Various Changes to the Thrift Savings Plan, 32206-32218 [05-10870]

Agencies

• Federal Retirement Thrift Investment Board

[Federal Register Volume 70, Number 104 (Wednesday, June 1, 2005)]
[Rules and Regulations]
[Pages 32206-32218]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-10870]



[[Page 32205]]

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Part IV





Federal Retirement Thrift Investment Board





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5 CFR Parts 1600, 1601, et al.



Various Changes to the Thrift Savings Plan; Final Rule

Federal Register / Vol. 70, No. 104 / Wednesday, June 1, 2005 / Rules 
and Regulations

[[Page 32206]]


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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Parts 1600, 1601, 1604, 1605, 1606, 1620, 1640, 1645, 1650, 
1651, 1653, 1655 and 1690


Various Changes to the Thrift Savings Plan

AGENCY: Federal Retirement Thrift Investment Board.

ACTION: Final rule.

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SUMMARY: The Executive Director of the Federal Retirement Thrift 
Investment Board (Board) is amending the Thrift Savings Plan (TSP) 
regulations to accommodate new TSP lifecycle investment allocation 
funds, eliminate references to open seasons (which Congress repealed), 
and to require participants to file all death benefit beneficiary 
designation forms with the TSP record keeper. The Executive Director is 
also removing obsolete and unhelpful provisions from the regulations, 
eliminating references to TSP form numbers, notifying TSP participants 
of a new mailing address for loan payments, and otherwise making the 
regulations easier to understand.

DATES: These regulations are effective July 1, 2005.

FOR FURTHER INFORMATION CONTACT: Patrick J. Forrest on (202) 942-1661.

SUPPLEMENTARY INFORMATION: The Board 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 
provisions of FERSA are codified, as amended, largely at 5 U.S.C. 8351 
and 8401-79. 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 
private-sector employees under section 401(k) of the Internal Revenue 
Code (26 U.S.C. 401(k)).
    On April 25, 2005, the Executive Director published this rule in 
proposed form in the Federal Register (70 FR 21290). The Board received 
no comments on the proposed rule. Therefore, the Executive Director is 
publishing the proposed rule as a final rule with several grammatical 
changes and the three amendments discussed below.
    Section 1601.32 of the current TSP regulations concerns the timing 
of the TSP's implementation of participant contribution elections and 
interfund transfer requests (transaction requests). Proposed section 
1601.32 would have amended subsections (c) and (d) of that section. 
Subsection (c) explains how the TSP would process multiple transaction 
requests and subsection (d) explains how a participant could cancel a 
transaction request. The proposed amendments to those subsections would 
have simplified the text and removed from it references to TSP form 
numbers. Upon further consideration, the Executive Director has decided 
to remove subsections (c) and (d) from TSP regulations. The TSP 
processes transaction requests daily; therefore, participants have 
little opportunity to submit multiple transaction requests or to cancel 
transaction requests once they are submitted. Accordingly, the rules 
described in subsections (c) and (d) were unworkable.
    Section 1605.14 of the current TSP regulations pertains to 
retirement system coverage errors that are corrected pursuant to the 
Federal Erroneous Retirement Coverage Corrections Act (FERCCA), Pub. L. 
No 106-265, title II, 114 Stat. 770. If a FERCCA correction involves 
retroactive TSP contributions, the participant is entitled to TSP 
investment earnings on all retroactive TSP contributions. Current 
section 1605.14(b)(5) refers to these investment earnings as ``lost 
earnings,'' while the current TSP term for lost earnings is 
``breakage.'' The proposed rule amended subsection (b)(5) to use the 
correct term. However, upon review, the Executive Director decided to 
remove subsection (b)(5) from the final rule because it describes OPM 
policy and regulations, which are subject to change.
    Current section 1651.14(g) explains that the TSP will abandon a 
death benefit payment if it returned as undeliverable to the TSP and 
the TSP cannot locate the beneficiary. Proposed section 1651.14(g) 
describes only one of several ways the TSP will attempt to locate the 
beneficiary although the TSP will attempt to locate the beneficiary by 
whatever means are appropriate under the circumstances. Therefore, 
final section 1651.14(g) simply states that the TSP will attempt to 
locate the beneficiary before abandoning the account.

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 employees and former employees of the Federal Government.

Paperwork Reduction Act

    I certify that these regulations do not require additional 
reporting under the criteria of the Paperwork Reduction Act of 1980.

