2872 Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Rules and Regulations

FEDERAL RETIREMENT THRIFT

INVESTMENT BOARD

5 CFR Part 1620

Thrift Savings Plan Participation for

Certain Employees of the District of

Columbia Financial Responsibility and

Management Authority

AGENCY: Federal Retirement Thrift

Investment Board.

ACTION: Interim rule with request for

comments.

SUMMARY: The Executive Director of the

Federal Retirement Thrift Investment

Board is publishing interim regulations

to implement section 102(e) of the

District of Columbia Financial

Responsibility and Management

Assistance Act of 1995 (Act). Under this

Act, persons who separate from Federal

employment and who are employed

within two months by the District of

Columbia Financial Responsibility and

Management Authority may elect to

participate in the Federal retirement

system in which they last participated

before separating from Federal service.

These regulations address participation

in the Thrift Savings Plan (TSP) by

eligible employees who elect Federal

retirement coverage. They do not apply

to eligibility to participate in retirement

programs administered by the Office of

Personnel Management (OPM).

DATES: This interim rule is effective

January 29, 1996.Comments must be

received on or before March 29, 1996.

ADDRESSES: Comments may be sent to:

Patrick J. Forrest, Federal Retirement

Thrift Investment Board, 1250 H Street,

NW., Washington, D.C. 20005.

FOR FURTHER INFORMATION CONTACT:

Patrick J. Forrest, (202) 942–1662.

SUPPLEMENTARY INFORMATION: The

Federal Retirement Thrift Investment

Board (Board) administers the Thrift

Savings Plan (TSP), which was

established by the Federal Employees’

Retirement System Act of 1986

(FERSA), Pub. L. 99–335, 100 Stat. 514

(1986), which has been codified, as

amended, largely at 5 U.S.C. 8401–8479

(1994). The TSP is a tax-deferred

retirement savings plan for Federal

employees that is similar to cash or

deferred arrangements established

under section 401(k) of the Internal

Revenue Code.

The District of Columbia Financial

Responsibility and Management

Assistance Act of 1995 (Act), Pub. L.

104–8, section 101, 109 Stat. 97, 100,

established the District of Columbia

Financial Responsibility and

Management Assistance Authority

(Authority) as an entity within the

Government of the District of Columbia.

The Act provides that individuals who

commence employment with the

Authority within two months of

separating from Federal service may

elect to retain their participation in the

‘‘retirement system in which the

individual last participated before so

separating * * *.’’ Id., section

102(e)(1)(A), 109 Stat. at 102. Although

this language is not explicit with respect

to the TSP, the Act contemplates TSP

participation because the TSP is a

component of the Federal Employees’

Retirement System (FERS) and the Civil

Service Retirement System (CSRS).

Section 1653.113 of these interim

regulations provides that the Authority

must notify an employee of his or her

right to participate in the TSP at the

time the employee is required to be

notified of his or her right to elect

Federal retirement coverage. Because

the TSP is an important part of the

Federal employee’s total retirement

package, an employee should be advised

of eligibility for TSP participation in

order to make an educated decision

whether to elect Federal retirement

coverage.

Section 1620.114 provides that some

employees may be eligible to contribute

to the TSP immediately upon

employment with the Authority, while

others would be eligible to participate in

the TSP during subsequent TSP open

seasons.

Section 1620.114(a) pertains to

employees who leave Federal service

and are employed by the Authority with

a break in service of less than 31 full

calendar days. These employees are

treated as though they transferred from

one Federal agency to another with no

break in service. Therefore, if such an

employee had a valid TSP contribution

election in effect on the date the

employee separated from the Federal

service, the employee’s contributions to

the TSP will continue without

interruption pursuant to the election

that was in effect upon separation. If

such an employee was eligible to

participate in the TSP prior to

separation but did not have a valid TSP

election in effect on the date that he or

she separated from the Federal service,

the employee will be eligible to

contribute to the TSP during the first

open season beginning after the date he

or she commences employment with the

Authority. If such an employee was not

previously eligible to participate in the

TSP, the employee will become eligible

during the second open season

beginning after the date he or she began

to work for the Federal Government, not

with the Authority.

