19990 Federal Register / Vol. 60, No. 77 / Friday, April 21, 1995 / Rules and Regulations

FEDERAL RETIREMENT THRIFT

INVESTMENT BOARD

5 CFR Part 1620

Thrift Savings Plan; Continuation of

Eligibility

AGENCY: Federal Retirement Thrift

Investment Board.

ACTION: Interim rule with request for

comments.

SUMMARY: The Executive Director of the

Federal Retirement Thrift Investment

Board (Board) is publishing interim

regulations concerning the eligibility of

certain individuals to have make-up

contributions credited to their Thrift

Savings Plan (TSP) accounts and, in

certain cases, restore withdrawn funds

and reestablish loan accounts. Section 4

of the Uniformed Services Employment

and Reemployment Rights Act amends

Title 5 of the United States Code to add

a new section 8432b that addresses TSP

benefits that apply to any Federal

employee whose release from military

service, discharge from hospitalization

related to that service, or other similar

event making the individual eligible to

seek restoration from leave-without-pay

status or reemployment under 38 U.S.C.

Chapter 43, occurs on or after August 2,

1990. This interim rule governs

retroactive participation in the TSP by

these employees.

DATES: The interim rule is effective

August 2, 1990. Comments must be

received by June 21, 1995.

ADDRESSES: Comments may be sent to:

John J. O’Meara, Federal Retirement

Thrift Investment Board, 1250 H Street

NW., Washington, DC 20005.

FOR FURTHER INFORMATION CONTACT:

John J. O’Meara (202) 942–1660.

SUPPLEMENTARY INFORMATION: These

regulations are being given retroactive

effect to August 2, 1990, in order to

provide eligible employees an

opportunity to seek and obtain TSP

benefits from the effective date of Public

Law 103–353.

These regulations include provisions

to ensure that all employees are given

the opportunity to make up any TSP

contributions that were not made to

their TSP accounts because they

separated (or were in a leave-withoutpay status) from Federal civilian

employment to perform military service.

Employing agencies are required to

deposit the appropriate amount of

Agency Matching Contributions to the

accounts of those employees covered by

the Federal Employees’ Retirement

System (FERS) who elect to make up

missed contributions. In addition,

employing agencies are required to

deposit to the accounts of eligible FERS

employees an amount equal to one

percent of their basic pay for the

retroactive period. Subject to de

minimis rules, lost earnings will also be

paid by the employing agencies on

retroactive agency contributions that are

reported for investment.

Employing agencies are required to

notify the TSP recordkeeper if an

employee’s Agency Automatic (1%)

Contributions and associated earnings

were forfeited because the employee

was not vested when he or she

separated to perform military service.

The employing agency will request that

these funds be restored.

Employees who are subject to the TSP

automatic cashout provisions (those

employees whose account balances

were $3,500 or less) and employees who

separated without eligibility for

retirement benefits and prior to March

1995 withdrew amounts greater than

$3,500, may elect to have the separation

for military service treated as if it had

never occurred. These employees will

be allowed to return amounts to the

Thrift Savings Plan that represent the

full amount of the withdrawal. In

addition, in certain cases, if a taxable

distribution was declared on a Thrift

Savings Plan loan and the employee

returns the full amount of the

withdrawal to the Thrift Savings Plan,

the taxable distribution that was

declared on a Thrift Savings Plan loan

may be reversed. In this case, the

employee will be able to resume regular

loan payments.

Regulatory Flexibility Act

I certify that these regulations will not

have a significant economic impact on

a substantial number of small entities.

They will affect only Federal employees

who leave, or have left, Federal civilian

service to perform military service and

have, under certain conditions, returned

to Federal civilian service.

Paperwork Reduction Act

I certify that these regulations do not

require additional reporting under the

Paperwork Reduction Act.

Waiver of Notice of Proposed

Rulemaking and 30-Day Delay of

Effective Date

Under 5 U.S.C. 553(b)(B) and (d)(3), I

find that good cause exists for waiving

the general notice of proposed

rulemaking and for making these

regulations effective in less than 30

days. It is necessary for these

regulations to be effective as of August

2, 1990, which is the day on which

employees eligible under the regulations

were first eligible to obtain retroactive

Thrift Savings Plan benefits.

List of Subjects in 5 CFR Part 1620

Employee benefit plans, Government

employees, Retirement, Pensions.

Dated: April 13, 1995.

Roger W. Mehle,

Executive Director, Federal Retirement Thrift

Investment Board.

