 

method. 

* * * * * 

(f) A participant receiving installment 

payments may change the investment of 

his or her account balance among the 

TSP core funds and may invest through 

the mutual fund window as provided in 

5 CFR part 1601. 

(g) Upon receiving information from 

an employing agency that a participant 

receiving installment payments is no 

longer separated, the TSP record keeper 

will cancel all pending and future 

installment payments. 

■ 66. Amend § 1650.14 by revising 

paragraphs (a), (b), (d), (e), (g)(3)(iii), 

and (h) to read as follows: 

§ 1650.14 Annuities. 

(a) A participant electing a postemployment distribution can use all or 

a portion of his or her total account 

balance, traditional balance only, or 

Roth balance only to purchase a life 

annuity. 

(b) If a participant has a traditional 

balance and a Roth balance and elects 

to use all or a portion of his or her total 

account balance to purchase a life 

annuity, the TSP record keeper must 

purchase two separate annuity contracts 

for the participant: One from the portion 

of the withdrawal distributed from his 

or her traditional balance and one from 

the portion of the withdrawal 

distributed from his or her Roth balance. 

* * * * * 

(d) Unless an amount must be paid 

directly to the participant to satisfy any 

applicable minimum distribution 

requirement of the Internal Revenue 

Code, the TSP record keeper will 

purchase the annuity contract(s) from 

the TSP’s annuity vendor using the 

participant’s entire account balance or 

the portion specified. In the event that 

a minimum distribution is required by 

section 401(a)(9) of the Internal Revenue 

Code before the date of the first annuity 

payment, the TSP record keeper will 

compute that amount prior to 

purchasing the annuity contract(s) and 

pay it directly to the participant. 

(e) An annuity will provide a payment 

for life to the participant and, if 

applicable, to the participant’s survivor, 

in accordance with the type of annuity 

chosen. The TSP annuity vendor will 

make the first annuity payment 

approximately 30 days after the TSP 

record keeper purchases the annuity. 

* * * * * 

(g) * * * 

(3) * * * 

(iii) A participant can establish that a 

person not described in paragraph 

(g)(3)(ii) of this section has an insurable 

interest in him or her by submitting, 

with the annuity request, an affidavit 

from a person other than the participant 

or the joint annuitant that demonstrates 

that the designated joint annuitant has 

an insurable interest in the participant 

(as described in paragraph (g)(3)(i) of 

this section). 

* * * * * 

(h) For each distribution election in 

which the participant elects to purchase 

an annuity with some or all of the 

amount distributed, if the TSP record 

keeper must purchase two annuity 

contracts, the type of annuity, the 

annuity features, and the joint annuitant 

(if applicable) selected by the 

participant will apply to both annuities 

purchased. For each distribution 

election, a participant cannot elect more 

than one type of annuity by which to 

receive a distribution, or portion 

thereof, from any one account. 

* * * * * 

■ 67. Amend § 1650.16 by revising 

paragraphs (c) and (d) to read as follows: 

§ 1650.16 Required minimum distributions. 

* * * * * 

(c) In the event that a separated 

participant does not withdraw from his 

or her account an amount sufficient to 

satisfy his or her required minimum 

distribution for the year, the TSP record 

keeper will automatically distribute the 

necessary amount on or before the 

applicable date described in paragraph 

(a) of this section. 

(d) The TSP record keeper will 

disburse required minimum 

distributions described in paragraph (c) 

of this section pro rata from the 


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participant’s traditional balance and the 

participant’s Roth balance. 

* * * * * 

■ 68. Revise § 1650.17 to read as 

follows: 

§ 1650.17 Changes and cancellation of a 

post-employment distribution request. 

(a) Before processing. A pending postemployment distribution request can be 

cancelled if the cancellation is received 

and can be processed before the TSP 

record keeper processes the request. 

However, the TSP record keeper 

processes post-employment distribution 

requests each business day and those 

that are entered into the record keeping 

system by 12 noon eastern time will 

ordinarily be processed that night; those 

entered after 12 noon eastern time will 

be processed the next business day. 

Consequently, a cancellation request 

must be received and entered into the 

system before the cut-off for the day the 

request is submitted for processing in 

order to be effective to cancel the postemployment distribution. 

(b) After processing. A postemployment distribution election 

cannot be changed or cancelled after the 

withdrawal request has been processed. 

Consequently, funds disbursed cannot 

be returned to the TSP. 

(c) Change in installment payments. If 

a participant is receiving a series of 

installment payments, with appropriate 

supporting documentation as required 

by the TSP record keeper, the 

participant can change at any time: The 

payment amount or frequency 

(including stopping installment 

payments), the address to which the 

payments are mailed, the amount of 

federal tax withholding, whether or not 

a payment will be rolled over (if 

permitted) and the portion to be rolled 

over, the method by which direct 

payments to the participant are being 

sent (EFT or check), the identity of the 

financial institution to which payments 

are rolled over or sent directly to the 

participant by EFT, or the identity of the 

EFT account. 

■ 69. Revise subpart C to read as 

follows: 

Subpart C—Procedures for PostEmployment Distributions 

Sec. 

1650.21 Information provided by 

employing agency or service. 

1650.22 Accounts of $200 or more. 

1650.23 Accounts of less than $200. 

1650.24 How to obtain a post-employment 

distribution. 

1650.25 Rollovers from the TSP. 

Subpart C—Procedures for PostEmployment Distributions 

§ 1650.21 Information provided by 

employing agency or service. 

When a TSP participant separates 

from Government service, his or her 

employing agency or service must report 

the separation and the date of separation 

to the TSP record keeper. Until the TSP 

record keeper receives this information 

from the employing agency or service, it 

will not pay a post-employment 

distribution. 

§ 1650.22 Accounts of $200 or more. 

A participant whose account balance 

is $200 or more must submit a properly 

completed distribution election to 

request a post-employment distribution 

of his or her account balance. 

§ 1650.23 Accounts of less than $200. 

Upon receiving information from the 

employing agency that a participant has 

been separated for more than 60 days 

and that any outstanding loans have 

been closed, provided the participant 

has not made a distribution election 

before the distribution is processed, if 

the account balance is $5.00 or more but 

less than $200, the TSP record keeper 

will automatically distribute the entire 

amount of his or her account balance. 

The TSP record keeper will not pay this 

amount by EFT. The participant may 

not elect to leave this amount in the 

TSP, nor will the TSP record keeper roll 

over any automatically distributed 

amount to an eligible employer plan, 

traditional IRA, or Roth IRA. However, 

the participant may make an indirect 

rollover of this payment into an eligible 

employer plan, traditional IRA, or Roth 

IRA to the extent the roll over is 

permitted by the Internal Revenue Code. 

§ 1650.24 How to obtain a postemployment distribution. 

To request a post-employment 

distribution, a participant must initiate 

a request in the form and manner 

prescribed by the TSP record keeper. 

§ 1650.25 Rollovers from the TSP. 

(a) The TSP record keeper will, at the 

participant’s election, roll over all or 

any portion of an eligible rollover 

distribution (as defined by section 

402(c) of the Internal Revenue Code) 

directly to an eligible employer plan or 

an IRA. 

(b) If a post-employment distribution 

includes a payment from a participant’s 

traditional balance and a payment from 

the participant’s Roth balance, the TSP 

record keeper will, at the participant’s 

election, roll over all or a portion of the 

payment from the traditional balance to 

a single plan or IRA and all or a portion 

of the payment from the Roth balance to 

another plan or IRA. The TSP record 

keeper will also allow the traditional 

and Roth portions of a payment to be 

rolled over to the same plan or IRA but, 

for each type of balance, the election 

must be made separately by the 

participant and each type of balance 

will be rolled over separately. However, 

the TSP record keeper will not roll over 

portions of the participant’s traditional 

balance to two different institutions or 

portions of the participant’s Roth 

balance to two different institutions. 

(c) If a post-employment distribution 

includes an amount from a participant’s 

Roth balance and the participant elects 

to roll over that amount to another 

eligible employer plan or Roth IRA, the 

TSP record keeper will inform the plan 

administrator or trustee of the start date 

of the participant’s Roth 5 year nonexclusion period or the participant’s 

Roth initiation date, and the portion of 

the distribution that represents Roth 

contributions. If a post-employment 

distribution includes an amount from a 

participant’s Roth balance and the 

participant does not elect to roll over 

the amount, the TSP record keeper will 

inform the participant of the portion of 

the distribution that represents Roth 

contributions. 

(d) Tax-exempt contributions can be 

rolled over only if the IRA or plan 

accepts such funds. 

(e) The TSP record keeper will roll 

over distributions only to the extent that 

the rollover is permitted by the Internal 

Revenue Code. 

■ 70. Amend § 1650.31 by revising 

paragraph (b) to read as follows: 

§ 1650.31 Age-based withdrawals. 

* * * * * 

(b) An age-based withdrawal is an 

eligible rollover distribution, so a 

participant may request that the TSP 

record keeper roll over all or a portion 

of the withdrawal to a traditional IRA, 

an eligible employer plan, or a Roth IRA 

in accordance with § 1650.25. 

* * * * * 

■ 71. Amend § 1650.32 by revising 

paragraphs (a), (b)(5), and (e) to read as 

follows: 

§ 1650.32 Financial hardship withdrawals. 

(a) A participant who has not 

separated from Government service and 

who can certify that he or she has a 

financial hardship is eligible to 

withdraw all or a portion of his or her 

own contributions to the TSP (and their 

attributable earnings) in a single 

payment to meet certain specified 

financial obligations. The amount of a 

financial hardship withdrawal request 

must be at least $1,000. 


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(b) * * * 

(5) The participant has incurred 

expenses and losses (including loss of 

income) on account of a disaster 

declared by the Federal Emergency 

Management Agency (FEMA) under the 

Robert T. Stafford Disaster Relief and 

Emergency Assistance Act, Public Law 

100–707, provided that the participant’s 

principal residence or principal place of 

employment at the time of the disaster 

was located in an area designated by 

FEMA for individual assistance with 

respect to the disaster. 

* * * * * 

(e) The participant must certify that 

he or she has a financial hardship as 

described on the hardship withdrawal 

request, and that the dollar amount of 

the withdrawal request does not exceed 

the actual amount of the financial 

hardship. 

* * * * * 

§ 1650.33 [Removed and Reserved] 

■ 72. Remove and reserve § 1650.33. 

■ 73. Revise § 1650.34 to read as 

follows: 

§ 1650.34 Uniqueness of loans and inservice withdrawals. 

An outstanding TSP loan cannot be 

converted into an in-service withdrawal 

or vice versa. Funds distributed as an 

in-service withdrawal cannot be 

returned or repaid. 

■ 74. Revise subpart E to read as 

follows: 

Subpart E—Procedures for In-Service 

Withdrawals 

Sec. 

1650.41 How to obtain an age-based 

withdrawal. 

1650.42 How to obtain a financial hardship 

withdrawal. 

1650.43 [Reserved] 

Subpart E—Procedures for In-Service 

Withdrawals 

§ 1650.41 How to obtain an age-based 

withdrawal. 

To request an age-based withdrawal, a 

participant must initiate a request in 

form and manner prescribed by the TSP 

record keeper. 

§ 1650.42 How to obtain a financial 

hardship withdrawal. 

(a) To request a financial hardship 

withdrawal, a participant must initiate a 

request in the form and manner 

prescribed by the TSP record keeper. 