Section 1620.114(b) pertains to

employees who were separated from

Federal service for 31 or more full

calendar days but less than 2 months

before they were employed by the

Authority. Section 1620.114(b)(1)

provides that if such an employee was

previously eligible to participate in the

TSP, he or she will be eligible to

contribute to the TSP during the first

open season beginning after the date he

or she is employed by the Authority.

Section 1620.114(b)(2) provides that if

the employee was not previously

eligible to participate in the TSP, he or

she will be eligible to contribute to the

TSP during the second open season

beginning after the date he or she is

employed by the Authority.

Section 1620.114(b)(3) provides that if

an employee covered under section

1620.114(b)(1) or (b)(2) commences

employment with the Authority during

an open season but before the election

period (the last month of the open

season), that open season is considered

the employee’s first open season.

These rules are applied in the

following examples:

Example Number 1: Assume an

employee leaves Federal service and 40

days later, on December 15, 1995 (which

is during an open season), commences

employment with the Authority.

Assume also that the employee elects

retirement coverage under CSRS.

Assume further that the employee was

eligible to contribute to the TSP at the

time she separated from the Federal

agency. Because she commenced

employment with the Authority after 31

or more full calendar days, but within

2 months after separating from Federal

service, section 1620.114(b) applies.

Because she previously was eligible to

contribute to the TSP, section

1620.114(b)(1) applies. Therefore, the

employee is eligible to contribute to the

TSP during the first open season

beginning after the date the employee

commenced employment with the

Authority. Furthermore, because the

employee was hired during a TSP open

season, but not during the last month of

an open season, section 1620.114(b)(3)

provides that the open season during

which she commences employment

with the Authority is her first open

season. Accordingly, the employee

would be eligible to contribute to the

TSP beginning in the first full pay

period in January 1996. (Note that under

section 1620.115(a), if the employee was

covered by FERS, she would be entitled

to Agency Automatic (1%)

Contributions beginning in the first full

pay period in January 1996, whether or

not she elected to contribute to the TSP;

and that she would be entitled to
Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Rules and Regulations 2873

matching contributions if she did elect

to contribute.)

Example Number 2: Assume an

employee begins working for the

Federal Government on February 28,

1995, and is recruited by the Authority

to begin working on October 30, 1995.

Assume further that the employee

separates from Federal service one week

before commencing service with the

Authority, and that he elects continued

retirement coverage under FERS once he

starts working for the Authority.

Because he commenced employment

with the Authority with less than a 31

day break in service, 1620.114(a)

applies. Because he was not previously

eligible to contribute to the TSP, section

1620.114(a)(3) applies and provides that

he is eligible to contribute to the TSP

during the second open season

beginning after the date he first began

working for the Federal Government.

The employee’s first open season was

the May 15, 1995, to July 31, 1995, open

season, during which he was employed

by the Federal Government. His second

open season is the November 15, 1995,

to January 31, 1996, open season, during

which he will be employed by the

Authority. Therefore, the employee can

contribute to the TSP in the first full pay

period in January 1996. (Also note that

under section 1620.115(a), because the

employee is covered by FERS, he would

be entitled to Agency Automatic (1%)

Contributions beginning in the first full

pay period in January 1996, whether or

not he elected to contribute; and that he

would be entitled to matching

contributions if he did elect to

contribute.)

Section 1620.117 provides that an

employee of the Authority who elects

Federal retirement coverage must notify

the TSP recordkeeper that he or she has

commenced employment with the

Authority if the employee separated

from Federal service with an

outstanding TSP loan. It may be

possible for such employees to continue

their TSP loan payments and thereby

avoid repaying in full or having a

taxable distribution declared, if their

loan payments resume before their loan

accounts are closed.

Regulatory Flexibility Act

I certify that these regulations will not

have a significant economic impact on

a substantial number of small entities

because the regulations will affect only

a small number of former Federal

employees and a single agency of the

Government of the District of Columbia.

Paperwork Reduction Act

I certify that these regulations do not

require additional reporting under the

criteria of the Paperwork Reduction Act

of 1980.

Waiver of Notice of Proposed

Rulemaking and 30-Day Delay of

Effective Date

Under 5 U.S.C. 553 (b)(3)(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. Elections made under these

regulations will affect qualifying

employees’ participation in the TSP

retroactive to their entry on duty with

the Authority. The intent of the

legislation is to allow eligible employees

to participate in the TSP as soon as

practicable. A delay in the effective date

of these regulations would be contrary

to the intent of the legislation and to the

public interest because it would delay

the election opportunity for eligible

employees during the initial staffing of

the Authority.