Accordingly, 5 CFR Part 1620 is

amended as follows:

PART 1620—CONTINUATION OF

ELIGIBILITY

1. The authority citation for Part 1620

is revised to read as follows:

Authority: 5 U.S.C. 8474 and 8432b; Pub.

L. 99–591, 100 Stat. 3341; Pub. L. 100–238,

101 Stat. 1744; Pub. L. 100–659, 102 Stat.

3910.

2. Part 1620 is amended by adding

subpart H, consisting of §§ 1620.100

through 1620.107, to read as follows:

Subpart H—Military Service

Sec.

1620.100 Scope.

1620.101 Definitions.

1620.102 Processing contribution elections.

1620.103 Processing lost earnings.

1620.104 Agency payments to

recordkeeper; agency ultimately

responsible.

1620.105 Restoring forfeited Agency

Automatic (1%) Contributions.

1620.106 Returning withdrawals.

1620.107 Agency responsibilities.

Subpart H—Military Service

§ 1620.100 Scope.

(a) General. To be covered by this

subpart, an employee must have:

(1) Been separated from Federal

civilian service or entered leavewithout-pay status in order to perform

military service;

(2) Been reemployed; and

(3) Become eligible to seek

reemployment by virtue of a release

from military service, discharge from

hospitalization, or other similar event

that occurred on or after August 2, 1990.

(b) Other rules. Except as provided in

this part, the rules governing

contributions to the TSP set forth in 5

CFR Part 1600 will apply to persons

reemployed under this subpart.

§ 1620.101 Definitions.

As used in this subpart:

(a) Basic pay has one of two

meanings:

(1) For the portion of the retroactive

period when an employee did not

receive a Federal civilian salary, the rate

of basic pay is that which would have

been payable to the employee if the
Federal Register / Vol. 60, No. 77 / Friday, April 21, 1995 / Rules and Regulations 19991

employee had remained continuously

employed in the position which he or

she last held before separating (or

entering leave-without-pay status) to

perform military service;

(2) For the portion of the retroactive

period that occurs after the employee is

reemployed, his or her actual basic pay

will be used to calculate contributions.

(b) Current contributions means those

contributions that are made

prospectively for any pay period after

the employee has been reemployed.

(c) Employee means any Federal

employee whose release from military

service, discharge from hospitalization,

or other similar event making the

individual eligible to seek restoration or

reemployment under 38 U.S.C. chapter

43 occurs on or after August 2, 1990.

(d) Leave-without-pay means a

temporary nonpay status and absence

from duty (including military furlough)

to perform military service.

(e) Recordkeeper means the

organization designated by the Federal

Retirement Thrift Investment Board as

the Thrift Savings Plan’s recordkeeper.

(f) Reemployed or reemployment

means reemployed in (or restored to) a

position pursuant to 38 U.S.C. chapter

43, which is subject to 5 U.S.C. chapter

84 or which entitles the employee to

contribute to the Thrift Savings Plan

pursuant to 5 U.S.C. 8351.

(g) Retroactive period means the

period for which an employee is

entitled to make up missed Employee

Contributions and to receive retroactive

Agency Automatic (1%) Contributions

and Agency Matching Contributions.

(1) Beginning of retroactive period.

For an employee who was eligible to

make contributions when military

service began, the retroactive period

begins on the date following the

effective date of separation or, in the

case of leave-without-pay, the date the

employee enters leave-without-pay

status. For an employee who was not

eligible to make contributions when

military service began, the retroactive

period begins on the first day of the first

pay period in the election period during

which the employee would have been

eligible to make contributions had the

employee remained in Federal civilian

service.

(2) End of retroactive period. The

retroactive period ends on the earlier of

the following two dates: the date before

the first day of the first election period

during which a contribution election

could have been made effective after

reemployment, or the last day of the pay

period before the pay period during

which routine current contributions are

begun after the employee is reemployed

(or restored). If an employee who was

making contributions when he or she

separated elects not to make routine

current contributions, the ending date of

the retroactive period is the last day of

the pay period during which the

employee elects to terminate

contributions.

(h) Separation or separated means the

period an employee was separated from

Federal civilian service (or entered a

leave-without-pay status) in order to

perform military service.

§ 1620.102 Processing contribution

elections.

(a) Current contribution elections.