(b) There is no limit on the number 

of financial hardship withdrawals a 

participant can make; however, the TSP 

record keeper will not accept a financial 

hardship withdrawal request for a 

period of six months after a financial 

hardship disbursement is made. 

§ 1650.43 [Reserved] 

■ 75. Amend § 1650.61 by revising 

paragraphs (a), (b), (c) introductory text, 

and (c)(1), (2), (4), and (5) to read as 

follows: 

§ 1650.61 Spousal rights applicable to 

post-employment distributions. 

(a) The spousal rights described in 

this section apply to total postemployment distributions when the 

married participant’s vested TSP 

account balance exceeds $3,500, to 

partial post-employment distributions 

without regard to the amount of the 

participant’s account balance, and to 

any change in the amount or frequency 

of an existing installment payment 

series, including a change from 

payments calculated based on life 

expectancy to payments based on a 

fixed-dollar amount. 

(b) Unless the participant was granted 

an exception under this subpart to the 

spousal notification requirement within 

90 days of the date the distribution 

request is processed by the TSP record 

keeper, the spouse of a CSRS participant 

is entitled to notice when the 

participant applies for a postemployment distribution or makes a 

change to the amount or frequency of an 

existing installment payment series. The 

participant must provide the TSP record 

keeper with the spouse’s correct email 

or physical address to which to send the 

required notice. 

(c) The spouse of a FERS or 

uniformed services participant has a 

right to a joint and survivor annuity 

with a 50 percent survivor benefit, level 

payments, and no cash refund based on 

the participant’s entire account balance 

when the participant elects a total postemployment distribution. 

(1) The participant may make a 

different total post-employment 

distribution election only if his or her 

spouse consents to that election and 

waives the right to this annuity. 

(2) A participant’s spouse must 

consent to any partial post-employment 

distribution election (other than an 

election to purchase this type of an 

annuity with such amount) and waive 

his or her right to this annuity with 

respect the amount distributed. 

* * * * * 

(4) Unless the participant was granted 

an exception under this subpart to the 

spousal consent requirement within 90 

days of the date the distribution request 

is processed by the TSP record keeper, 

to show that the spouse has consented 

to a different total or partial postemployment distribution election or 

installment payment change and waived 

the right to this annuity with respect to 

the applicable amount, the participant 

must submit to the TSP record keeper a 

properly completed distribution request, 

signed by his or her spouse. 

(5) The spouse’s consent and waiver 

is irrevocable for the applicable 

distribution or installment payment 

change once the TSP record keeper has 

received it. 

■ 76. Amend § 1650.62 by revising 

paragraphs (b) and (c) to read as follows: 

§ 1650.62 Spousal rights applicable to inservice withdrawals. 

* * * * * 

(b) Unless the participant was granted 

an exception under this subpart to the 

spousal notification requirement within 

90 days of the date on which the 

withdrawal request is processed by the 

TSP record keeper, the spouse of a CSRS 

participant is entitled to notice when 

the participant applies for an in-service 

withdrawal. The participant must 

provide the TSP record keeper with the 

spouse’s correct email or physical 

address to which to send the required 

notice. 

(c) Unless the participant was granted 

an exception under this subpart to the 

spousal consent requirement within 90 

days of the date the withdrawal request 

is processed by the TSP record keeper, 

before obtaining an in-service 

withdrawal, a participant who is 

covered by FERS or who is a member of 

the uniformed services must obtain the 

consent of his or her spouse and waiver 

of the spouse’s right to a joint and 

survivor annuity described in 

§ 1650.61(c) with respect to the 

applicable amount. To show the 

spouse’s consent and waiver, a 

participant must submit to the TSP 

record keeper a properly completed 

withdrawal request, signed by his or her 

spouse. Once a request containing the 

spouse’s consent and waiver has been 

submitted to the TSP record keeper, the 

spouse’s consent is irrevocable for that 

withdrawal. 

■ 77. Amend § 1650.63 by revising 

paragraphs (a) introductory text, 

(a)(3)(i), (b), and (c) to read as follows: 

§ 1650.63 Executive Director’s exception 

to the spousal notification requirement. 

(a) Whenever this subpart requires the 

Executive Director to give notice of an 

action to the spouse of a CSRS 

participant, an exception to this 

requirement may be granted if the 

participant establishes to the 

satisfaction of the Executive Director 

that the spouse’s whereabouts cannot be 

determined. A request for such an 

exception must be submitted to the TSP 


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record keeper in the form and manner 

prescribed by the TSP record keeper, 

accompanied by the following: 

* * * * * 

(3) * * * 

(i) The participant’s statement must 

give the full name of the spouse, declare 

the participant’s inability to locate the 

spouse, state the last time the spouse’s 

location was known, explain why the 

spouse’s location is not known 

currently, and describe the good faith 

efforts the participant has made to 

locate the spouse in the 90 days before 

the request for an exception was 

received by the TSP record keeper. 

Examples of attempting to locate the 

spouse include, but are not limited to, 

checking with relatives and mutual 

friends or using telephone directories 

and directory assistance for the city of 

the spouse’s last known address. 

Negative statements, such as, ‘‘I have 

not seen nor heard from him,’’ or ‘‘I 

have not had contact with her,’’ are not 

sufficient. 

* * * * * 

(b) A TSP withdrawal election will be 

processed within 90 days of an 

approved exception so long as the 

spouse named on the TSP withdrawal 

request is the spouse for whom the 

exception has been approved. 

(c) The TSP and/or its record keeper 

may require a participant to provide 

additional information before granting a 

waiver. The TSP and/or its record 

keeper may use any of the information 

provided to conduct its own search for 

the spouse. 

■ 78. Amend § 1650.64 by revising 

paragraphs (a) introductory text, 

(a)(2)(ii)(C), and (b) to read as follows: 

§ 1650.64 Executive Director’s exception 

to the spousal consent requirement. 

(a) Whenever this subpart requires the 

consent of a spouse of a FERS or 

uniformed services participant to a loan 

or TSP withdrawal or a waiver of the 

right to a survivor annuity, an exception 

to this requirement may be granted if 

the participant establishes to the 

satisfaction of the Executive Director 

that: 

* * * * * 

(2) * * * 

(ii) * * * 

(C) Expressly states that the 

participant may obtain a loan from his 

or her TSP account or make a TSP 

withdrawal notwithstanding the 

absence of the spouse’s signature. 

(b) A post-employment distribution 

election or an in-service withdrawal 

request processed within 90 days of an 

approved exception will be accepted by 

the TSP record keeper so long as the 

spouse named on the request is the 

spouse for whom the exception has been 

approved. 

PART 1651—DEATH BENEFITS 

■ 79. The authority citation for part 

1651 continues to read as follows: 

Authority: 5 U.S.C. 8424(d), 8432d, 8432(j), 

8433(e), 8435(c)(2), 8474(b)(5) and 8474(c)(1). 

§ 1651.1 [Amended] 

■ 80. Amend § 1651.1 by removing the 

definition of ‘‘TIN’’. 

■ 81. Amend § 1651.2 by revising 

paragraphs (a) introductory text, (a)(1), 

(b) introductory text, (b)(1) through (4), 

(c), and (d) to read as follows: 

§ 1651.2 Entitlement to funds in a 

deceased participant’s account. 

(a) Death benefits. Except as provided 

in paragraph (b) of this section, the 

account balance of a deceased 

participant will be paid as a death 

benefit to the individual or individuals 

surviving the participant, in the 

following order of precedence: 

(1) To the beneficiary or beneficiaries 

designated by the participant in 

accordance with § 1651.3; 

* * * * * 

(b) TSP withdrawals. If the TSP record 

keeper processes a notice that a 

participant has died, it will cancel any 

pending request by the participant to 

withdraw his or her account. The TSP 

record keeper will also cancel an 

annuity purchase made on or after the 

participant’s date of death but before 

annuity payments have begun, and the 

annuity vendor will return the funds to 

the TSP. The funds designated by the 

participant for the withdrawal will be 

paid as a death benefit in accordance 

with paragraph (a) of this section, unless 

the participant elected to withdrawal 

his or her account in the form of an 

annuity, in which case the funds 

designated for the purchase of the 

annuity will be paid as described in 

paragraphs (b)(1) through (5) of this 

section: 

(1) If the participant requested a 

single life annuity with no cash refund 

or 10-year certain feature, the TSP 

record keeper will pay the funds as a 

death benefit in accordance with 

paragraph (a) of this section. 

(2) If the participant requested a 

single life annuity with a cash refund or 

10-year certain feature, the TSP record 

keeper will pay the funds as a death 

benefit to the beneficiary or 

beneficiaries designated by the 

participant on the annuity portion of the 

TSP post-employment distribution 

request, or as a death benefit in 

accordance with paragraph (a) of this 

section if no beneficiary designated on 

the withdrawal request survives the 

participant. 

(3) If the participant requested a joint 

life annuity without additional features, 

the TSP record keeper will pay the 

funds as a death benefit to the joint life 

annuitant if he or she survives the 

participant, or as a death benefit in 

accordance with paragraph (a) of this 

section if the joint life annuitant does 

not survive the participant. 

(4) If the participant requested a joint 

life annuity with a cash refund or 10- 

year certain feature, the TSP record 

keeper will pay the funds as a death 

benefit to the joint life annuitant if he 

or she survives the participant, or as a 

death benefit to the beneficiary or 

beneficiaries designated by the 

participant on the annuity portion of the 

TSP post-employment distribution 

request if the joint life annuitant does 

not survive the participant, or as a death 

benefit in accordance with paragraph (a) 

of this section if neither the joint life 

annuitant nor any designated 

beneficiary survives the participant. 

* * * * * 

(c) TSP loans. If the TSP record 

keeper processes a notice that a 

participant has died, any pending loan 

disbursement will be cancelled and the 

funds designated for the loan will be 

distributed as a death benefit in 

accordance with paragraph (a) of this 

section. If a TSP loan has been 

disbursed, but the check has not been 

negotiated (or an electronic funds 

transfer (EFT) has been returned), the 

loan proceeds will be used to pay off the 

loan. If the loan check has been 

negotiated (or the EFT has been 

processed), the funds cannot be 

returned to the TSP and the TSP record 

keeper will declare the loan balance as 

a loan foreclosure in accordance with 

part 1655 of this chapter. 

(d) TSP investments. Upon a 

participant’s death, his or her TSP 

account will remain invested in the 

same TSP core funds as the account 

balance was invested on his or her date 

of death. If any portion of the 

participant’s TSP account is invested 

through the mutual fund window at the 

time of his or her death, his or her 

mutual fund window account will be 

closed and the balance will be 

transferred back to the TSP core funds 

in the participant’s TSP account in 

accordance with his or her most recent 

investment election until it is paid out 

or a beneficiary participant account is 

established under this part. 

■ 82. Revise § 1651.3 to read as follows: 


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§ 1651.3 Designation of beneficiary. 

(a) Designation requirements. A 

participant may designate one or more 

beneficiaries for his or her TSP account. 

A valid TSP designation of beneficiary 

remains in effect until it is properly 

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. A 

participant can name up to 20 total 

(primary and contingent) beneficiaries 

to share the death benefit. A beneficiary 

may be designated without the 

knowledge or consent of that beneficiary 

or the knowledge or consent of the 

participant’s spouse. 

