Court Opinion

ID: 3217536
Source: CourtListenerOpinion
Date Created: 2016-06-28 16:00:19.00568+00
Date Added: 2024-06-11T14:46:08.459063
License: Public Domain

UNITED STATES OF AMERICA
                        MERIT SYSTEMS PROTECTION BOARD

     JUSTIN GRIMSRUD,                                DOCKET NUMBERS
                   Appellant,                        NY-0752-13-0073-X-1
                                                     NY-0752-13-0073-C-1
                  v.

     DEPARTMENT OF
       TRANSPORTATION,                               DATE: June 28, 2016
                 Agency.

             THIS FINAL ORDER IS NONPRECEDENTIAL 1

           Jonathan Bell, Esquire, and Mordy Yankovich, Esquire, Carle Place, New
             York, for the appellant.

           Christian Lewerenz, Esquire, Jamaica, New York, for the agency.

                                           BEFORE

                              Susan Tsui Grundmann, Chairman
                                 Mark A. Robbins, Member

                                       FINAL ORDER

¶1         This case is before the Board on the appellant’s petition to enforce the
     settlement agreement that resolved his 2013 removal appeal. 2 On May 15, 2015,

     1
        A nonprecedential order is one that the Board has determined does not add
     significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
     but such orders have no precedential value; the Board and administrative judges are not
     required to follow or distinguish them in any future decisions. In contrast, a
     precedential decision issued as an Opinion and Order has been identified by the Board
     as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
                                                                                         2

     the Board ordered the agency to submit evidence and a narrative statement
     showing that it properly corrected the appellant’s Thrift Savings Plan (TSP)
     account for all employee and agency automatic and matching contributions that
     the appellant would have made and received but for the removal action.
     Grimsrud v. Department of Transportation, MSPB Docket No. NY-0752-13-
     0073-C-1, Order, ¶ 13 (May 15, 2015); Compliance Referral File (CRF), Tab 1.
     The agency filed evidence in response to that order, CRF, Tab 2, and the
     appellant filed a reply asserting that the agency remained in noncompliance, CRF,
     Tab 3.
¶2         On October 27, 2015, the Board issued a show cause order directing the
     agency to file additional evidence.         CRF, Tab 5.      In response, the agency
     produced affidavits from individuals involved in processing corrections to the
     appellant’s TSP account as well as the data records submitted to the Federal
     Retirement Thrift Investment Board (FRTIB), which administers the TSP. CRF,
     Tab 7. The appellant, in reply, again asserts that his TSP account has not been
     fully restored. CRF, Tab 8. Specifically, the appellant states that the agency,
     after erroneously designating his TSP funds as “traditional,” rather than “Roth,”
     further erred in its attempt to correct that error. Id. at 4, 7.
¶3         The TSP was established by the Federal Employees’ Retirement System Act
     of 1986 (FERSA), Pub. L. No. 99-335, 100 Stat. 514 (codified as amended largely
     at 5 U.S.C. §§ 8351 and 8401-8479), and has been implemented by the FRTIB
     through regulations at 5 C.F.R. part 1600. As discussed in the Board’s May 15,
     2015 Order, the agency was required to comply with the FERSA and with the
     applicable TSP regulations in issuing the appellant’s back pay.         See 5 C.F.R.

     2
       The agency removed the appellant for the second time on June 26, 2014. In an initial
     decision issued on February 3, 2016, the administrative judge affirmed the agency’s
     removal action.        Grimsrud v. Department of Transportation, MSPB Docket
     No. NY-0752-14-0340-I-1, Initial Decision (Feb. 3, 2016). The appellant’s petition for
     review of the initial decision is pending with the Board.
                                                                                          3