Unfunded Mandates Reform Act of 1995

    Pursuant to the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 
1532, the Agency has considered 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, the Agency is 
not required to prepare a written statement regarding these regulations 
under 2 U.S.C. 1532.

Submission to Congress and the Government Accountability Office

    Pursuant to 5 U.S.C. 810(a)(1)(A), the Board 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. 814(2).

List of Subjects

5 CFR Parts 1600, 1601, 1606, 1620, 1645, 1650, 1651, 1653, 1690

    Employment benefit plans, Government employees, Pensions, 
Retirement.

5 CFR Parts 1604, 1655

    Employment benefit plans, Government employees, Military personnel, 
Pensions, Retirement.

5 CFR Part 1605

    Administrative practice and procedure, Employment benefit plans, 
Government employees, Pensions, Retirement.

5 CFR Part 1640

    Employment benefit plans, Government employees, Pensions, Reporting 
and recordkeeping requirements, Retirement.

Gary A. Amelio,
Executive Director Federal Retirement Thrift Investment Board.

0
For the reasons set forth in the preamble, the Board amends 5 CFR 
chapter VI as follows:

PART 1600--EMPLOYEE CONTRIBUTON ELECTIONS AND CONTRIBUTION 
ALLOCATIONS

0
1. The authority citation for Part 1600 continues to read as follows:

    Authority: 5 U.S.C. 8351, 8432(a), 8432(b), 8432(j), 8474(b)(5) 
and (c)(1).


[[Page 32207]]



0
1a. Revise the heading for part 1600 to read as set forth above.

Subpart B--Elections


Sec.  1600.11  [Amended]

0
2. Amend Sec.  1600.11 by removing ``TSP's investment funds'' from 
paragraph (b) and adding in its place ``TSP Funds''.

0
3. Revise Sec.  1600.12 to read as follows:


Sec.  1600.12  Contribution elections.

    (a) An employee may make a contribution election at any time.
    (b) A participant must submit a contribution election to his or her 
employing agency. To make an election, employees may use either the 
paper election form provided by the TSP, or, if available from their 
employing agency, electronic media. If an electronic medium is used, 
all relevant elements contained on the paper form must be included in 
the electronic medium.
    (c) A contribution election must:
    (1) Be completed in accordance with the instructions on the form, 
if a paper form is used;
    (2) Be made in accordance with the employing agency's instructions, 
if the submission is made electronically; and
    (3) Not exceed the maximum contribution limitations described in 
Sec.  1600.22.
    (d) A contribution election will become effective no later than the 
first full pay period after it is received by the employing agency.


Sec. Sec.  1600.13 through 1600.18  [Removed]

0
4. Remove Sec. Sec.  1600.13 through 1600.18.
0
5. Add a new Sec.  1600.13 to read as follows:


Sec.  1600.13  Timing of agency contributions.

    (a) Employees not previously eligible to receive agency 
contributions. An employee appointed or reappointed to a position 
covered by FERS who had not been previously eligible to receive agency 
contributions is eligible to receive agency contributions under the 
following rules:
    (1) If the effective date of the appointment is any day during the 
period June 1 through November 30, the agency contributions must begin 
the first full pay period of the following June; and
    (2) If the effective date of the appointment is any day during the 
period December 1 through May 31, the agency contributions must begin 
the first full pay period of the following December.
    (b) Employees previously eligible to receive agency contributions. 
An employee reappointed to a position covered by FERS who was 
previously eligible to receive agency contributions is immediately 
eligible to receive agency contributions.

0
6. Add a new Sec.  1600.14 to read as follows:


Sec.  1600.14  Effect of transfer to FERS.

    (a) If an employee appointed to a position covered by CSRS elects 
to transfer to FERS, the employee may make a contribution election at 
any time.
    (b) Eligibility to make employee contributions, and therefore to 
have agency matching contributions made on the employee's behalf, is 
subject to the restrictions on making employee contributions after 
receipt of a financial hardship in-service withdrawal described at 5 
CFR part 1650.
    (c) If the employee had elected to make TSP contributions while 
covered by CSRS, the election continues to be valid until the employee 
makes a new valid election.
    (d) Agency automatic (1%) contributions for all employees covered 
under this section and, if applicable, agency matching contributions 
attributable to employee contributions must begin the same pay period 
that the transfer to FERS becomes effective.

