Source: https://www.tsp.gov/PDF/bulletins/15-01.html
Timestamp: 2019-03-25 10:47:15
Document Index: 13359181

Matched Legal Cases: ['§ 1603', '§ 3132', '§ 5312', '§ 5317', '§ 8411', '§ 8332', '§ 8332', '§ 8411']

TSP: Thrift Savings Plan Vesting Requirements and the TSP Service Computation Date
This bulletin explains the Thrift Savings Plan (TSP) vesting requirement found in 5 CFR § 1603. It also discusses the TSP Vesting Code and TSP Service Computation Date, which are used to determine whether or not the vesting requirement has been met.
The TSP Vesting Requirement
The term “vested” refers to the eligibility of participants in an employer-sponsored retirement plan to keep all the money from their accounts when they leave their jobs. TSP participants are immediately vested in (entitled to) their own contributions and any Agency Matching Contributions. However, there is a minimum amount of time in service a TSP participant must meet in order to be vested in the Agency Automatic (1%) Contributions and associated earnings in their accounts.
If a FERS employee separates from Federal service before meeting the TSP vesting requirement, the Agency Automatic (1%) Contributions and associated earnings will be automatically forfeited to the TSP. A FERS employee who dies in service is deemed to be vested in the TSP, no matter how many years of service the employee had completed. Consequently, an employee’s beneficiary (or beneficiaries) will be entitled to all the funds in the employee’s account.
For most FERS employees, the TSP vesting requirement is 3 years. However, employees serving in certain positions (see below) only need to complete 2 years of service to meet the TSP vesting requirement.
The TSP Vesting Code
The TSP Vesting Code corresponds to the number of years FERS employees must serve in order to be vested in the Agency Automatic (1%) Contributions and associated earnings in their TSP accounts. When you on-board a FERS employee, you must determine or verify the employee’s TSP Vesting Code. This code is one of the elements submitted to the TSP on the Employee Data Record (also referred to as the EDR or the “06 record”).
The TSP Vesting Code is “2” for FERS employees in any of the following positions:
Noncareer Senior Executive Service positions (as defined in 5 U.S.C. § 3132(a)(7))
Executive Level positions listed in 5 U.S.C. §§ 5312, 5313, 5314, 5315, 5316, or placed in the Executive Schedule under 5 U.S.C. § 5317
Schedule C positions, which are excepted from the competitive service by the Office of Personnel Management because of the confidential and policy-determining character of the positions
FERS employees who are Members of Congress or Congressional employees
The TSP Vesting Code is “3” for all other FERS employees.
The TSP Vesting Code for CSRS employees should be left blank because they have no vesting requirement, but “0” is also acceptable.
The TSP Service Computation Date
The TSP Service Computation Date (TSP-SCD) is the date, either actual or constructed, which marks the beginning of a FERS TSP participant’s Federal service. (See “How is the TSP-SCD determined?) The TSP-SCD is included on the EDR.
CSRS employees do not have a TSP-SCD, so this field should be left blank for CSRS employees, but “00/00/0000” is also acceptable.
The TSP-SCD has two uses:
When a FERS employee separates, the TSP uses the TSP-SCD, along with the TSP Vesting Code and separation date, to determine if the employee is vested in the Agency Automatic (1%) Contributions and associated earnings in her account.
When a TSP participant separates from your agency, you must notify the TSP by submitting an EDR with an updated TSP Employment Code (“S” - Separated) and Employment Code Date (date of separation). If the employee is covered under FERS, the TSP will subtract the employee’s TSP-SCD from the updated Employment Code Date and compare this result to the TSP Vesting Code. If the result indicates the employee is not vested, the Agency Automatic (1%) Contributions and associated earnings will be removed from the employee’s account and forfeited to the TSP.
When a participant applies for a TSP loan, the TSP performs a series of tests prescribed by the Internal Revenue Code to determine how much the participant may borrow. One of these tests involves the vested account balance, so calculating a participant’s maximum loan amount depends on having a correct TSP-SCD on file.
How is the TSP-SCD determined?
The TSP-SCD for new FERS employees who have had no prior civilian service is the effective date of their appointment.
The TSP-SCD for FERS employees who have had prior civilian service is determined by adjusting their latest date of appointment to include all prior Federal service that is creditable for TSP vesting purposes. This adjustment is done the same way as the computation of the SCD for leave purposes; the only difference is the type of service that is included in the TSP-SCD computation.
Your agency personnel office must verify the TSP-SCD upon receipt of the employee’s Official Personnel Folder (OPF). If the TSP-SCD is incorrect, you must correct it in your agency personnel system and submit an EDR to the TSP containing the correct date.
A TSP-SCD can be no earlier than January 1, 1984. If your computation results in a date earlier than January 1, 1984, just report the TSP-SCD as January 1, 1984.
When a FERS employee transfers from one Federal agency to another or changes agency payroll offices, the losing agency must provide the TSP-SCD (and other TSP data) to the gaining agency. Form TSP-19, Transfer of Information Between Agencies, should be used for this purpose. (Form SF-75, Request for Preliminary Employment Data, has fields for some TSP data, but it does not provide sufficient information about the employee’s TSP contribution election.)
Upon receipt of the OPF, the gaining agency must verify the TSP-SCD and correct it if necessary.
Agencies have the opportunity to update and correct a TSP-SCD by submitting an EDR with the correct date until the employee separates from Federal service or transfers to another Federal agency. Agencies should review the TSP-SCD one final time prior to an employee’s separation and, if necessary, submit the corrected date prior to processing the separation action.If incorrect employee data results in a forfeiture, the employee is entitled to have the forfeited money restored to their account. Information on restoring erroneous forfeitures is contained in a separate bulletin.