(c) Validity requirements. To be valid 

and accepted by the TSP record keeper, 

a TSP designation of beneficiary must: 

(1) Be received by the TSP record 

keeper on or before the date of the 

participant’s death; 

(2) Identify the participant in such a 

manner so that the TSP record keeper 

can locate his or her TSP account; 

(3) Be signed and properly dated by 

the participant and signed and properly 

dated by one witness: 

(i) The participant must either sign 

the designation of beneficiary in the 

presence of the witness or acknowledge 

his or her signature on the designation 

of beneficiary to the witness; 

(ii) A witness must be age 21 or older; 

and 

(iii) A witness designated as a 

beneficiary will not be entitled to 

receive a death benefit payment; if a 

witness is the only named beneficiary, 

the designation of the beneficiary is 

invalid. If more than one beneficiary is 

named, the share of the witness 

beneficiary will be allocated among the 

remaining beneficiaries pro rata; 

(4) Designate primary beneficiary 

shares which when summed equal 

100%; 

(5) Contain no substantive alterations 

(e.g., struck-through shares or scratchedout names of beneficiaries); 

(6) Designate each primary and each 

contingent beneficiary in such a manner 

so that the TSP record keeper can 

identify the individual or entity; 

(7) Not attempt to designate 

beneficiaries for the participant’s 

traditional balance and the participant’s 

Roth balance separately; and 

(8) Be received by the TSP record 

keeper not more than 365 calendar days 

after the date of the participant’s most 

recent signature. 

(d) Will. A participant cannot use a 

will to designate a TSP beneficiary. 

■ 83. Revise § 1651.4 to read as follows: 

§ 1651.4 How to change a designation of 

beneficiary. 

(a) Change. To change a designation 

of beneficiary, the participant must 

submit to the TSP record keeper a new 

TSP designation of beneficiary meeting 

the requirements of § 1651.3 to the TSP 

record keeper. If the TSP record keeper 

receives more than one valid 

designation of beneficiary, it will honor 

the designation with the latest date 

signed by the participant. A participant 

may change a TSP beneficiary at any 

time, without the knowledge or consent 

of any person, including his or her 

spouse. 

(b) [Reserved] 

(c) Will. A participant cannot use a 

will to change a TSP designation of 

beneficiary. 

§ 1651.5 [Amended] 

■ 84. Amend § 1651.5, in paragraph (b), 

by removing ‘‘TSP’’ and adding in its 

place ‘‘TSP record keeper’’. 

§ 1651.6 [Amended] 

■ 85. Amend § 1651.6, in paragraph (d) 

introductory text, by removing ‘‘TSP’’ 

and adding in its place ‘‘TSP record 

keeper’’. 

§ 1651.8 [Amended] 

■ 86. Amend § 1651.8, in paragraph (b), 

by removing ‘‘Board’’ and adding in its 

place ‘‘TSP record keeper’’. 

§ 1651.10 [Amended] 

■ 87. Amend § 1651.10, in paragraph 

(c), by removing ‘‘form’’. 

§ 1651.12 [Amended] 

■ 88. Amend § 1651.12 by removing 

‘‘Board’’ and adding in its place ‘‘TSP 

record keeper’’ wherever it appears. 

■ 89. Revise § 1651.13 to read as 

follows: 

§ 1651.13 How to apply for a death benefit. 

To apply for a TSP death benefit, a 

potential beneficiary must contact the 

ThriftLine for instructions on providing 

a certified copy of the participant’s 

death certificate, along with any other 

information as required by the TSP. 

■ 90. Revise § 1651.14 to read as 

follows: 

§ 1651.14 How payment is made. 

(a) In general. Each beneficiary’s 

death benefit will be disbursed pro rata 

from the participant’s traditional and 

Roth balances. The payment from the 

traditional balance will be further pro 

rated between the tax-deferred balance 

and tax-exempt balance. The payment 

from the Roth balance will be further 

pro rated between contributions in the 

Roth balance and earnings in the Roth 

balance. In addition, all death benefits 

will be disbursed pro rata from all TSP 

core funds in which the deceased 

participant’s account is invested. All 

pro rated amounts will be based on the 

balances in each TSP core fund or 

source of contributions on the day the 

disbursement is made. Disbursement 

will be made separately for each entitled 

beneficiary. 

(b) Spouse beneficiaries. The TSP 

record keeper will automatically 

transfer a surviving spouse’s death 

benefit to a beneficiary participant 

account (described in § 1651.19) 

established in the spouse’s name. The 

TSP record keeper will not maintain a 

beneficiary participant account if the 

balance of the beneficiary participant 

account is less than $200 on the date the 

account is established. The TSP record 

keeper also will not transfer this amount 

or pay it by electronic funds transfer. 

Instead, the spouse will receive an 

immediate distribution in the form of a 

check. 

(c) Nonspouse beneficiaries. The TSP 

record keeper will send notice of 

pending payment to each beneficiary. 

Payment will be sent to the address that 

is provided on the participant’s TSP 

designation of beneficiary unless the 

TSP record keeper receives notice of a 

more recent address. All individual 

beneficiaries must provide the TSP 

record keeper with a Social Security 

number. The following additional rules 

apply to payments to nonspouse 

beneficiaries: 

(1) 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. 

(2) 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 

taxpayer identification number must be 

provided for all estates. 

(3) Payment to trust. If payment is to 

a trust, the payment will be made 

payable to the trust and mailed in care 

of the trustee. A taxpayer identification 

number must be provided for the trust. 

(4) Payment to inherited IRA on 

behalf of a nonspouse beneficiary. If 

payment is to an inherited IRA on 

behalf of a nonspouse beneficiary, the 

check will be made payable to the 

account. Information pertaining to the 


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inherited IRA must be submitted by the 

IRA trustee. A payment to an inherited 

IRA will be made only in accordance 

with the rules set forth in 5 CFR 

1650.25. 

(5) Undeliverable payments. If a death 

benefit payment is returned as 

undeliverable, the TSP record keeper 

will attempt to contact the beneficiary. 

If the beneficiary does not respond 

within 90 days, the death benefit 

payment will be forfeited to the TSP. 

The beneficiary can claim the forfeited 

funds, although they will not be 

credited with investment returns. 

(6) Proper payments. A properly paid 

death benefit payment cannot be 

returned to the TSP. 

■ 91. Amend § 1651.16 by revising 

paragraph (c) to read as follows: 

§ 1651.16 Missing and unknown 

beneficiaries. 

* * * * * 

(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 TSP record 

keeper’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 

account is abandoned. The TSP may 

require the beneficiary to apply for the 

death benefit in the form and manner 

prescribed by the TSP record keeper and 

submit proof of identity and 

relationship to the participant. 

■ 92. Amend § 1651.19 by revising 

paragraphs (a), (b), (c)(3) and (4), (e), (g), 

(h), (k), (l), (m) introductory text, (m)(1) 

and (4), and (n) to read as follows: 

§ 1651.19 Beneficiary participant 

accounts. 

* * * * * 

(a) Initial investment allocation. Each 

beneficiary participant account, once 

established, will be allocated to the TSP 

core funds in which the deceased 

participant’s account balance was 

invested on his or her date of death. A 

beneficiary participant may redistribute 

his or her beneficiary participant 

account balance among the TSP core 

funds by making a fund reallocation or 

fund transfer request described in part 

1601, subpart C, of this chapter. A 

beneficiary participant may move a 

portion of his or her beneficiary account 

balance from the TSP core funds to the 

mutual fund window by making a fund 

transfer request described in part 1601, 

subpart F. 

(b) Contributions. A beneficiary 

participant may not make contributions 

or rollovers to his or her beneficiary 

participant account. The TSP record 

keeper will not accept an investment 

election request described in part 1601, 

subpart B, of this chapter for a 

beneficiary participant account. 

(c) * * * 

(3) In the event that a beneficiary 

participant does not withdraw from his 

or her beneficiary participant account 

an amount sufficient to satisfy his or her 

required minimum distribution for the 

year, the TSP record keeper will 

automatically distribute the necessary 

amount on or before the applicable date 

described in paragraph (c)(1) of this 

section. 

(4) The TSP record keeper will 

disburse required minimum 

distributions described in paragraph 

(c)(3) of this section pro rata from the 

beneficiary participant’s traditional 

balance and the beneficiary participant’s 

Roth balance. 

* * * * * 

(e) Ineligibility for certain 

withdrawals. A beneficiary participant 

is ineligible to request the following 

types of withdrawals from his or her 

beneficiary participant account: Agebased withdrawals described in 

§ 1650.31 of this chapter, financial 

hardship withdrawals described in 

§ 1650.32 of this chapter, or loans 

described in part 1655 of this chapter. 

* * * * * 

(g) Rollovers. A beneficiary 

participant may request that the TSP 

record keeper roll over all or a portion 

of an eligible rollover distribution 

(within the meaning of I.R.C. section 

402(c)) from his or her beneficiary 

participant account to a traditional IRA, 

Roth IRA or eligible employer plan 

(including a civilian or uniformed 

services TSP account other than a 

beneficiary participant account) in the 

form and manner prescribed by the TSP 

record keeper. 

(h) Periodic statements. The TSP or its 

record keeper will furnish beneficiary 

participants with periodic statements in 

a manner consistent with part 1640 of 

this chapter. 

* * * * * 

(k) Court orders. Court orders relating 

to a civilian beneficiary participant 

account or uniformed services 

beneficiary participant account shall be 

processed pursuant to the procedures 

set forth in part 1653 of this chapter as 

if all references to a TSP participant are 

references to a beneficiary participant 

and all references to a TSP account or 

account balance are references to a 

beneficiary participant account or 

beneficiary participant account balance. 

Notwithstanding any provision of part 

1653, a payee of a court-ordered 

distribution from a beneficiary 

participant account cannot request a 

rollover of the court-ordered 

distribution to an eligible employer plan 

or IRA. 

(l) Death of beneficiary participant. 

To the extent it is not inconsistent with 

this § 1651.19, a beneficiary participant 

account shall be disbursed upon the 

death of the beneficiary participant in 

accordance with part 1651 as if any 

reference to a participant is a reference 

to a beneficiary participant. For 

example, a beneficiary participant may 

designate a beneficiary for his or her 

beneficiary participant account in 

accordance with §§ 1651.3 and 1651.4. 

No individual who is entitled to a death 

benefit from a beneficiary participant 

account shall be eligible to keep the 

death benefit in the TSP or request that 

the TSP record keeper roll over all or a 

portion of the death benefit to an IRA 

or eligible employer plan. 

(m) Uniformed services beneficiary 

participant accounts. Uniformed 

services beneficiary participant 

accounts are subject to the following 

additional rules and procedures: 

(1) Uniformed services beneficiary 

participant accounts are established and 

maintained separately from civilian 

beneficiary participant accounts. 

Beneficiary participants who have a 

uniformed services beneficiary 

participant account and a civilian 

beneficiary participant account will be 

issued two separate TSP account 

numbers. A beneficiary participant must 

submit separate fund allocation, fund 

transfer, re and/or TSP withdrawal 

requests for each account and submit 

separate beneficiary designations for 

each account; 

* * * * * 

(4) A beneficiary participant may roll 

over all or any portion of an eligible 

rollover distribution (within the 

meaning of I.R.C. section 402(c)) from a 

uniformed services beneficiary 

participant account into a civilian or 

uniformed services TSP participant 

account. However, tax-exempt money 

attributable to combat zone 

contributions cannot be rolled over from 

a uniformed services beneficiary 

participant account to a civilian TSP 

participant account. 