Subpart C--Program of Contributions

0
7. Revise Sec.  1600.22 to read as follows:


Sec.  1600.22  Maximum contributions.

    (a) Regular employee contributions. A participant's regular TSP 
contributions are subject the following limitations:
    (1) FERS percentage limit. The maximum employee contribution from 
basic pay for a FERS participant for 2005 is 15 percent. After 2005 the 
percentage of basic pay limit will not apply and the maximum 
contribution will be limited only by the provisions of the Internal 
Revenue Code (26 U.S.C.).
    (2) CSRS and uniformed services percentage limit. The maximum 
employee contribution from basic pay for a CSRS or uniformed services 
participant for 2005 is 10 percent. After 2005 the percentage of basic 
pay limit will not apply and the maximum contribution will be limited 
only by the provisions of the Internal Revenue Code.
    (b) Catch-up contributions. (1) A participant may make tax-deferred 
catch-up contributions from basic pay at any time during the calendar 
year if he or she:
    (i) Is at least age 50 by the end of the calendar year;
    (ii) Is making regular TSP contributions at a rate that will result 
in the participant making the maximum regular contributions permitted 
under paragraph (a) of this section; and
    (iii) Does not exceed the annual limit on catch-up contributions 
contained in the Internal Revenue Code.
    (2) Elections to make catch-up contributions will be separate from 
the participant's regular contribution election.
    (3) A participant who has both a civilian and a uniformed services 
account can make catch-up contributions to both accounts, but the total 
amount of the catch-up contributions to both accounts cannot exceed the 
Internal Revenue Code catch-up contribution limit for the year.
    (4) Catch-up contributions are not eligible for matching 
contributions.


Sec.  1600.23  [Removed]

0
8. Remove Sec.  1600.23.

PART 1601--[AMENDED]

0
9. Revise the Part 1601 Part Heading to read as follows:

PART 1601--PARTICIPANTS' CHOICES OF TSP FUNDS

0
10. The authority citation for Part 1601 is revised to read as follows:

    Authority: 5 U.S.C. 8351, 8438, 8474(b)(5) and (c)(1).

Subpart A--General


Sec.  1601.1  [Amended]

0
11. Amend Sec.  1601.1 by removing ``the F Fund, C Fund, S Fund or I'' 
from paragraph (b) and by adding in its place ``a TSP Fund other than 
the G''.

Subpart B--Investing Future Deposits


Sec.  1601.11  [Amended]

0
12. Amend Sec.  1601.11 by removing ``investment funds'' wherever it 
appears and adding in its place ``TSP Funds''.
0
13. Revise Sec.  1601.12 to read as follows:


Sec.  1601.12  Investing future deposits in the TSP Funds.

    (a) Allocation. Future deposits in the TSP, including 
contributions, loan payments, and transfers or rollovers from 
traditional IRAs and eligible employer plans, will be allocated among 
the TSP Funds based on the most recent contribution allocation on file 
for the participant.
    (b) TSP Funds availability. All participants may elect to invest 
all or any portion of their deposits in any of the TSP Funds.

0
14. Amend Sec.  1601.13 by revising paragraphs (a) and (b) to read as 
follows:

[[Page 32208]]

Sec.  1601.13  Elections.

    (a) Contribution allocation. Each participant may indicate his or 
her choice of TSP Funds for the allocation of future deposits by using 
the TSP Web site or the ThriftLine, or by completing and filing the 
appropriate paper TSP form with the TSP record keeper in accordance 
with the form's instructions. The following rules apply to contribution 
allocations:
    (1) Contribution allocations must be made in one percent 
increments. The sum of the percentages elected for all of the TSP Funds 
must equal 100 percent;
    (2) The percentage elected by a participant for investment of 
future deposits in a TSP Fund will be applied to all sources of 
contributions and transfers (or rollovers) from traditional IRAs and 
eligible employer plans. A participant may not make different 
percentage elections for different sources of contributions;
    (3) A participant who elects for the first time to invest in a TSP 
Fund other than the G Fund must execute an acknowledgment of risk in 
accordance with Sec.  1601.33;
    (4) All deposits made on behalf of a participant who does not have 
a contribution allocation in effect will be invested in the G Fund; and
    (5) Once a contribution allocation becomes effective, it remains in 
effect until it is superseded by a subsequent contribution allocation. 
If a separated participant is rehired and had not withdrawn his or her 
entire TSP account, the participant's last contribution allocation 
before separation from service will be effective until a new allocation 
is made.
    (b) Effect of rejection of contribution allocation. If a 
participant does not correctly complete a contribution allocation, the 
attempted allocation will have no effect. The TSP will provide the 
participant with a written statement of the reason the transaction was 
rejected.
* * * * *