Immediately upon reemployment, an

employee’s agency will give an eligible

employee the opportunity to submit a

contribution election form (Form TSP–

1) to make current contributions. The

effective date of the current Form TSP–

1 will be the first day of the first full pay

period in the most recent TSP election

period. If the employee is reemployed

during a TSP Open Season but before

the election period, he or she can also

submit an election form that will

become effective the first day of the first

full pay period in the following election

period.

(b) Retroactive contribution elections.

(1) An employee has the following

options for making retroactive

contributions:

(i) If the employee had a valid

contribution election form (Form TSP–

1) on file when he or she separated, that

election form will be reinstated for

purposes of retroactive contributions

upon the employee’s reemployment,

unless a new contribution election form

is submitted to terminate all retroactive

contributions or those contributions that

would have been made from the date of

separation through the end of the Open

Season that occurred immediately after

the separation.

(ii) Instead of making the

contributions for the retroactive period

under the reinstated contribution

election form, the employee may submit

a new election form for any Open

Season that occurred during the

retroactive period. However, the

allocation election on each Form TSP–

1 for the retroactive period must be the

same as the allocation election on the

current Form TSP–1.

(2) An employee who terminated

contributions within two months before

entering military service will be eligible

to make a retroactive contribution

election effective for the first Open

Season that occurs after the effective

date that the contributions were

terminated. This election may be made

even if the termination was made

outside of an Open Season.

(3) Employees may not make any

retroactive contributions that will cause

them to exceed the Internal Revenue

Service’s elective deferral limit. If an

employee’s current contributions, when

added to the make-up contributions,

will exceed the annual elective deferral

limit, the employing agency must

suspend the make-up contributions in

accordance with 5 CFR 1605.2(b)(2)(ii).

§ 1620.103 Processing lost earnings.

(a) Agency Automatic (1%)

Contributions. Subject to the de minimis

rules in 5 CFR part 1606, employing

agencies are required to pay lost

earnings on the Agency Automatic (1%)

Contributions that are made for the

retroactive period.

(b) Agency Matching Contributions.

Subject to the de minimis rules in 5 CFR

part 1606, employing agencies are

required to pay lost earnings for the

agency contributions that match makeup Employee Contributions.

(c) Make-up Employee Contributions.

Employing agencies may not pay lost

earnings for make-up Employee

Contributions associated with the

retroactive period.

(d) Lost earnings calculation. Lost

earnings will be calculated on all

retroactive agency contributions using

the rates of return for the Government

Securities Investment Fund (G Fund),

unless the employee submitted one or

more interfund transfer requests during

the period of separation. In the case of

interfund transfer requests, the earnings

will be calculated using the G Fund

rates of return until the first interfund

transfer was processed. The

contribution that is subject to lost

earnings will be moved to the

investment fund(s) the employee

requested and lost earnings will be

calculated based on the earnings for that

fund(s). The amount of lost earnings

calculated will be posted to the

investment fund(s) to which the

contribution was moved. If there were

no interfund transfers processed during

the lost earnings calculation period, the

amount of lost earnings calculated will

be posted to the employee’s G Fund

account.

§ 1620.104 Agency payments to

recordkeeper; agency ultimately

chargeable.

(a) Agency making payments to

recordkeeper. The current employing

agency will always be the agency

responsible for making payments to the

recordkeeper for all contributions (both

employee and agency) and lost earnings,

regardless of whether some of that

expense is ultimately chargeable to a

prior employing agency.
19992 Federal Register / Vol. 60, No. 77 / Friday, April 21, 1995 / Rules and Regulations

(b) Agency ultimately chargeable with

expense. The agency ultimately

chargeable with the expense of agency

contributions and lost earnings

attributable to the retroactive period is

ordinarily the agency that reemployed

the employee. However, if an employee

changed agencies during the period

between the date of reemployment and

October 13, 1994, the employing agency

as of October 13, 1994, is the agency

ultimately chargeable with the expense.

(c) Reimbursement by agency

ultimately chargeable with expense. If

the agency that made the payments to

the recordkeeper for agency

contributions and lost earnings is not

the agency ultimately chargeable with

that expense, the agency that made the

payments to the recordkeeper may, but

is not required to, obtain reimbursement

from the agency ultimately chargeable

with the expense.

§ 1620.105 Restoring forfeited Agency

Automatic (1%) Contributions.

If an employee’s Agency Automatic

(1%) Contributions were forfeited

because the employee was not vested

when he or she separated to perform

military service, the employee must

notify the employing agency that a

forfeiture occurred. Employing agencies

will submit a written request to the

recordkeeper to restore any Agency

Automatic (1%) Contributions that were

forfeited from an employee’s account

because he or she was not vested at the

time the employee separated to perform

military service.