(n) Multiple beneficiary accounts. 

Each beneficiary participant account is 

maintained separately from all other 

beneficiary participant accounts. If an 

individual has multiple beneficiary 


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participant accounts, each of the 

individual’s beneficiary participant 

accounts will have a unique account 

number. A beneficiary participant must 

submit separate fund reallocation, fund 

transfer, and/or TSP withdrawal 

requests and submit separate beneficiary 

designations for each beneficiary 

participant account that the TSP 

maintains for him or her. A beneficiary 

participant account cannot be combined 

with another beneficiary participant 

account. 

PART 1653—COURT ORDERS AND 

LEGAL PROCESSES AFFECTING 

THRIFT SAVINGS PLAN ACCOUNTS 

■ 93. The authority citation for part 

1653 continues to read as follows: 

Authority: 5 U.S.C. 8432d, 8435, 8436(b), 

8437(e), 8439(a)(3), 8467, 8474(b)(5) and 

8474(c)(1). 

§ 1653.1 [Amended] 

■ 94. Amend § 1653.1, in the definition 

of ‘‘TSP investment earnings or 

earnings’’, by removing ‘‘TSP fund’’ and 

adding in its place ‘‘TSP core fund’’. 

■ 95. Amend § 1653.2 by revising 

paragraphs (a)(3)(ii) and (iv) and (b)(1), 

(2), (4), (5), and (7) to read as follows: 

§ 1653.2 Qualifying retirement benefits 

court orders. 

(a) * * * 

(3) * * * 

(ii) A stated percentage of the account; 

or 

* * * * * 

(iv) The following examples would 

qualify to require payment from the 

TSP, although ambiguous or conflicting 

language used elsewhere could cause 

the order to be rejected. 

(A) Example 1. ORDERED: [payee’s 

name, Social Security number (SSN), 

and address] is awarded $ll from the 

[civilian or uniformed services] Thrift 

Savings Plan account of [participant’s 

name, account number or SSN, and 

address]. 

(B) Example 2. ORDERED: [payee’s 

name, SSN, and address] is awarded 

ll % of the [civilian and/or 

uniformed services] Thrift Savings Plan 

account[s] of [participant’s name, 

account number or SSN, and address] as 

of [date]. 

Note 1 to paragraph (a)(3)(iv). The 

following optional language can be used in 

conjunction with any of the above examples. 

FURTHER ORDERED: Earnings will be paid 

on the amount of the entitlement under this 

ORDER until payment is made. 

* * * * * 

(b) * * * 

(2) An order relating to a TSP account 

that contains only nonvested money; 

* * * * * 

(4) An order requiring the TSP to 

make a payment in the future, unless 

the present value of the payee’s 

entitlement can be calculated, in which 

case the TSP will make the payment 

currently; 

(5) An order that does not specify the 

account to which the order applies, if 

the participant has both a civilian TSP 

account and a uniformed services TSP 

account; 

* * * * * 

(7) An order that designates the TSP 

core fund, source of contributions, or 

balance (e.g., traditional, Roth, or taxexempt) from which the payment or 

portions of the payment shall be made. 

■ 96. Revise § 1653.3 to read as follows: 

§ 1653.3 Processing retirement benefits 

court orders. 

(a) The payment of a retirement 

benefits court order from the TSP is 

governed solely by FERSA and by the 

terms of this subpart. The TSP record 

keeper will honor retirement benefits 

court orders properly issued and 

certified by a court (as defined in 

§ 1653.1). However, those courts have 

no jurisdiction over the TSP and the 

TSP cannot be made a party to the 

underlying domestic relations 

proceedings. 

(b) The TSP record keeper will review 

a retirement benefits court order to 

determine whether it is enforceable 

against the TSP only after the TSP 

record keeper has received a complete 

copy of the document. Receipt by an 

employing agency or any other agency 

of the Government does not constitute 

receipt by the TSP record keeper. 

Retirement benefits court orders should 

be submitted to the TSP record keeper 

at the current address as provided at 

https://www.tsp.gov. Receipt by the TSP 

record keeper is considered receipt by 

the TSP. To be complete, a court order 

must be written in English or be 

accompanied by a certified English 

translation and contain all pages and 

attachments; it must also provide (or be 

accompanied by a document that 

provides): 

(1) The participant’s account number 

or Social Security number (SSN); 

(2) The name and last known mailing 

address of each payee covered by the 

order; and 

(3) The payee’s SSN and state of legal 

residence if he or she is the current or 

former spouse of the participant. 

(c) As soon as practicable after the 

TSP record keeper receives a document 

that purports to be a qualifying 

retirement benefits court order, whether 

or not complete, the participant’s 

account will be frozen. After the 

account is frozen, no withdrawals or 

loan disbursements (other than a 

required minimum distribution 

pursuant to section 401(a)(9) of the 

Internal Revenue Code, 26 U.S.C. 

401(a)(9)) will be allowed until the 

account is unfrozen. All other account 

activity will be permitted. 

(d) The following documents do not 

purport to be qualifying retirement 

benefits court orders, and accounts of 

participants to whom such orders relate 

will not be frozen: 

(1) A court order relating to a TSP 

account that has been closed; 

(2) A court order dated before June 6, 

1986; 

(3) A court order that does not award 

all or any part of the TSP account to 

someone other than the participant; and 

(4) A court order that does not 

mention retirement benefits. 

(e) After the participant’s account is 

frozen, the TSP record keeper will 

review the document further to 

determine if it is complete; if the 

document is not complete, it will be 

rejected, the account will be unfrozen, 

all parties will be notified, and no 

further action will be taken with respect 

to the document. 

(f) The TSP record keeper will review 

a complete copy of an order to 

determine whether it is a qualifying 

retirement benefits court order as 

described in § 1653.2. The TSP record 

keeper will mail a decision letter to all 

parties containing the following 

information: 

(1) A determination regarding 

whether the court order is qualifying; 

(2) A statement of the applicable 

statutes and regulations; 

(3) An explanation of the effect the 

court order has on the participant’s TSP 

account; and 

(4) If the qualifying order requires 

payment, the letter will provide: 

(i) An explanation of how the 

payment will be calculated and an 

estimated amount of payment; 

(ii) The anticipated date of payment; 

(iii) Tax and withholding information 

to the person responsible for paying 

Federal income tax on the payment; 

(iv) Information on how to roll over 

the payment to an eligible employer 

plan within the meaning of section 

402(c) of the Internal Revenue Code (26 

U.S.C. 402(c)), traditional IRA, or Roth 

IRA (if the payee is the current or former 

spouse of the participant); and 

(v) Information on how to receive the 

payment through an electronic funds 

transfer (EFT). 

(g)[Reserved] 


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(h) An account frozen under this 

section will be unfrozen as follows: 

(1) If the account was frozen in 

response to an order issued to preserve 

the status quo pending final resolution 

of the parties’ rights to the participant’s 

TSP account, the account will be 

unfrozen if the TSP record keeper 

receives a court order that vacates or 

supersedes the previous order (unless 

the order vacating or superseding the 

order itself qualifies to place a freeze on 

the account). A court order that purports 

to require a payment from the TSP 

supersedes an order issued to preserve 

the status quo, even if it does not qualify 

to require a payment from the TSP; 

(2) If the account was frozen in 

response to an order purporting to 

require a payment from the TSP, the 

freeze will be lifted: 

(i) Once payment is made, if the court 

order is qualifying; or 

(ii) Eighteen (18) months after the date 

of the decision letter if the court order 

is not qualifying. The 18-month period 

will be terminated, and the account will 

be unfrozen, if both parties submit to 

the TSP record keeper a written request 

for such a termination. 

(i) The TSP record keeper will hold in 

abeyance the processing of a courtordered payment if the TSP record 

keeper is notified in writing that the 

underlying court order has been 

appealed, and that the effect of the filing 

of the appeal is to stay the enforceability 

of the order. 

(1) In the notification, the TSP record 

keeper must be provided with proper 

documentation of the appeal and 

citations to legal authority, which 

address the effect of the appeal on the 

enforceability of the underlying court 

order. 

(i) If the TSP record keeper receives 

proper documentation and citations to 

legal authority which demonstrate that 

the underlying court order is not 

enforceable, the TSP record keeper will 

inform the parties that the payment will 

not occur until resolution of the appeal, 

and the account will remain frozen for 

loans and withdrawals. 

(ii) In the absence of proper 

documentation and citations to legal 

authority, the TSP record keeper will 

presume that the provisions relating to 

the TSP in the court order remain valid 

and will proceed with the payment 

process. 

(2) The TSP record keeper must be 

notified in writing of the disposition of 

the appeal before the freeze will be 

removed from the participant’s account 

or a payment will be made. The 

notification must include a complete 

copy of an order from the appellate 

court explaining the effect of the appeal 

on the participant’s account. 

(j) Multiple qualifying court orders 

relating to the same TSP account and 

received by the TSP record keeper will 

be processed as follows: 

(1) If the orders make awards to the 

same payee or payees and do not 

indicate that the awards are cumulative, 

the TSP record keeper will only honor 

the order bearing the latest effective 

date. 

(2) If the orders relate to different 

former spouses of the participant and 

award survivor annuities, the TSP 

record keeper will honor them in the 

order of their effective dates. 

(3) If the orders relate to different 

payees and award fixed dollar amounts, 

percentages of an account, or portions of 

an account calculated by the application 

of formulae, the orders will be honored: 

(i) In the order of their receipt by the 

TSP record keeper, if received by the 

TSP record keeper on different days; or 

(ii) In the order of their effective 

dates, if received by the TSP record 

keeper on the same day. 

(4) In all other cases, the TSP record 

keeper will honor multiple qualifying 

court orders relating to the same TSP 

account in the order of their receipt by 

the TSP record keeper. 

■ 97. Amend § 1653.4 by revising 

paragraphs (b), (c), (f) introductory text, 

(f)(1), (f)(3) introductory text, (f)(3)(i), (g) 

introductory text, and (g)(2) to read as 

follows: 

§ 1653.4 Calculating entitlements. 

* * * * * 

(b) If the court order awards a 

percentage of an account as of a specific 

date, the payee’s entitlement will be 

calculated based on the account balance 

as of that date. If the date specified in 

the order is not a business day, the TSP 

record keeper will use the participant’s 

account balance as of the last preceding 

business day. 

(c) If the court order awards a 

percentage of an account but does not 

contain a specific date as of which to 

apply that percentage, the TSP record 

keeper will use the liquidation date. 

* * * * * 

(f) The payee’s entitlement will be 

credited with TSP investment earnings 

as described: 

(1) The entitlement calculated under 

this section will not be credited with 

TSP investment earnings unless the 

court order specifically provides 

otherwise. The court order may not 

specify a rate for earnings. 