Subpart C--Redistributing Participants' Existing Account Balances 
(Interfund Transfers)


Sec.  1601.21  [Amended]

0
15. Amend Sec.  1601.21 by removing ``TSP's investment funds'' and 
adding in its place ``TSP Funds''.

0
16. Revise Sec.  1601.22 to read as follows:


Sec.  1601.22  Methods of requesting an interfund transfer.

    (a) Participants may make an interfund transfer using the TSP Web 
site or the ThriftLine, or by completing and filing the appropriate 
paper TSP form with the TSP record keeper in accordance with the form's 
instructions. The following rules apply to an interfund transfer 
request:
    (1) Interfund transfer requests must be made in whole percentages 
(one percent increments). The sum of the percentages elected for all of 
the TSP 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 tax-deferred 
and tax-exempt balances on the effective date of the interfund 
transfer.
    (3) Any participant who elects to invest in a TSP Fund other than 
the G Fund for the first time must execute an acknowledgement of risk 
in accordance with Sec.  1601.33.
    (b) An interfund transfer request has no effect on deposits made 
after the effective date of the interfund transfer request; subsequent 
deposits will continue to be allocated among the investment funds in 
accordance with the participant's contribution allocation made under 
subpart B of this part.
    (c) If an interfund transfer is found to be invalid pursuant to 
Sec.  1601.34, the purported transfer will not be made. The TSP will 
provide the participant with a written statement of the reason the 
transaction was rejected.

Subpart D--Contribution Allocations and Interfund Transfer Requests

0
17. Revise Sec.  1601.32 to read as follows:


Sec.  1601.32  Timing and posting dates.

    (a) Posting dates. The date on which the TSP processes or posts a 
contribution allocation or interfund transfer request (transaction 
request) 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 Web 
site 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 
according to the following rules:
    (1) A transaction request entered into the TSP record keeping 
system by a participant who uses the TSP Web site or the ThriftLine, or 
by a TSP Service Office participant service representative at the 
participant's request, at or before 12:00 noon eastern time of any 
business day, will ordinarily be posted that business day. A 
transaction request entered into the system after 12:00 noon eastern 
time of any business day will ordinarily be posted on the next business 
day.
    (2) A transaction request made on the TSP Web site or the 
ThriftLine on a non-business 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 24 
hours of their receipt.
    (4) In most cases, the share price(s) applied to an interfund 
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 contribution 
allocations or interfund transfer requests that may be made by a 
participant.
0
18. Revise Sec.  1601.33 to read as follows:


Sec.  1601.33  Acknowledgment of risk.

    (a) A participant who wants to invest in a TSP Fund other than the 
G Fund must execute an acknowledgment of risk for that 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 
a contribution allocation or an interfund transfer using the TSP Web 
site, the ThriftLine, or a paper TSP form.


Sec. Sec.  1601.34 and 1601.35  [Removed and Redesignated]

0
19. Remove Sec. Sec.  1601.34 and 1601.35 and redesignate Sec.  1601.36 
as Sec.  1601.34.

0
20. Add a new subpart E to read as follows:

Subpart E--Lifecycle Funds


Sec.  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 by the TSP pursuant to 5 
U.S.C. 8438.

PART 1604--UNIFORMED SERVICES ACCOUNTS

0
21. The authority citation for Part 1604 continues to read as follows:

    Authority: 5 U.S.C. 8440e, 8474(b)(5) and (c)(1).

[[Page 32209]]

Sec.  1604.2  [Amended]

0
22. Amend Sec.  1604.2 by removing the definitions of ``eligible 
retirement plan'' and ``TSP record keeper''.

0
23. Revise Sec.  1604.3 to read as follows:


Sec.  1604.3  Contribution elections.