§ 1620.106 Returning withdrawals.

(a) General. Employees who are

subject to the TSP automatic cashout

provisions (employees whose account

balances were $3,500 or less) and

employees who separated without

eligibility for retirement benefits and

prior to March 1995 withdrew amounts

greater than $3,500, may elect to have

the separation for military service

treated as if it had never occurred.

These employees will be allowed to

return amounts to the Thrift Savings

Plan that represent the full amount of

the withdrawal. Eligible employees

must notify the recordkeeper by April

21, 1996, or one year from the date of

reemployment, whichever is later, of

their intent to return the withdrawn

funds.

(b) Documentation. An eligible

employee who elects to return the full

amount of a withdrawal under this

section must provide documentation of

reemployment to the recordkeeper. The

recordkeeper will notify the employee

of the amount of funds to be returned

and the deadline for making that

payment. The employee must provide

the funds in a single payment to the

recordkeeper within 90 days after the

recordkeeper sends the employee the

notice advising of the amount and

procedures for returning the funds.

(c) Earnings. Employees will not

receive retroactive earnings on any

amounts withdrawn that they later

return to their accounts.

(d) Taxable distribution reversed.

Employees who return withdrawn funds

under this section may be eligible to

have a taxable distribution associated

with a loan reversed. At the time the

recordkeeper notifies the employee of

the amount required to return the

withdrawn funds, it will notify the

employee whether he or she is eligible

to have a taxable distribution reversed.

§ 1620.107 Agency responsibilities.

(a) General. Each employing agency

must establish procedures for

implementing these regulations. These

procedures must at a minimum, require

agency personnel to identify and notify

eligible employees concerning their

options under these regulations and tell

them the time period within which

those options must be exercised. For

employees who are reemployed on or

after August 2, 1990, and before April

21, 1995, the agency must perform these

functions by June 20, 1995. For

employees who are reemployed on or

after April 21, 1995, employing agencies

must perform these functions within 60

days of the employee’s reemployment.

An employee must submit a written

request to the employing agency to

make up Employee Contributions for the

retroactive period on or before April 21,

1996, or one year from the date the

employee was reemployed, whichever is

later, or forfeit the right to make up

these contributions.

(b) Agency records; procedure for

reimbursement. The agency that is

making the payments to the

recordkeeper for all contributions (both

employee and agency) and lost earnings

will obtain from prior employing

agencies whatever information is

necessary in order to make accurate

payments. If a prior employing agency

is ultimately chargeable under

§ 1620.104(b) for all or part of the

expense of agency contributions and

lost earnings, the agency making the

payments to the recordkeeper will

determine the procedure to follow in

order to collect amounts owed to it by

the agency ultimately chargeable with

the expense.

(c) Payment schedule; matching

contributions report. Agencies will, with

the employee’s consent, prepare a

payment schedule for making

retroactive Employee Contributions. In

addition, the employing agencies will

calculate the Agency Matching

Contributions that will be reported for

investment to the recordkeeper in equal

installments for each pay period

covered by the payment schedule. The

employing agency may impose limits on

the maximum amount of time during

which an employee may make up the

missed contributions. This maximum

amount of time may be no less than two

times and no more than four times the

number of pay periods that were

covered by the period of missed

contributions. An employee may decide

to terminate the make-up contributions;

however, such a decision is irrevocable.

(d) Agency Automatic (1%)

Contributions. Employing agencies must

calculate the Agency Automatic (1%)

Contributions for all reemployed FERS

employees, report these contributions to

the recordkeeper, and submit lost

earnings records to cover the retroactive

period by June 20, 1995, or 60 days from

the date of reemployment, whichever is

later.

(e) Forfeiture restoration. When

notified by an employee that a forfeiture

of the Agency Automatic (1%)

Contributions occurred after the

employee separated to perform military

service, the employing agency must

submit a written request to the

recordkeeper to restore these funds.

(f) Thrift Savings Plan Service

Computation Date. The agencies must

review the Thrift Savings Plan Service

Computation Date for all reemployed

Federal Employees’ Retirement System

employees for purposes of crediting

military service performed during the

separation period. If the period of

military service has not been credited,

the agency must submit a corrected

Thrift Savings Plan Service

Computation Date to the recordkeeper.

[FR Doc. 95–9606 Filed 4–20–95; 8:45 am]

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