* * * * * 

(3) If earnings are awarded, the TSP 

record keeper will calculate the amount 

to be awarded by: 

(i) Determining the payee’s award 

amount (e.g., the percentage of the 

participant’s account); 

* * * * * 

(g) The TSP record keeper will 

estimate the amount of a payee’s 

entitlement when it prepares the 

decision letter and will recalculate the 

entitlement at the time of payment. The 

recalculation may differ from the initial 

estimation because: 

* * * * * 

(2) After the estimate of the payee’s 

entitlement is prepared, the TSP record 

keeper may process account 

transactions that have an effective date 

on or before the date used to compute 

the payee’s entitlement. Those 

transactions will be included when the 

payee’s entitlement is recalculated at 

the time of payment; and 

* * * * * 

■ 98. Amend § 1653.5 by revising 

paragraphs (a)(1) and (2), (d), (e), (g), (h), 

(k), (m), and (n) to read as follows: 

§ 1653.5 Payment. 

(a) * * * 

(1) As soon as administratively 

practicable after the date of the decision 

letter when the payee is the current or 

former spouse of the participant, but in 

no event earlier than 30 days after the 

date of the decision letter. 

(2) As soon as administratively 

practicable after the date of the decision 

letter when the payee is someone other 

than the current or former spouse of the 

participant. 

* * * * * 

(d) Payment will be made pro rata 

from the participant’s traditional and 

Roth balances. The distribution from the 

traditional balance will be further pro 

rated between the tax-deferred balance 

and tax-exempt balance. The payment 

from the Roth balance will be further 

pro rated between contributions in the 

Roth balance and earnings in the Roth 

balance. In addition, all payments will 

be distributed pro rata from all TSP core 

funds in which the participant’s account 

is invested. All pro rated amounts will 

be based on the balances in each fund 

or source of contributions on the day the 

disbursement is made. The TSP record 

keeper will not honor provisions of a 

court order that require payment to be 

made from a specific TSP core fund, 

source of contributions, or balance. 

(e) Payment will be made only to the 

person or persons specified in the court 

order. However, if the court order 

specifies a third-party mailing address 

for the payment, the TSP record keeper 

will mail to the address specified any 

portion of the payment that is not rolled 

over to a traditional IRA, Roth IRA, or 


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eligible employer plan within the 

meaning of section 402(c) of the Internal 

Revenue Code (26 U.S.C. 402(c)). 

* * * * * 

(g) If there are insufficient funds to 

pay each court order payee, payment 

will be made as follows: 

(1) If the order specifies an order of 

precedence for the payments, the TSP 

record keeper will honor it. 

(2) If the order does not specify an 

order of precedence for the payments, 

the TSP record keeper will pay a current 

or former spouse first and a dependent 

second. 

(h) If the payee dies before a payment 

is disbursed, payment will be made to 

the estate of the payee, unless otherwise 

specified by the court order. A 

distribution to the estate of a deceased 

court order payee will be reported as 

income to the decedent’s estate. If the 

participant dies before payment is 

made, the order will be honored so long 

as it is submitted to the TSP record 

keeper before the TSP account has been 

closed. 

* * * * * 

(k) If a court ordered payment is 

returned as undeliverable, the TSP 

record keeper will attempt to locate the 

payee by writing to the address 

provided on the court order. If the payee 

does not respond within 90 days, the 

funds will be forfeited to the TSP. The 

payee can claim the forfeited funds, 

although they will not be credited with 

TSP investment fund returns. 

* * * * * 

(m) A payee who is a current or 

former spouse of the participant may 

elect to roll over a court-ordered 

payment to a traditional IRA, eligible 

employer plan within the meaning of 

section 402(c) of the Internal Revenue 

Code (26 U.S.C. 402(c)), or Roth IRA. 

Any election permitted by this 

paragraph (m) must be made pursuant to 

the rules described in 5 CFR 1650.25. 

(n) If a court order payee who is the 

current or former spouse of the 

participant has their own TSP account 

(other than a beneficiary participant 

account), the payee can request that the 

TSP record keeper roll over the courtordered payment to the payee’s TSP 

account in accordance with the rules 

described in 5 CFR 1650.25. However, 

any pro rata share attributable to taxexempt contributions cannot be rolled 

over; instead, it will be paid directly to 

the payee. 

■ 99. Add § 1653.6 to subpart A to read 

as follows: 

§ 1653.6 Fees. 

The TSP record keeper will charge a 

participant a $600.00 court order 

processing fee as follows: 

(a) Upon receipt of a complete court 

order document (whether draft or final) 

and prior to reviewing the order to 

determine whether it is a qualifying 

retirement benefits court order, the fee 

will be deducted from his or her TSP 

account balance on a pro rata basis from 

the participant’s traditional and Roth 

balances. The portion of the fee 

deducted from the traditional balance 

will be further pro rated between the 

tax-deferred balance and tax-exempt 

balance. The portion of the fee deducted 

from the Roth balance will be further 

pro rated between contributions in the 

Roth balance and earnings in the Roth 

balance. In addition, the entire fee will 

be distributed pro rata from all TSP core 

funds in which the participant’s account 

is invested. All pro rated amounts will 

be based on the balances in each fund 

or source of contributions on the day the 

fee is deducted; 

(b) The fee will be charged only once 

per court order. However, it will not be 

refunded in the event that the court 

order is never determined to be a 

qualifying retirement benefits court 

order; and 

(c)(1) If the court order: 

(i) Is determined to be a qualifying 

retirement benefits court order; and 

(ii) Explicitly requires the fee to be 

split between the participant and the 

payee; 

(2) The TSP record keeper will deduct 

the payee’s portion of the fee from his 

or her payment and credit that amount 

back to the participant’s TSP account 

balance. 

■ 100. Amend § 1653.12 as follows: 

■ a. In paragraph (a), remove ‘‘TSP’’ and 

add in its place ‘‘TSP record keeper’’; 

■ b. Revise paragraph (c)(2); and 

■ c. In paragraph (c)(6), remove ‘‘TSP 

Fund’’ and add in its place ‘‘TSP core 

fund’’. 

The revision reads as follows: 

§ 1653.12 Qualifying legal processes. 

* * * * * 

(c) * * * 

(2) A legal process relating to a TSP 

account that contains only nonvested 

money; 

* * * * * 

■ 101. Revise § 1653.13 to read as 

follows: 

§ 1653.13 Processing legal processes. 

(a) The payment of legal processes 

from the TSP is governed solely by the 

Federal Employees’ Retirement System 

Act, 5 U.S.C. chapter 84, and by the 

terms of this subpart. Although the TSP 

record keeper will honor legal processes 

properly issued by a competent 

authority, those entities have no 

jurisdiction over the TSP and the TSP 

cannot be made a party to the 

underlying proceedings. 

(b) The TSP record keeper will review 

a legal process to determine whether it 

is enforceable against the TSP only after 

the TSP record keeper has received a 

complete copy of the document. Receipt 

by an employing agency or any other 

agency of the Government does not 

constitute receipt by the TSP. Legal 

processes should be submitted to the 

TSP record keeper at the current address 

as provided at https://www.tsp.gov. 

Receipt by the TSP record keeper is 

considered receipt by the TSP. To be 

complete, a legal process must contain 

all pages and attachments; it must also 

provide (or be accompanied by a 

document that provides): 

(1) The participant’s account number 

or Social Security number (SSN); 

(2) The name and last known mailing 

address of each payee covered under the 

order; and 

(3) The SSN and state of legal 

residence of the payee if he or she if the 

current or former spouse of the 

participant. 

(c) As soon as practicable after the 

TSP record keeper receives a document 

that purports to be a qualifying legal 

process, whether or not complete, the 

participant’s account will be frozen. 

After the account is frozen, no TSP 

withdrawal or loan disbursements will 

be allowed until the account is 

unfrozen. All other account activity will 

be permitted, including contributions, 

loan repayments, adjustments, 

investment elections, fund reallocations, 

and fund transfers. 

(d) The following documents will not 

be treated as purporting to be a 

qualifying legal processes, and accounts 

of participants to whom such orders 

relate will not be frozen: 

(1) A document that does not indicate 

on its face (or accompany a document 

that establishes) that it has been issued 

by a competent authority; 

(2) A legal process relating to a TSP 

account that has been closed; and 

(3) A legal process that does not relate 

either to the TSP or to the participant’s 

retirement benefits. 

(e) After the participant’s account is 

frozen, the TSP record keeper will 

review the document further to 

determine if it is complete; if the 

document is not complete, it will be 

rejected, the account will be unfrozen, 

all parties will be notified, and no 

further action will be taken with respect 

to the document. 


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(f) As soon as practicable after receipt 

of a complete copy of a legal process, 

the TSP record keeper will review it to 

determine whether it is a qualifying 

legal process as described in § 1653.12. 

The TSP record keeper will mail a 

decision letter to all parties containing 

the same information described at 

§ 1653.3(f). 

(g) [Reserved] 

(h) An account frozen under this 

section will be unfrozen as follows: 

(1) If the account was frozen pursuant 

to a legal process requiring the TSP to 

freeze the participant’s account in 

anticipation of an order to pay from the 

account, the account will be unfrozen if 

any one of the following events occurs: 

(i) As soon as practicable after the 

TSP record keeper receives a complete 

copy of an order vacating or superseding 

the preliminary order (unless the order 

vacating or superseding the preliminary 

order qualifies to place a freeze on the 

account); 

(ii) Upon payment pursuant to the 

order to pay from the account, if the 

TSP record keeper determines that the 

order is qualifying; or 

(iii) As soon as practicable after the 

TSP issues a decision letter informing 

the parties that the order to pay from the 

account is not a qualifying legal process; 

(2) If the account was frozen after the 

TSP record keeper received a document 

that purports to be a legal process 

requiring payment from the 

participant’s account, the account will 

be unfrozen: 

(i) Upon payment pursuant to a 

qualifying legal process; or 

(ii) As soon as practicable after the 

TSP record keeper informs the parties 

that the document is not a qualifying 

legal process. 

(i) The TSP record keeper will hold in 

abeyance the processing of a payment 

required by legal process if the TSP 

record keeper is notified in writing that 

the legal process has been appealed, and 

that the effect of the filing of the appeal 

is to stay the enforceability of the legal 

process. The notification must be 

accompanied by the documentation and 

citations to legal authority described at 

§ 1653.3(i). 

(j) Multiple qualifying legal processes 

relating to the same TSP account and 

received by the TSP record keeper will 

be processed as follows: 

(1) If the legal processes make awards 

to the same payee or payees and do not 

indicate that the awards are cumulative, 

the TSP record keeper will only honor 

the legal process bearing the latest 

effective date. 

(2) If the legal processes relate to 

different payees, the legal process will 

be honored: 

(i) In the order of their receipt by the 

TSP record keeper, if received by the 

TSP record keeper on different days; or 

(ii) In the order of their effective 

dates, if received by the TSP record 

keeper on the same day. 

■ 102. Add § 1653.16 to subpart B to 

read as follows: 

§ 1653.16 Fees. 

The TSP record keeper will charge a 

participant a $600.00 legal process 

processing fee as follows: 

(a) Upon receipt of a complete legal 

process document (whether draft or 

final) and prior to reviewing order to 

determine whether it is a qualifying 

legal process, the fee will be deducted 

from his or her TSP account balance on 

a pro rata basis from the participant’s 

traditional and Roth balances. The 

portion of the fee deducted from the 

traditional balance will be further pro 

rated between the tax-deferred balance 

and tax-exempt balance. The portion of 

the fee deducted from the Roth balance 

will be further pro rated between 

contributions in the Roth balance and 

earnings in the Roth balance. In 

addition, the entire fee will be 

distributed pro rata from all TSP core 

funds in which the participant’s account 

is invested. All pro rated amounts will 

be based on the balances in each fund 

or source of contributions on the day the 

fee is deducted; and 

(b) The fee will be charged only once 

per legal process. However, it will not 

be refunded in the event that the court 

order is never determined to be a 

qualifying legal process. 