    A service member may make contribution elections as described in 5 
CFR part 1600. A service member may elect to contribute sums to the TSP 
from basic pay, incentive pay, and special pay (including bonuses). 
However, the service member must elect to contribute to the TSP from 
basic pay in order to contribute to the TSP from incentive pay and 
special pay (including bonuses). A service member may elect to 
contribute from special pay or incentive pay (including bonuses) in 
anticipation of receiving such pay (that is, he or she does not have to 
be receiving the special pay or incentive pay when the contribution 
election is made); those elections will take effect when the service 
member receives the special or incentive pay.

0
24. Amend Sec.  1604.4 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  1604.4  Contributions.

    (a) Employee contributions. Subject to the regulations at 5 CFR 
part 1600 and the following limitations, a service member may make 
regular contributions to the TSP from basic pay. If the service member 
makes regular contributions, he or she also may contribute all or a 
portion of incentive pay and special pay (including bonuses) to the 
TSP. The maximum TSP regular employee contribution (including 
contributions from pay earned in a combat zone) which a service member 
may make for 2005 is 10 percent of basic pay. After 2005 the percentage 
of basic pay limit will not apply and the maximum contribution will be 
limited only by the provisions of the Internal Revenue Code (26 
U.S.C.).
    (b) Matching contributions. When matching contributions are 
authorized for a service member, that service member's regular 
contributions will be matched dollar-for-dollar on the first three 
percent of basic pay contributed to the TSP, and 50 cents on the dollar 
on the next two percent of basic pay contributed. Matching 
contributions only apply to regular contributions.
* * * * *

0
25. Amend Sec.  1604.5 by revising paragraphs (a)(1) and (b)(3) to read 
as follows:


Sec.  1604.5  Separate service member and civilian accounts.

    (a) * * *
    (1) If a participant contributes to a service member account and a 
civilian account, the contributions to both accounts together cannot 
exceed the Internal Revenue Code (26 U.S.C.) contribution limits.
* * * * *
    (b) * * *
    (3) Transferred funds will be allocated among the TSP Funds 
according to the contribution allocation in effect for the account into 
which the funds are transferred.
* * * * *

0
26. Amend Sec.  1604.7 by revising paragraph (c) to read as follows:


Sec.  1604.7  Withdrawals.

* * * * *
    (c) Combat zone contributions. If a service member account contains 
combat zone contributions, the withdrawal will be distributed pro rata 
from all sources. If a participant requests the TSP to transfer all, or 
a portion, of a withdrawal to a traditional IRA or eligible employer 
plan, the share of the withdrawal attributable to combat zone 
contributions (if any) can be transferred only if the IRA or plan 
accepts such funds.
* * * * *

0
27. Amend Sec.  1604.8 by revising paragraph (c) to read as follows:


Sec.  1604.8  Death benefits.

* * * * *
    (c) Trustee-to-trustee transfers. The surviving spouse of a TSP 
participant can request the TSP to transfer a death benefit payment to 
a traditional IRA or eligible employer plan. The share of the death 
benefit payment that is attributable to combat zone contributions (if 
any) can be transferred only if the IRA or plan accepts such funds.
* * * * *

0
28. Amend Sec.  1604.9 by revising paragraph (c) to read as follows:


Sec.  1604.9  Court orders and legal processes.

* * * * *
    (c) Trustee-to-trustee transfers. The current or former spouse of a 
TSP participant can request the TSP to transfer a court-ordered payment 
to a traditional IRA or eligible employer plan. If the payee requests 
the TSP to transfer all or a portion of the court-ordered payment to an 
IRA or plan, the share of the payment attributable to combat zone 
contributions (if any) can be transferred only if the IRA or plan 
accepts such funds.
* * * * *


Sec.  1604.10  [Amended]

0
29. Amend Sec.  1604.10 by removing ``; and'' from paragraph (a)(3) and 
adding a period in its place; and by removing paragraph (a)(4).

PART 1605--CORRECTION OF ADMINISTRATIVE ERRORS

0
30. The authority citation for Part 1605 continues to read as follows:

    Authority: 5 U.S.C. 8351, 8432a, and 8474(b)(5) and (c)(1).

Subpart A--General

0
31. Amend paragraph (b) of Sec.  1605.1 by removing the definitions of 
``Board error'', ``Employing agency error'', and ``Record keeper 
error'', and by adding a new definition of ``Error'' to read as 
follows:


Sec.  1605.1  Definitions.

* * * * *
    (b) * * *
    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.
* * * * *

0
32. Revise Sec.  1605.2 to read as follows:


Sec.  1605.2  Calculating, posting, and charging breakage.