     § 550.805(h) (agencies must correct errors that affect an employee’s TSP account
     consistent with regulations prescribed by the FRTIB). There is no dispute that
     the agency made a series of errors in attempting to restore the appellant’s TSP
     account. See, e.g., CRF, Tab 7 at 12-14 (affidavit of B.A., Benefits Processing
     Branch Chief), Tab 8 at 7-8 (appellant’s timeline).
¶4         The agency was required to implement the appellant’s TSP elections by
     deducting his employee contributions from the back pay award and transferring
     those funds to the FRTIB. 5 C.F.R. § 1605.13(c). As discussed in the Board’s
     May 15, 2015 Order, the agency did not withhold the appellant’s TSP
     contributions from his back pay due to an administrative error.             Grimsrud,
     M.S.P.B. Docket No. NY-0752-13-0073-C-1, Order, ¶ 9; CRF, Tab 1 at 9.               To
     remedy this, the agency decided that “[t]he only means to make the TSP payments
     for the employee was to issue additional salary above and beyond his settlement
     amount.” CRF, Tab 7 at 7 (affidavit of S.J., Management and Program Analyst). 3
¶5         The agency then deposited these funds into a traditional TSP account, using
     the G Fund (Government Securities).       Id. at 10 (affidavit of L.C., Supervisory
     Benefits Specialist). In doing so, the agency made two errors. First, the funds
     should have been contributed to the appellant’s Roth TSP account rather than a
     traditional account. Id. at 12 (affidavit of B.A.). Second, the funds should have
     been invested according to the appellant’s contribution allocation rather than the
     G Fund. Id; see 5 C.F.R. § 1605.13(a)(3). To correct the first error, the agency
     redesignated the funds from a traditional TSP account to a Roth TSP account.
     CRF, Tab 7 at 10 (affidavit of L.C.). See 5 C.F.R. § 1605.17 (redesignation and
     recharacterization).   The agency also removed the funds deposited into the
     G Fund and resubmitted the funds using the appellant’s allocations.              CRF,
     Tab 7 at 12 (affidavit of B.A.).     In doing so, however, the agency used the

     3
      The appellant stated that he was willing to remit pay for this purpose and was waiting
     on instructions from the agency on how to do so. CRF, Tab 3 at 2.
                                                                                           4

     incorrect effective date on two transactions; subsequently, the agency removed
     these funds and resubmitted them using the correct dates. Id. at 12-13. 4
¶6         The appellant asserts that the agency’s redesignation of his TSP account
     from traditional to Roth was “done completely improperly.” CRF, Tab 8 at 7. He
     states that “[o]nly the initial transactions should have been done in terms of
     Dollars by the agency.” Id. He contends that all subsequent corrections should
     have involved shares, rather than dollars.        Id.   He states that, “So, for this
     transaction to be accurate, the number of Shares bought for My Contributions and
     its associated ‘breakage’ on the transactions posted to my account on 7/21/15
     should have been transferred from Traditional Funds to ROTH Funds.” Id. The
     agency responds that its payroll office transmits all transactions, including
     corrections, to the FRTIB in dollars, based on the contributions that are deducted
     from basic pay. CRF, Tab 7 at 11. The agency’s Benefits Processing Branch
     Chief avers that her office has “no visibility or understanding of how TSP shares
     are purchased” and that she contacted the FRTIB to find a point of contact to
     explain the appellant’s shares to him. Id. at 13.
¶7         According to FRTIB regulations, when pay has been contributed to a
     participant’s traditional balance when it should have been contributed to his Roth
     balance, the agency must promptly submit a redesignation record.               5 C.F.R.
     § 1605.17(b). That is exactly what the agency did here. CRF, Tab 7 at 22-23
     (certification of redesignation of records and journal voucher). Once the agency
     submitted the redesignation records, the FRTIB was responsible for treating “the

     4
       There were other errors that the agency states—and the appellant does not dispute—
     have been corrected. The FRTIB rejected a $674 contribution for October 15, 2013,
     because the payment would have caused the appellant to exceed the Internal Revenue
     Service contribution limit for 2013. CRF, Tab 7 at 10, 12 (affidavits of L.C. and B.A.);
     CRF, Tab 8 at 7 (appellant’s timeline). See 5 C.F.R. § 1600.22 (maximum employee
     contributions). The agency therefore redeposited $650 for that date and refunded the
     appellant $24. CRF, Tab 8 at 7. In addition, the agency failed to make a matching
     contribution for pay period 26 of 2012; the agency states that this was subsequently
     corrected and the deposit was made. CRF, Tab 7 at 12, Tab 8 at 8.
                                                                                          5