§ 1653.22 [Amended] 

■ 103. Amend § 1653.22 by removing 

‘‘TSP’’ and adding in its place ‘‘TSP 

record keeper’’. 

§ 1653.23 [Amended] 

■ 104. Amend § 1653.23 by removing 

‘‘TSP’’ and adding in its place ‘‘TSP 

record keeper’’. 

§ 1653.32 [Amended] 

■ 105. Amend § 1653.32 as follows: 

■ a. In paragraph (a), remove ‘‘TSP’’ and 

add in its place ‘‘TSP record keeper’’; 

■ b. In paragraph (c)(2), remove ‘‘the 

TSP’’ and add in its place ‘‘the TSP 

record keeper’’; and 

■ c. In paragraph (c)(6), remove ‘‘TSP 

Fund’’ and add in its place ‘‘TSP core 

fund’’. 

§ 1653.33 [Amended] 

■ 106. Amend § 1653.33 as follows: 

■ a. In paragraph (a), remove ‘‘TSP’’ and 

add in its place ‘‘TSP record keeper’’; 

■ b. In paragraph (c)(2), remove ‘‘the 

TSP’’ and add in its place ‘‘the TSP 

record keeper’’; and 

■ c. In paragraph (c)(6), remove ‘‘TSP 

Fund’’ and add in its place ‘‘TSP core 

fund’’. 

■ 107. Revise § 1653.34 to read as 

follows: 

§ 1653.34 Processing Federal tax levies 

and criminal restitution orders. 

(a) The payment of tax levies and 

criminal restitution orders from the TSP 

is governed solely by the Federal 

Employees’ Retirement Systems Act, 5 

U.S.C. chapter 84, and by the terms of 

this subpart. Although the TSP record 

keeper will honor tax levies or criminal 

restitution orders properly issued, those 

entities have no jurisdiction over the 

TSP and the TSP cannot be made a 

party to the underlying proceedings. 

(b) The TSP record keeper will review 

a tax levy or criminal restitution order 

to determine whether it is enforceable 

against the TSP record keeper only after 

it has received a complete copy of the 

document. Receipt by an employing 

agency or any other agency of the 

Government does not constitute receipt 

by the TSP record keeper. Tax levies 

and criminal restitution orders should 

be submitted to the TSP record keeper 

at the current address as provided at 

https://www.tsp.gov. Receipt by the TSP 

record keeper is considered receipt by 

the TSP. To be complete, a tax levy or 

criminal restitution order must meet all 

the requirements of § 1653.32 or 

§ 1653.33; it must also provide (or be 

accompanied by a document or 

enforcement letter that provides): 

(1) The participant’s TSP account 

number or Social Security number 

(SSN); and 

(2) The name and mailing address of 

the payee. 

(c) As soon as practicable after the 

TSP record keeper receives a document 

that purports to be a qualifying tax levy 

or criminal restitution order, the 

participant’s account will be frozen. 

After the participant’s account is frozen, 

no TSP withdrawal or loan 

disbursements will be allowed until the 

account is unfrozen. All other account 

activity will be permitted, including 

contributions, loan repayments, 

adjustments, investment elections, fund 

reallocations, and fund transfers. Once a 

disbursement from the account is made 

in accordance with the restitution order 

or levy, the hold will be removed from 

the participant’s account. 

(d) As soon as practicable after receipt 

of a complete copy of a tax levy or 

criminal restitution order, the TSP 

record keeper will review it to 

determine whether it is qualifying as 


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described in § 1653.32 or § 1653.33. The 

TSP record keeper will mail a decision 

letter to all parties containing the 

following information: 

(1) A determination regarding 

whether the restitution order or levy is 

qualifying; 

(2) A statement of the applicable 

statutes and regulations; 

(3) An explanation of the effect the 

restitution order or levy has on the 

participant’s TSP account; and 

(4) If the qualifying restitution order 

or levy requires payment, the letter will 

provide: 

(i) An explanation of how the 

payment will be calculated and an 

estimated amount of payment; 

(ii) The anticipated date of payment. 

§ 1653.36 [Amended] 

■ 108. Amend § 1653.36 as follows 

■ a. In paragraph (a), remove ‘‘TSP’’; 

■ b. In paragraph (e), remove ‘‘TSP 

Funds’’ and add in its place ‘‘TSP core 

funds’’; and 

■ c. In paragraph (h), remove ‘‘TSP’’ and 

add in its place ‘‘TSP record keeper’’. 

PART 1655—LOAN PROGRAM 

■ 109. The authority citation for part 

1655 continues to read as follows: 

Authority: 5 U.S.C. 8432d, 8433(g), 

8439(a)(3) and 8474. 

■ 110. Amend § 1655.1, in paragraph 

(b), as follows: 

■ a. Add in alphabetical order a 

definition for ‘‘Cure period’’; 

■ b. Remove the definition of ‘‘Date of 

application’’; 

■ c. Add in alphabetical order 

definitions for ‘‘Deemed distribution’’, 

‘‘Loan direct debit repayment’’, and 

‘‘Loan offset’’; and 

■ d. Remove the definition of ‘‘Taxable 

distribution’’. 

The additions read as follows: 

§ 1655.1 Definitions. 

* * * * * 

(b) * * * 

Cure period means the period set forth 

at § 1655.14(e). 

Date of request means the day on 

which the TSP record keeper receives 

the loan request in the form and manner 

prescribed by the TSP record keeper. 

Deemed distribution means a deemed 

distribution under Internal Revenue 

Code section 72(p) and the regulations 

promulgated thereunder. Also referred 

to as a loan taxation or taxed loan, it 

means the amount of outstanding 

principal and interest on a loan that 

must be reported to the Internal 

Revenue Service as taxable income as a 

result of the failure of a participant who 

has not separated from Government 

service to: 

(i) Make timely loan repayments 

before the end of the cure period; or 

(ii) Repay the loan in full by the 

maximum term limit. 

* * * * * 

Loan direct debit repayment means a 

loan repayment made directly from a 

participant’s personal savings or 

checking account. 

* * * * * 

Loan offset means a loan offset under 

Internal Revenue Code section 72(p) and 

the regulations promulgated thereunder. 

Also referred to as a loan foreclosure, it 

means the amount of outstanding 

principal and interest on a loan that 

must be reported to the Internal 

Revenue Service as taxable income as 

the result of the failure of a participant 

who has separated from Government 

service to repay his or her loan in full 

or begin making repayments by the 

deadline imposed by the TSP record 

keeper. 

* * * * * 

■ 111. Revise § 1655.2 to read as 

follows: 

§ 1655.2 Eligibility for loans. 

A participant can apply for a TSP 

general purpose or residential loan if: 

(a) More than 30 business days have 

elapsed since the participant has repaid 

in full any TSP loan; 

(b) The participant is in pay status; 

(c) The participant is eligible to 

contribute to the TSP; and 

(d) The participant has at least $1,000 

in employee contributions and 

attributable earnings in his or her 

account. Paragraph (b) of this section 

shall not apply to loan requests made 

during a Government shutdown by 

participants who are furloughed or 

excepted from furlough due to the 

Government shutdown. 

§ 1655.3 [Amended] 

■ 112. Amend § 1655.3 by removing 

‘‘record keeper’’. 

■ 113. Revise § 1655.4 to read as 

follows: 

§ 1655.4 Number of loans. 

A participant may have no more than 

two loans outstanding from his or her 

TSP account at any time. No more than 

one outstanding loan from an account 

may be a residential loan. A participant 

with both a civilian TSP account and a 

uniformed services TSP account may 

have two outstanding loans from each 

account. 

■ 114. Revise § 1655.5 to read as 

follows: 

§ 1655.5 Loan repayment period. 

(a) Minimum. The minimum 

repayment period a participant may 

request for a general purpose loan is 12 

months of scheduled payments. The 

minimum repayment period a 

participant may request for a residential 

loan is 61 months of scheduled 

payments. 

(b) Maximum. The maximum 

repayment period a participant may 

request for a general purpose loan is 60 

months of scheduled payments. The 

maximum repayment period a 

participant may request for a residential 

loan is 180 months years of scheduled 

payments. 

■ 115. Amend § 1655.6 by revising 

paragraph (b)(2) and adding paragraph 

(d) to read as follows: 

§ 1655.6 Amount of loan. 

* * * * * 

(b) * * * 

(2) 50 percent of the participant’s 

vested account balance that is 

attributable to employee contributions 

and attributable earnings (including any 

outstanding loan balance) or $10,000, 

whichever is greater, minus any 

outstanding loan balance; or 

* * * * * 

(d) Any amount invested through the 

mutual fund window at the time the 

participant makes a loan request will 

not be considered for purposes of 

determining either the minimum or 

maximum loan amounts. 

■ 116. Amend § 1655.7 by revising 

paragraph (a) to read as follows: 

§ 1655.7 Interest rate. 

(a) Except as provided in paragraph 

(b) of this section, loans will bear 

interest at the monthly G Fund interest 

rate established by the Department of 

the Treasury in effect on the 15th of the 

month prior to the date the loan request 

is made. 

* * * * * 

§ 1655.8 [Removed and Reserved] 

■ 117. Remove and reserve § 1655.8. 

■ 118. Amend § 1655.9 as follows: 

■ a. In paragraph (b), remove ‘‘TSP 

Fund’’ and add in its place ‘‘TSP core 

fund’’; 

■ b. In paragraph (c), remove ‘‘TSP 

Funds’’ and add in its place ‘‘TSP core 

funds’’ and remove ‘‘TSP Fund’’ and ad 

in its place ‘‘TSP core fund’’; 

■ c. In paragraph (d), remove 

‘‘contribution allocation’’ and add in its 

place ‘‘investment election’’ and remove 

‘‘TSP Fund’’ and add in its place ‘‘TSP 

core fund’’; and 

■ d. Add paragraph (e). 

The addition reads as follows: 

§ 1655.9 Effect of loans on individual 

account. 

* * * * * 


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(e) Loan disbursements will not be 

made from any amounts invested 

through the mutual fund window and 

loan payments will not be credited to a 

participant’s mutual fund window 

account. 

■ 119. Revise § 1655.10 to read as 

follows: 

§ 1655.10 Loan request process. 

(a) Any participant may apply for a 

loan by submitting a completed TSP 

loan request in the form and manner 

prescribed by the TSP record keeper. 

(b) If a participant has a uniformed 

services account and a civilian account, 

a separate loan request must be made for 

each account. 

■ 120. Revise § 1655.11 to read as 

follows: 

§ 1655.11 Loan acceptance. 

If the requirements set forth in 

§§ 1655.2, 1655.4, and 1655.6(a) are 

satisfied, the TSP record keeper will 

nevertheless reject a loan request if: 

(a) The participant has failed to 

provide all required information on the 

loan request; 

(b) The participant has a pending loan 

request or in-service withdrawal 

request; or 

(c) A hold has been placed on the 

account pursuant to 5 CFR 1653.3(c). 

■ 121. Revise § 1655.12 to read as 

follows: 

§ 1655.12 Loan agreement. 

(a) Upon determining that a loan 

request meets the requirements of this 

part, the TSP record keeper will provide 

the participant with the terms and 

conditions of the loan. 