    (a) The TSP will calculate breakage on late contributions, makeup 
agency contributions, and loan payments as described by Sec.  
1605.15(b). This breakage calculation is subject to the following 
rules:
    (1) The TSP 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 will not take the participant's interfund transfers 
into account when determining breakage.
    (b) Calculating breakage. The TSP will calculate breakage as 
follows:
    (1) For contributions or loan payments with ``as of'' dates on or 
after January 1, 2000, the TSP will:
    (i) Use the participant's contribution allocation on file for the 
``as of'' date to determine how the funds would have been invested. If 
there is no contribution allocation on file, or one cannot be

[[Page 32210]]

derived based on the investment of contributions, the TSP will consider 
the funds to have been invested in the G Fund;
    (ii) 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 monthly earnings the participant would have 
received had the contributions or loan payments been made on the ``as 
of'' date; and
    (iii) 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. 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.
    (2) For contributions and loan payments with an ``as of'' date 
before January 1, 2000, the TSP will:
    (i) Value the contributions and loan payments from the ``as of'' 
date through the date TSP accounts were converted to shares, by using 
the greater of either the G Fund monthly rate of return or the average 
monthly rate of return for all TSP Funds;
    (ii) Determine the number of shares the participant would have 
received at conversion; and
    (iii) Determine the dollar value of those shares on the posting 
date by using the greater of either the G Fund share price or the 
average share price for all of the TSP Funds. 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 contribution allocation 
on file for the posting date. If there is no contribution allocation on 
file for the posting date, they will be posted to the G Fund.
    (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 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 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 Funds will not be netted against each other. Instead, breakage will 
be determined separately for each as-of date, TSP Fund, and source of 
contributions.

Subpart B--Employing Agency Errors

0
33. Amend Sec.  1605.11 by revising paragraphs (c)(5), (c)(6) and 
(c)(8) to read as follows:


Sec.  1605.11  Makeup of missed or insufficient contributions.

* * * * *
    (c) * * *
    (5) Employee makeup contributions will be invested in accordance 
with the participant's current contribution allocation. The number of 
shares of each TSP Fund which will be purchased will be determined by 
dividing the amount of the makeup contributions by the share price of 
the applicable fund(s) on the posting date.
    (6) Employee makeup contributions will be included for purposes of 
applying the annual limit contained in Internal Revenue Code (I.R.C.) 
section 402(g) (26 U.S.C. 402(g)(1)). For purposes of applying that 
limit, employee makeup contributions will be applied against the limit 
for the year of the ``as of'' date.
    (i) Before establishing a schedule of employee makeup 
contributions, the employing agency must review any schedule proposed 
by the affected participant, as well as the participant's prior TSP 
contributions, if any, to determine whether the makeup contributions, 
when combined with prior contributions for the same year, would exceed 
the annual contribution limit(s) contained in I.R.C. section 402(g) for 
the year(s) with respect to which the contributions are being made.
    (ii) The employing agency must not permit contributions that, when 
combined with prior contributions, would exceed the applicable annual 
contribution limit contained in I.R.C. section 402(g).
* * * * *
    (8) A participant may elect to terminate a schedule of employee 
makeup contributions at any time, but a termination is irrevocable. If 
a participant separates from Federal service, the participant may elect 
to accelerate the payment schedule by a lump sum contribution from his 
or her final paycheck.
* * * * *

0
34. Revise Sec.  1605.12 to read as follows:


Sec.  1605.12  Removal of erroneous contributions.

    (a) Applicability. This section applies to the removal of funds 
erroneously contributed to the TSP. The TSP calls this action 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 Sec.  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.
    (1) To remove money from a participant's account, the employing 
agency must submit, for each attributable pay date involved, a negative 
adjustment record stating the attributable pay date and the amount, by 
source, of the erroneous contribution.
    (2) A negative adjustment record may be for any part of the 
contributions made for the attributable pay date. However, for each 
source of contributions, the negative adjustment may not exceed the 
amount of the contributions made for that date, minus any prior 
negative adjustments for the same date.
    (c) Processing negative adjustments. To determine current value, a 
negative adjustment will be allocated among the TSP Funds as it would 
have been allocated on the attributable pay period (as reported by the 
employing agency).
    (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 will, for each source of contributions 
and investment fund:
    (i) Determine the dollar value of the amount to be removed by using 
the