What service counts toward the TSP-SCD?
Any non-military service that is creditable under either 5 U.S.C. § 8411 (FERS retirement law) or 5 U.S.C. § 8332 (CSRS retirement law) must be credited when calculating the TSP-SCD. That includes all of the following:
Service for which FERS contributions have been made, whether or not an employee has received a refund of these contributions
Service for which CSRS contributions have been made, whether or not an employee has received a refund of these contributions
Civilian service for which no retirement contributions have been made but which would be potentially creditable under 5 U.S.C. § 8332 (CSRS retirement law) or 5 U.S.C. § 8411 (FERS retirement law) (This includes service that is potentially creditable under CSRS retirement law, even if it is not creditable under FERS law.)
This calculation is made without regard to any
deposit or redeposit requirements contained in those statutory provisions,
requirement that the individual become subject to either of those statutory provisions after performing the service involved, or
requirement that the individual give notice of his or her desire to become subject to the retirement system established by either 5 U.S.C. Chapter 83 or Chapter 84.
How do periods of nonpay affect the TSP-SCD?
Aggregate nonpay status of up to 6 months in any calendar year is creditable service, and should be counted when calculating the TSP-SCD. Generally, periods of nonpay that exceed 6 months in any calendar year must not be counted, but there are exceptions:
FERS employees who have been placed in a nonpay status because of an on-the-job injury, and who are entitled to receive benefits from the Office of Workers’ Compensation Programs must be given credit for the entire period of nonpay.
When FERS employees separate or enter “Absent-US” status to perform military service and are subsequently reemployed under the provisions of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), the period of the absence that resulted from their performance of military service must be included when computing their TSP-SCD.
TSP-SCD Calculation Examples
The computation rules to determine the TSP-SCD are the same as those used to determine other Federal service computation dates. Transpose dates into year/month/day. When subtracting, add one day to the separation date to ensure the employee gets credit for the full day of service. If you must borrow days from a month, always borrow 30 days; if you must borrow months from a year, always borrow 12 months.
The following are examples of TSP-SCD computations:
Sara was first appointed to Federal service on September 25, 2004, and covered by FERS. She resigned on June 30, 2005. She was reinstated on October 31, 2005, and again covered by FERS.
Sara’s TSP-SCD is January 25, 2005. It is determined by adjusting her latest date of appointment by all prior civilian service.
Compute Sara’s amount of prior service:
Amount of Prior Service:
Subtract prior service from latest date of appointment:
TSP-SCD:
Ben was first appointed to Federal service on September 25, 2011, on an appointment not to exceed one year. He was covered by FICA only. On September 24, 2012, he was converted to a permanent position with no break in service and covered by FERS.
Ben’s TSP-SCD is September 25, 2011; it includes all Federal civilian service.
Beth was first appointed to Federal service on July 10, 2007, and covered by FERS. She resigned on February 9, 2010. She was reinstated March 10, 2010, and again covered by FERS.
Beth’s TSP-SCD is August 10, 2007. It is determined by adjusting her latest date of appointment by all prior civilian service.
Compute Beth’s amount of prior service:
Katie was first appointed to Federal service on December 31, 1989, on an appointment not to exceed one year. She was converted to a permanent appointment on June 30, 1990, and covered by FERS. She went on leave without pay July 30, 1990, and returned to duty May 15, 1991.
Katie’s TSP-SCD is December 31, 1989. It includes all Federal civilian service; it is not adjusted upon her return to duty because she had no excess leave without pay.
Jean was first appointed to Federal civilian service on October 1, 2002. She had prior military service from June 7, 1980, to March 5, 2002.
Jean’s TSP-SCD is October 1, 2002. This military service does not count for TSP vesting purposes.
Mark was first appointed to Federal service on July 14, 1994, and resigned on April 6, 1997. On March 22, 2002, he was given an appointment not to exceed one year and covered by FICA only. He was converted to a permanent position October 5, 2002, and covered by FERS.
Mark’s TSP-SCD is June 29, 1999. It is determined by adjusting his latest date of appointment by all prior civilian service.
Compute Mark’s amount of prior service
Jonathan was first appointed to Federal service on July 14, 1974, and resigned September 25, 1985. He was reinstated on May 6, 1993, and transferred to FERS on July 11, 1993.
Jonathan’s TSP-SCD is January 1, 1984. Adjusting his latest date of appointment by the amount of his prior service would result in a constructed date earlier than January 1, 1984, but the TSP-SCD cannot be earlier than January 1, 1984.
Charles was first appointed to Federal service on May 18, 2011, and covered by FERS. His TSP-SCD was established as May 18, 2011. Charles was placed on leave without pay March 23, 2012, and returned to duty November 30, 2012.
Charles’ TSP-SCD is now July 25, 2011. His earlier date had to be adjusted to reflect his excess leave without pay.
Compute Charles’ excess Leave Without Pay:
Date Returned to Duty:
Leave Without Pay Began:
Leave Without Pay Period:
Subtract 6 Months:
Add the excess leave without pay to his previously established TSP-SCD:
Previous TSP-SCD:
Excess Leave Without Pay:
New TSP-SCD:
Joe was first appointed to Federal service on March 31, 2000. He separated from civilian service to perform active duty military service January 3, 2001. After his period of military service, he was reemployed in civilian service pursuant to 38 U.S.C. Chapter 43 on October 5, 2002.
Joe’s TSP-SCD is March 31, 2000. It includes his military service because this type of military service is counted for TSP vesting purposes.
This bulletin may be filed in Chapter 4, Vesting.
This bulletin supersedes TSP Bulletin 97-30, Thrift Savings Plan Vesting Requirement and the TSP-Service Computation Date, dated August 19, 1997.