     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.” 5 C.F.R. § 1605.17(c)(1). The FRTIB was
     also responsible for changing the tax characterization of the erroneously
     characterized contribution. 5 C.F.R. § 1605.17(c)(2).
¶8         Similarly, once the agency certified the transfer of funds, CRF, Tab 7 at 18,
     22-23, 25-26 (Form TSP-2-G), the FRTIB was responsible for calculating
     “breakage,” i.e., “the loss incurred or the gain realized on makeup or late
     contributions.” 5 C.F.R. § 1605.1. 5 The regulations make clear that the FRTIB
     calculates    breakage     on     late   contributions     and     makeup      agency
     contributions. 5 C.F.R. § 1605.2(a). The FRTIB, not the employing agency, must
     determine the number of shares of applicable investment funds the participant
     would have received had the contributions been made on time.                  5 C.F.R.
     § 1605.2(b)(1)(ii). The regulations further provide that there is no “breakage”
     associated with the redesignation of a TSP account from traditional to
     Roth. 5 C.F.R. § 1605.17(c)(4).
¶9         Therefore, based on the agency’s evidence and the applicable regulations,
     we conclude that the agency complied with its obligations in restoring and
     correcting the appellant’s TSP account.        The continued management of the
     appellant’s TSP account is a matter between the appellant and the FRTIB. See
     Wilkes v. Department of Veterans Affairs, No. 2016-1220, 2016 WL 1394260, at
     *2 n.6 (Fed. Cir. Apr. 8, 2016) (finding that the employing agency does not
     manage an employee’s TSP contributions). Accordingly, we find the agency in
     compliance and dismiss the petition for enforcement.

     5
       Breakage is further defined as “the difference between the value of the shares of the
     applicable investment fund(s) that would have been purchased had the contribution been
     made” on the date on which the contribution occurred “and the value of the shares of
     the same investment fund(s) on the date the contribution is posted to the
     account.” 5 C.F.R. § 1605.1.
                                                                                          6

¶10        This is the final decision of the Merit Systems Protection Board in this
      compliance   proceeding.       Title 5   of   the   Code   of   Federal   Regulations,
      section 1201.183(c)(1) (5 C.F.R. § 1201.183(c)(1)).

                        NOTICE TO THE APPELLANT REGARDING
                              YOUR RIGHT TO REQUEST
                             ATTORNEY FEES AND COSTS
            You may be entitled to be paid by the agency for your reasonable attorney
      fees and costs. To be paid, you must meet the requirements set out at title 5 of
      the United States Code (5 U.S.C.), sections 7701(g), 1221(g), or 1214(g). The
      regulations may be found at 5 C.F.R. §§ 1201.201, 1201.202, and 1201.203. If
      you believe you meet these requirements, you must file a motion for attorney fees
      WITHIN 60 CALENDAR DAYS OF THE DATE OF THIS DECISION.                             You
      must file your attorney fees motion with the office that issued the initial decision
      on your appeal.

                        NOTICE TO THE APPELLANT REGARDING
                           YOUR FURTHER REVIEW RIGHTS
            You have the right to request review of this final decision by the U.S.
      Court of Appeals for the Federal Circuit. You must submit your request to the
      court at the following address:
                                 United States Court of Appeals
                                     for the Federal Circuit
                                   717 Madison Place, N.W.
                                    Washington, DC 20439

      The court must receive your request for review no later than 60 calendar days
      after the date of this order. See 5 U.S.C. § 7703(b)(1)(A) (as rev. eff. Dec. 27,
      2012). If you choose to file, be very careful to file on time. The court has held
      that normally it does not have the authority to waive this statutory deadline and
      that filings that do not comply with the deadline must be dismissed. See Pinat v.
      Office of Personnel Management, 931 F.2d 1544 (Fed. Cir. 1991).
                                                                                  7

      If you need further information about your right to appeal this decision to
court, you should refer to the Federal law that gives you this right. It is found in
title 5 of the United States Code, section 7703 (5 U.S.C. § 7703) (as rev. eff.
Dec. 27, 2012).    You may read this law as well as other sections of the
United States Code, at our website, http://www.mspb.gov/appeals/uscode.htm.
Additional information is available at the court's website, www.cafc.uscourts.gov.
Of particular relevance is the court’s “Guide for Pro Se Petitioners and
Appellants,” which is contained within the court’s Rules of Practice, and Forms
5, 6, and 11.
      If you are interested in securing pro bono representation for an appeal to
the U.S. Court of Appeals for the Federal Circuit, you may visit our website
at   http://www.mspb.gov/probono       for     information   regarding   pro   bono
representation for Merit Systems Protection Board appellants before the Federal
Circuit.   The Merit Systems Protection Board neither endorses the services
provided by any attorney nor warrants that any attorney will accept representation
in a given case.

FOR THE BOARD:                               ______________________________
                                             Jennifer Everling
                                             Acting Clerk of the Board
Washington, D.C.