Unfunded Mandates Reform Act of

1995

Pursuant to the Unfunded Mandates

Reform Act of 1995, Pub. L. 104–4,

section 201, 109 Stat. 48, 64, the effect

of this regulation on State, local, and

tribal governments and on the private

sector has been assessed. This

regulation will not compel the

expenditure in any one year of $100

million or more by any State, local, or

tribal governments in the aggregate or by

the private sector. Therefore, a

statement under section 202, 109 Stat.

48, 64–65, is not required.

List of Subjects in 5 CFR Part 1620

District of Columbia, Employment

benefit plans, Government employees,

Retirement, Pensions.

Federal Retirement Thrift Investment Board.

Roger W. Mehle,

Executive Director.

For the reasons set out in the

preamble, 5 CFR Chapter VI is amended

as set forth below:

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; Pub. L. 104–4, 109 Stat. 48.

2. Subpart I is added to part 1620 to

read as follows:

Subpart I—Certain Employees of the

District of Columbia Financial

Responsibility and Management Assistance

Authority.

Sec.

1620.110 Scope.

1620.111 Definitions.

1620.112 Eligibility requirements.

1620.113 Notice to an employee of his or

her right to participate in the TSP.

1620.114 Employee contributions.

1620.115 Employer contributions.

1620.116 TSP contributions.

1620.117 TSP loan payments.

1620.118 Failure to participate or delay in

participation.

1620.119 Other regulations.

Subpart I—Certain Employees of the

District of Columbia Financial

Responsibility and Management

Assistance Authority

§ 1620.110 Scope.

The District of Columbia Financial

Responsibility and Management

Assistance Authority (Authority) was

established by the District of Columbia

Financial Responsibility and

Management Assistance Act of 1995 (the

Act), Public Law 104–8, 109 Stat. 97.

Although the Authority is an agency of

the District of Columbia Government,

any individual who is employed by the

Authority within two months after being

separated from Federal service may

elect to retain his or her participation in

the retirement system in which the

individual last participated before

separating from Federal service. This

subpart governs participation in the

Thrift Savings Plan (TSP) by employees

of the Authority who elect to be covered

by FERS or CSRS.

§ 1620.111 Definitions.

As used in this subpart:

Authority means the District of

Columbia Financial Responsibility and

Management Authority.

Basic pay means basic pay as defined

in 5 U.S.C. 8431.

CSRS means the Civil Service

Retirement System established by

subchapter III of chapter 83 of title 5,

United States Code, or any equivalent

Government retirement plan.

Election period means the last

calendar month of an open season and

is the period in which an election to

make or change contributions during

that open season can first become

effective.

FERS means the Federal Employees’

Retirement System established by

chapter 84 of title 5, United States Code,

and any equivalent retirement system.

Open season means the period during

which employees may make an election

with respect to their contributions to the

Thrift Savings Plan.
2874 Federal Register / Vol. 61, No. 19 / Monday, January 29, 1996 / Rules and Regulations

Recordkeeper means the organization

under contract to the Board to perform

recordkeeping services. This currently is

the National Finance Center, United

States Department of Agriculture, P.O.

Box 61500, New Orleans, Louisiana

70161- 1500.

Retirement election means an election

by an eligible employee of the Authority

to remain covered by either CSRS or

FERS.

Thrift Savings Plan (TSP) election

means a request by an eligible employee

to start contributing to the TSP, to

terminate contributions to the TSP, to

change the amount of contributions

made to the TSP each pay period

(including a request to terminate

contributions), or to change the

allocation of TSP contributions among

the TSP investment funds, as described

at 5 CFR 1600.4. A TSP election must

be made on Form TSP–1, Thrift Savings

Plan Election Form.

§ 1620.112 Eligibility requirements.

To be eligible to participate in the

TSP, an employee of the Authority

must:

(a) Have been separated from the

Federal service for not more than 2

months before commencing

employment with the Authority;

(b) Have been covered by FERS or

CSRS immediately before separating

from Federal service; and

(c) Have elected to be covered by

FERS or CSRS within the time

permitted by the United States Office of

Personnel Management.

§ 1620.113 Notice to an employee of his or

her right to participate in the TSP.