(b) By accepting the loan agreement, 

the participant agrees to be bound by all 

of its terms and conditions, agrees to 

repay the loan by payroll deduction, 

and certifies, under penalty of perjury, 

to the truth and completeness of all 

statements made in the loan request and 

loan agreement to the best of his or her 

knowledge. 

(c) For loan requests not completed on 

the TSP website, the TSP record keeper 

must receive the completed loan 

agreement (including any required 

supporting documentation) before the 

expiration date stated on the loan 

agreement or the agreement will not be 

processed. 

(d) The signed loan agreement must 

be accompanied by: 

(1) In the case of a residential loan, 

supporting materials that document the 

purchase or construction of the 

residence and the amount requested (as 

described in § 1655.20); and 

(2) Any other information that the 

Executive Director may require. 

(e) A participant may request, in the 

form and manner prescribed by the TSP 

record keeper, that the loan be 

disbursed by direct deposit to a 

checking or savings account maintained 

by the participant in a financial 

institution. 

§ 1655.13 [Amended] 

■ 122. Amend § 1655.13 as follows: 

■ a. In paragraph (b)(2), remove ‘‘TSP’’ 

and add in its place ‘‘TSP record 

keeper’’; 

■ b. Remove paragraph (b)(5); and 

■ c. In paragraph (e), remove ‘‘60’’ and 

add in its place ‘‘90’’ and remove ‘‘TSP’’ 

and add in its place ‘‘TSP record 

keeper’’. 

■ 123. Revise § 1655.14 to read as 

follows: 

§ 1655.14 Loan payments. 

(a) In the case of a participant who 

has not separated from Government 

service, loan payments must be made 

through payroll deduction in 

accordance with the loan agreement. 

Once loan payments begin, the 

employing agency cannot terminate the 

payroll deductions at the employee’s 

request, unless the TSP or its record 

keeper instructs it to do so. 

(b) The participant may make 

additional payments by mailing a check 

or guaranteed funds to the TSP record 

keeper or by enrolling in loan direct 

debit repayments from his or her 

personal savings or checking account. If 

the TSP record keeper receives a 

payment that repays the outstanding 

loan amount and overpays the loan by 

$10.00 or more, the overpayment will be 

refunded to the participant. 

Overpayments of less than $10.00 will 

be applied to the participant’s account 

and will not be refunded. If a loan 

overpayment refund is returned as 

undeliverable, the TSP record keeper 

will attempt to locate the participant. If 

the participant does not respond within 

90 days, the overpayment refund will be 

forfeited to the TSP. The participant can 

claim the forfeited funds, although they 

will not be credited with TSP 

investment fund returns. 

(c) The initial payment on a loan is 

due on or before the 60th day following 

the loan issue date. Interest accrues on 

the loan from the date of issuance. 

(d) Subsequent payments are due at 

regular intervals as prescribed in the 

loan agreement, or most recent 

amortization, according to the 

participant’s pay cycle. 

(e) In the case of a participant who 

has not separated from Government 

service, if a payment is not made when 

due, the TSP record keeper will notify 

the participant of the missed payment 

and the participant must make up the 

payment in full. The participant’s makeup payment must be in the form of a 

check, guaranteed funds, or a one-time 

payment via loan direct debit from his 

or her personal savings or checking 

account. If the participant does not 

make up all missed payments by the 

end of the calendar quarter following 

the calendar quarter in which the first 

payment was missed, the TSP record 

keeper will declare the loan to be a 

deemed distribution in accordance with 

§ 1655.15(a). The declaration of a 

deemed distribution does not relieve the 

participant of his or her obligation to 

repay the amount. 

(f) Interest will accrue on all missed 

payments and will be included in the 

calculation of any deemed distribution 

subsequently declared in accordance 

with § 1655.15(a). Interest will also 

accrue on payments missed while a 

participant is in nonpay status and on 

any deemed distribution until it is 

repaid in full. 

(g) A participant who has separated 

from Government service with an 

outstanding loan balance may continue 

making loan repayments via check, 

guaranteed funds, or loan direct debit 

repayments. If a separated participant 

does not begin making post-separation 

loan repayments or pay off the loan in 

full by the deadline imposed by the TSP 

record keeper, the TSP record keeper 

will declare the outstanding loan 

balance and accrued interest to be a loan 

offset in accordance with § 1655.15(b). 

In the case of a separated participant 

who commences post-separation loan 

repayments, if a payment is not made 

when due, the TSP record keeper will 

notify the separated participant of the 

missed payment and he or she must 

make up the payment in full. The makeup payment must be in the form of a 

check, guaranteed funds, or a one-time 

payment via loan direct debit from his 

or her personal savings or checking 

account. If the participant does not 

make up all missed payments by the 

end of the calendar quarter following 

the calendar quarter in which the first 

payment was missed, the TSP record 

keeper will declare the outstanding loan 

balance and accrued interest to be a loan 

offset in accordance with § 1655.15(b). 

■ 124. Revise § 1655.15 to read as 

follows: 

§ 1655.15 Deemed Distributions and Loan 

Offsets. 

(a) The TSP record keeper will ensure 

that all requirements set forth in section 

72(p) of the Internal Revenue Code and 

the regulations promulgated thereunder 

with respect to deemed distributions are 

satisfied. 


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(1) The TSP record keeper will 

declare the entire unpaid balance of an 

outstanding loan (including interest) to 

be a deemed distribution if: 

(i) The participant misses two or more 

loan payments or the participant’s 

payments are made for less than the 

required amount, and the delinquency 

is not cured within the cure period; 

(ii) The loan is not repaid in full by 

the maximum term limit; or 

(iii) A participant is in a confirmed 

nonpay status for a period of one year 

or more, has not advised the TSP record 

keeper that he or she is serving on active 

military duty, and payments are not 

resumed after the participant is notified 

the loan has been reamortized. 

(2) Loan taxation does not relieve a 

participant of his or her obligation to 

repay the taxed loan amount. A 

participant may repay a taxed loan in 

full (including accrued interest) via 

check or money order up until the time 

he or she separates from Government 

service. The tax basis in a participant’s 

TSP account will be adjusted to reflect 

the repayment of a taxed loan. 

(3) If a participant does not repay a 

taxed loan: 

(i) His or her account balance will be 

permanently reduced; and 

(ii) The taxed loan will count as one 

of the two loans the participant is 

permitted per account and is treated as 

an outstanding loan balance when 

calculating the participant’s maximum 

loan amount. 

(b) The TSP record keeper will ensure 

that all requirements set forth in section 

72(p) of the Internal Revenue Code and 

the regulations promulgated thereunder 

with respect to loan offsets are satisfied. 

(1) The TSP record keeper will 

declare a loan offset in the following 

situations: 

(i) A participant separates from 

Government service and does not begin 

making loan repayments or repay the 

outstanding loan principal and interest 

in full within the period specified by 

the notice to the participant from the 

TSP record keeper explaining the 

participant’s repayment options; or 

(ii) The participant dies. 

(2) [Reserved] 

(c) If a deemed distribution or loan 

offset occurs in accordance with 

paragraph (a) or (b) of this section, as 

applicable, the TSP record keeper will 

notify the participant of the amount and 

date of the distribution. The TSP record 

keeper will report the distribution to the 

Internal Revenue Service as income for 

the year in which it occurs. 

(d) If a participant dies and a loan 

offset occurs in accordance with 

paragraph (b) of this section, the TSP 

record keeper will notify the 

participant’s estate of the amount and 

date of the distribution. Neither the 

estate nor any other person, including a 

beneficiary, may repay the loan of a 

deceased participant, nor can the funds 

be returned to the TSP. 

(e) If, because of Board or TSP record 

keeper error, a TSP loan is declared a 

deemed distribution or loan offset under 

circumstances that make such a 

declaration inconsistent with this part, 

or inconsistent with other procedures 

established by the Board or TSP record 

keeper in connection with the TSP loan 

program, the distribution will be 

reversed. The participant will be 

provided an opportunity to reinstate 

loan payments or repay in full the 

outstanding balance on the loan. 

■ 125. Revise § 1655.16 to read as 

follows: 

§ 1655.16 Reamortization. 

(a) When a participant’s pay cycle 

changes for any reason, he or she must 

notify the TSP record keeper of the 

change in the form and manner 

prescribed by the TSP record keeper. 

Upon notification, the participant’s loan 

will be reamortized to adjust the 

scheduled payment to an equivalent 

amount in the new pay cycle. If the new 

pay cycle results in fewer payments per 

year and the participant does not 

reamortize the loan, the loan may be 

declared a deemed distribution 

pursuant to § 1655.15(a)(1). 

(b) Upon reamortization, the 

outstanding principal balance remains 

the same. Any accrued interest is paid 

off first before payments are applied to 

principal and current interest. 

(c) The interest rate on a reamortized 

loan will be the same as the interest rate 

on the original loan. 

■ 126. Revise § 1655.17 to read as 

follows: 

§ 1655.17 Prepayment. 

(a) A participant may repay a loan in 

full, without a penalty, at any time 

before the declaration of a deemed 

distribution or loan foreclosure under 

§ 1655.15. Repayment in full means 

receipt by the TSP record keeper of a 

payment, by check or guaranteed funds 

made payable to the Thrift Savings Plan 

or via loan direct debit repayments, of 

all principal and interest due on the 

loan. 

(b) If a participant returns a loan 

check to the TSP record keeper, it will 

be treated as a repayment; however, 

additional interest may be owed, which, 

if not paid, could result in a deemed 

distribution. The loan, even though 

repaid, will also be taken into account 

in determining the maximum amount 

available for future loans, in accordance 

with § 1655.6(b). 

(c) The amount outstanding on a loan 

can be obtained from the TSP website, 

the ThriftLine, or by a written request to 

the TSP record keeper. 

■ 127. Amend § 1655.18 by revising 

paragraph (d) to read as follows: 

§ 1655.18 Spousal rights. 

* * * * * 

(d) Certification of truthfulness. By 

completing a loan request, the 

participant certifies, under penalty of 

perjury, that all information provided to 

the TSP record keeper during the loan 

process is true and complete, including 

statements concerning the participant’s 

marital status, the spouse’s email or 

physical address at the time the 

application is filed, or the current 

spouse’s consent to the loan. 

■ 128. Revise § 1655.20 to read as 

follows: 

§ 1655.20 Residential loans. 

(a) A residential loan will be made 

only for the purchase or construction of 

the primary residence of the participant, 

or for the participant and his or her 

spouse, and for the amount required to 

close on the purchase. The participant 

must actually bear all or part of the cost 

of the purchase. If the participant 

purchases a primary residence with 

someone other than his or her spouse, 

only the portion of the purchase costs 

that is borne by the participant will be 

considered in making the loan. A 

residential loan will not be made for the 

purpose of paying off an existing 

mortgage or otherwise providing 

financing for a previously purchased 

primary residence. 

(b) The participant’s primary 

residence is his or her principal 

residence. A primary residence may 

include a house, a townhouse, a 

condominium, a share in a cooperative 

housing corporation, or a mobile home; 

a primary residence does not include a 

second home or vacation home. A 

participant cannot have more than one 

primary residence. 