The Authority must notify an

employee of his or her right to

participate in the TSP at the time the

employee is required to be notified of

his or her right to elect to be covered

under FERS or CSRS.

§ 1620.114 Employee contributions.

(a) An employee of the Authority who

is separated from Federal service for less

than 31 full calendar days before

commencing employment with the

Authority and who elects to be covered

by FERS or CSRS within the time period

mandated by the United States Office of

Personnel Management will be eligible

to contribute to the TSP as though he or

she had transferred to the Authority

from the losing Federal agency, i.e., as

though the employee did not have a

break in service as defined by the TSP.

(b) An employee who is employed by

the Authority after 31 or more full

calendar days but within 2 months after

separating from Federal service and who

elects to be covered by FERS or CSRS

within the time period permitted by the

United States Office of Personnel

Management will be eligible to

contribute to the TSP as follows:

(1) If the employee was previously

eligible to participate in the TSP, the

employee will be eligible to contribute

to the TSP in the first open season (as

determined in accordance with

paragraph (b)(3) of this section)

beginning after the date the employee

commences employment with the

Authority.

(2) If the employee was not previously

eligible to participate in the TSP, the

employee will be eligible to contribute

to the TSP in the second open season (as

determined in accordance with

paragraph (b)(3) of this section)

beginning after the date the employee

commences employment with the

Authority.

(3) If an employee of the Authority

who is described in paragraphs (b)(1)

and (b)(2) of this section is employed by

the Authority during an open season,

but before the election period (the last

calendar month of the open season), the

open season during which the employee

is employed will be considered the

employee’s first open season.

(c) TSP contributions from employees

of the Authority must be made from the

employee’s basic pay for service with

the Authority and are subject to the

limits described at 5 CFR Part 1600,

subpart C.

§ 1620.115 Employer contributions.

(a) If an eligible employee of the

Authority elects to be covered by FERS,

the Authority must contribute on the

employee’s behalf each pay period to

the Thrift Savings Fund, in accordance

with Board procedures, an amount

equal to 1 percent of the employee’s

basic pay paid to such employee for that

period of service, as required by 5

U.S.C. 8432(c)(1)(A), beginning:

(1) Immediately upon employment

with the Authority if the employee

separated from Federal service less than

31 full calendar days before

commencing employment with the

Authority and was eligible to participate

in the TSP when he or she separated

from Federal service; or

(2) With the first pay period in which

the employee is eligible to contribute to

the TSP (as determined in accordance

with § 1620.114 of this subpart) for all

other FERS employees of the Authority.

(b) If a FERS employee of the

Authority elects to participate in the

TSP under § 1620.114 of this subpart,

the Authority must contribute on behalf

of such employee each pay period to the

Thrift Savings Fund, in accordance with

Board procedures, any matching

contributions which he or she is eligible

to receive under 5 U.S.C. 8432(c).

§ 1620.116 TSP contributions.

The Authority is responsible for

transmitting, in accordance with Board

procedures, any employee and employer

contributions that are required by this

subpart to the Board’s Recordkeeper.

§ 1620.117 TSP loan payments.

The Authority shall deduct and

transmit TSP loan payments for

employees in accordance with 5 CFR

part 1655 and Board procedures. An

employee of the Authority who

separates from Federal service with an

outstanding TSP loan and who elects to

be covered under FERS or CSRS must

notify the recordkeeper that he or she

has commenced employment with the

Authority.

§ 1620.118 Failure to participate or delay in

participation.

If an employee of the Authority who

elects to be covered by FERS or CSRS

fails to participate or is delayed in

participating in the TSP because of a

delay in the implementation of the Act

or in the promulgation of the regulations

in this subpart, the employee may

request that retroactive corrective action

be taken in accordance with 5 CFR

1605.2(b)(2), as if the delay were

attributable to employing agency error.

Lost earnings shall be payable pursuant

to 5 CFR part 1606 due to delay

described in this section, as if the delay

were attributable to employing agency

error.

§ 1620.119 Other regulations.

The Authority and individuals

covered by § 1620.110 of this subpart

are governed by the regulations in 5 CFR

chapter VI, to the extent the regulations

in 5 CFR chapter VI are not inconsistent

with this subpart.

[FR Doc. 96–1492 Filed 1–26–96; 8:45 am]

BILLING CODE 6760–01–P