(c) Purchase of a primary residence 

means acquisition of the residence 

through the exchange of cash or other 

property or through the total 

construction of a new residence. A 

residential loan will not be made for a 

lease-to-buy option, unless the option to 

buy is being exercised and the 

documentation states that the funds are 

being used to purchase the primary 

residence. Construction of an addition 

to or the renovation of a residence or the 

purchase of land only does not 

constitute the purchase of a primary 

residence. 


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Federal Register / Vol. 87, No. 100 / Tuesday, May 24, 2022 / Rules and Regulations 31695 

(d) The amount required to close on 

the purchase of a primary residence 

does not include points or loan 

origination fees charged for a loan. In 

addition, real estate taxes cannot be 

included. 

(e) The documentation required for a 

loan under this section is as follows: 

(1) For all purchases, except for 

construction, a signed sale/purchase 

contract/settlement offer or agreement 

or addendum; or 

(2) For construction, a signed 

builder’s agreement/contract; and 

(3) For requests including closing 

costs and/or settlement charges, a loan 

estimate/worksheet/statement/closing 

disclosure from a mortgage company. 

(f) The documentation provided 

under this section must meet the 

requirements set forth by the TSP record 

keeper. 

■ 129. Revise § 1655.21 to read as 

follows: 

§ 1655.21 Loan fee. 

The TSP will charge a participant a 

$50.00 loan fee when it disburses a 

general purpose loan and a $100.00 loan 

fee when it disburses a residential loan 

and will deduct the applicable fee from 

the proceeds of the loan. 

PART 1690—THRIFT SAVINGS PLAN 

■ 130. The authority citation for part 

1690 continues to read as follows: 

Authority: 5 U.S.C. 8474. 

■ 131. Amend § 1690.1 as follows: 

■ a. Remove the definitions of ‘‘Account 

or individual account’’ and ‘‘Account 

balance’’; 

■ b. Remove the definition of ‘‘Agency 

Automatic (1%) Contributions’’ and add 

in its place a definition for ‘‘Agency 

automatic (1%) contributions’’; 

■ c. Remove the definition of 

‘‘Contribution allocation’’; 

■ d. Revise the definitions of ‘‘Employer 

contributions’’ and ‘‘In-service 

withdrawal request’’; 

■ e. Add in alphabetical order 

definitions for ‘‘Investment election’’, 

‘‘L Fund’’, and ‘‘Post-employment 

distribution request’’; 

■ f. Remove the definition of ‘‘Postemployment withdrawal request’’; 

■ g. Revise the definitions of ‘‘Roth 

balance’’, paragraph (1)(iii) of the 

definition of ‘‘Roth initiation’’, the 

definition of ‘‘Source of contributions’’, 

paragraph (1) of the definition of ‘‘Taxdeferred balance’’, and the definition of 

‘‘Traditional balance’’; 

■ h. Remove the definition of ‘‘Trusteeto-trustee transfer or transfer’’; 

■ i. Add in alphabetical order a 

definition for ‘‘TSP core fund’’; 

■ j. Remove the definition of ‘‘TSP 

Fund’’; 

■ k. Revise the definition of ‘‘TSP 

record keeper’’; and 

■ l. Remove the definition of ‘‘TSP 

website’’ and add a definition for ‘‘TSP 

website’’ in its place. 

The revisions and additions read as 

follows: 

§ 1690.1 Definitions. 

* * * * * 

Agency automatic (1%) contributions 

means any contributions made under 5 

U.S.C. 8432(c)(1) and (c)(3). It also 

includes service automatic (1%) 

contributions made under 5 U.S.C. 

8440e(e)(3)(A). 

Agency matching contributions means 

any contributions made under 5 U.S.C. 

8432(c)(2). It also includes service 

matching contributions under 5 U.S.C. 

8440e(e)(3)(B). 

* * * * * 

Employer contributions means agency 

automatic (1%) contributions under 5 

U.S.C. 8432(c)(1), 8432(c)(3), or 5 U.S.C. 

8440e(e)(3)(A) and agency matching 

contributions under 5 U.S.C. 8432(c)(2) 

or 5 U.S.C. 8440e(e)(3)(B). 

* * * * * 

In-service withdrawal request means a 

properly completed withdrawal election 

for either an age-based in-service 

withdrawal under 5 CFR 1650.41 or a 

financial hardship in-service 

withdrawal under 5 CFR 1650.42. 

Investment election means the 

participant’s apportionment of his or 

her future contributions, loan payments, 

and rollovers from eligible employer 

plans or traditional IRAs among the TSP 

core funds. 

L Fund means the Lifecycle Funds 

described in 5 CFR part 1601, subpart E. 

* * * * * 

Post-employment distribution request 

means a properly completed 

distribution withdrawal election under 

5 CFR 1650.24. 

* * * * * 

Roth balance means the sum of: 

(1) Roth contributions and associated 

earnings; and 

(2) Amounts rolled over to the TSP 

from a Roth account maintained by an 

eligible employer plans and earnings on 

those amounts. 

* * * * * 

Roth initiation date * * * 

(1) * * * 

(iii) The date used, by a plan from 

which the participant directly rolled 

over Roth money into the TSP, to 

measure the participant’s Roth 5 year 

non-exclusion period. 

* * * * * 

Source of contributions means 

traditional contributions, Roth 

contributions, agency automatic (1%) 

contributions, or agency matching 

contributions. All amounts in a 

participant’s account are attributed to 

one of these four sources. Catch-up 

contributions, rollovers, and loan 

payments are included in the traditional 

contribution source or the Roth 

contribution source. 

* * * * * 

Tax-deferred balance * * * 

(1) All contributions and rollovers in 

a participant’s traditional balance that 

would otherwise be includible in gross 

income if paid directly to the 

participant and earnings on those 

amounts; and 

* * * * * 

Traditional balance means the sum 

of: 

(1) Tax-deferred contributions and 

associated earnings; 

(2) Tax-deferred amounts rolled over 

into the TSP and associated earnings; 

(3) Tax-exempt contributions and 

associated earnings; 

(4) Agency matching contributions 

and associated earnings; 

(5) Agency automatic (1%) 

contributions and associated earnings. 

* * * * * 

TSP core fund means an investment 

fund established pursuant to 5 U.S.C. 

8438(b)(1)(A)–(E) and (c)(2). 

TSP record keeper means the entities 

the Board engages to perform record 

keeping and administration services for 

the Thrift Savings Plan. 

TSP website means the internet 

location(s) maintained by the TSP and/ 

or its record keeper, which contain(s) 

information about the TSP and by 

which TSP participants may, among 

other things, access their accounts by 

computer. 

* * * * * 

■ 132. Revise § 1690.12 to read as 

follows: 

§ 1690.12 Power of attorney. 

(a) A participant or beneficiary can 

appoint an agent to conduct business 

with the TSP on his or her behalf by 

using a power of attorney (POA). The 

agent is called an attorney-in-fact. The 

TSP record keeper must approve a POA 

before the agent can conduct business 

with the TSP; however, the TSP record 

keeper will accept a document that was 

signed by the agent before the TSP 

record keeper approved the POA. The 

TSP record keeper will approve a POA 

if it meets the following conditions: 

(1) The POA must give the agent 

either general or specific powers, as 

explained in paragraphs (b) and (c) of 

this section; 

(2) The POA must be signed by the 

participant; 


jspears on DSK121TN23PROD with RULES2
31696 Federal Register / Vol. 87, No. 100 / Tuesday, May 24, 2022 / Rules and Regulations 

(3) The POA must provide the names 

and addresses of the participant and the 

agent; 

(4) The POA must meet the state law 

requirements of the participant’s state of 

domicile as determined by the address 

on file with the TSP record keeper; 

(5) The POA must be a complete 

document; and 

(6) The POA must be submitted to the 

TSP record keeper for approval. 

(b) A general POA gives an agent 

unlimited authority to conduct business 

with the TSP, including the authority to 

sign any TSP-related document. 

Additional information regarding 

general powers of attorney can be 

accessed at https://www.tsp.gov. 

(c) A specific power of attorney gives 

an agent the authority to conduct 

specific TSP transactions. A specific 

POA must expressly describe the 

authority it grants. Additional 

information regarding specifical powers 

of attorney, as well as a sample form, 

can be accessed at https://www.tsp.gov. 

■ 133. Revise § 1690.13 to read as 

follows: 

§ 1690.13 Guardianship and 

conservatorship orders. 

(a) A court order can authorize an 

agent to conduct business with the TSP 

on behalf of an incapacitated participant 

or beneficiary. The agent is called a 

guardian or conservator and the 

incapacitated person is called a ward. 

The TSP record keeper must approve a 

court order before an agent can conduct 

business with the TSP; however, the 

TSP record keeper will accept a 

document that was signed by the agent 

before the TSP record keeper approved 

the court order. The TSP record keeper 

will approve a court order appointing an 

agent if the following conditions are 

met: 

(1) A court of competent jurisdiction 

(as defined at § 1690.1) must have 

issued the court order; 

(2) The court order must give the 

agent either general or specific powers, 

as explained in paragraphs (b) and (c) of 

this section; and 

(3) The agent must demonstrate that 

he or she meets any precondition 

specified in the court order, such as a 

bonding requirement. 

(b) A general grant of authority gives 

a guardian or conservator unlimited 

authority to conduct business with the 

TSP, including the authority to sign any 

TSP-related document. By way of 

example, an order gives a general grant 

authority by appointing a ‘‘guardian of 

the ward’s estate,’’ by permitting a 

guardian to ‘‘conduct business 

transactions’’ for the ward, or by 

authorizing a guardian to care for the 

ward’s ‘‘personal property’’ or ‘‘Federal 

Government retirement benefits.’’ 

(c) A specific grant of authority gives 

a guardian or conservator authority to 

conduct specific TSP transactions. Such 

an order must expressly describe the 

authority it grants. By way of example, 

an order may authorize an agent to 

‘‘obtain information about the ward’s 

TSP account’’ or ‘‘borrow or withdraw 

funds from the ward’s TSP account.’’ 

■ 134. Amend § 1690.14 by revising 

paragraph (b) to read as follows: 

§ 1690.14 Checks made payable to the 

Thrift Savings Plan. 

* * * * * 

(b) TSP payment address. The TSP 

record keeper has established an 

address for the receipt of specified TSP 

payments. The TSP record keeper will 

not answer correspondence mailed to 

that payment address. 

■ 135. Revise § 1690.15 to read as 

follows: 

§ 1690.15 Freezing an account— 

administrative holds. 

(a) The TSP record keeper may freeze 

(e.g., place an administrative hold on) a 

participant’s account for any of the 

following reasons: 

(1) Pursuant to a qualifying retirement 

benefits court order as set forth in part 

1653 of this chapter; 

(2) Pursuant to a request from the 

Department of Justice under the 

Mandatory Victims Restitution Act; 

(3) Upon the death of a participant; 

(4) Upon suspicion or knowledge of 

fraudulent account activity or identity 

theft; 

(5) In response to litigation pertaining 

to an account; 

(6) For operational reasons (e.g., to 

correct a processing error or to stop 

payment on a check when account 

funds are insufficient); 

(7) Pursuant to a written request from 

a participant made in the manner 

prescribed by the TSP record keeper; 

and 

(8) For any other reason necessary to 

ensure the integrity of TSP accounts or 

compliance with law. 

(b) [Reserved] 

[FR Doc. 2022–10875 Filed 5–23–22; 8:45 am] 

BILLING CODE 6760–01–P 


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