[[Page 32211]]

monthly returns for the applicable TSP Fund;
    (ii) Determine the number of shares that the dollar value 
determined in paragraph (c)(1)(i) of this section would have purchased 
on the conversion date; and
    (iii) Multiply the price per share for the date the adjustment is 
posted by the number of shares calculated in paragraph (c)(1)(ii) of 
this section.
    (2) If the attributable pay date of the negative adjustment is 
after the date TSP accounts were converted to shares, the TSP will, for 
each source of contributions and TSP Fund:
    (i) Determine the number of shares that represent the amount of the 
contribution to be removed using the share price on the attributable 
pay date; and
    (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.
    (d) Employee contributions. The following rules apply to negative 
adjustments involving employee contributions:
    (1) If, on the posting date, the amount calculated under paragraph 
(c) of this section is equal to or greater than the amount of the 
proposed negative adjustment, the full amount of the adjustment will be 
removed from the participant's account and returned to the employing 
agency. Earnings on the erroneous contribution will remain in the 
participant's account;
    (2) If, on the posting date, the amount calculated under paragraph 
(c) of this section is less than the amount of the proposed negative 
adjustment, the amount of the adjustment, reduced by the investment 
loss, will be removed from the participant's account and returned to 
the employing agency. However, the employing agency must refund to the 
participant the full amount of the erroneous contribution;
    (3) If an employing agency requests the removal of erroneous 
employee contributions from a participant's account, it must also 
request the removal, under paragraph (e) of this section, of any 
attributable agency matching contributions; and
    (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 an in-service or a post-employment 
withdrawal. If the participant is not eligible to maintain a TSP 
account, the employing agency must submit an employee data record to 
the TSP indicating that the participant has separated from Federal 
service (this will allow the TSP-ineligible participant to make a post-
employment withdrawal election).
    (e) Employer contributions. The following rules apply to negative 
adjustments involving erroneous employer contributions:
    (1) The amount calculated under paragraph (c) of this section will 
be removed from the participant's account.
    (2) Erroneous employer contributions will be returned to the 
employing agency only if the negative adjustment record is posted by 
the TSP record keeper within one year of the date the erroneous 
contribution was posted. If one year or more has elapsed when the 
negative adjustment record is posted, the amount computed under 
paragraph (c) of this section will be removed from the participant's 
account and used to offset TSP administrative expenses;
    (3) If the erroneous contribution has been in the participant's 
account for less than one year when the negative adjustment record is 
posted and the amount computed under paragraph (c) of this section is 
equal to or greater than the amount of the adjustment, the employing 
agency will receive the full amount of the erroneous contribution. Any 
earnings attributable to the erroneous contribution will be removed 
from the participant's account and used to offset TSP administrative 
expenses;
    (4) If the erroneous contribution has been in the participant's 
account for less than one year when the negative adjustment record is 
posted, and the amount computed under paragraph (c) of this section is 
less than the amount of the adjustment, the employing agency will 
receive the amount of the erroneous contribution reduced by the 
investment loss; and
    (5) An employing agency's obligation to submit negative adjustment 
records to remove erroneous contributions from a participant's account 
is not affected by the length of time the contributions have been in 
the account.
    (f)(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 Funds will not be netted against each 
other. Instead, for each attributable pay date each source of 
contributions and each TSP 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 Funds when the transaction is posted; and
    (2) If there is insufficient money in the same source of 
contributions to cover the amount to be removed or the amount of the 
requested adjustment, the negative adjustment record will be rejected.

0
35. Amend Sec.  1605.13 by revising paragraphs (a)(2)(ii), (a)(3), 
(b)(3), and (d) to read as follows:


Sec.  1605.13  Back pay awards and other retroactive pay adjustments.

    (a) * * *
    (2) * * *
    (ii) Instead of making contributions for the period of separation 
in accordance with the reinstated contribution election, the 
participant may submit a new contribution election if he or she would 
have been eligible to make such an election but for the erroneous 
separation.
    (3) All contributions made under this paragraph (a) and associated 
breakage will be invested according to the participant's contribution 
allocation on the posting date. Breakage will be calculated using the G 
Fund share prices in accordance with Sec.  1605.2 unless otherwise 
required by the employing agency or the court or other tribunal with 
jurisdiction over the back pay case.
    (b) * * *
    (3) All contributions under this paragraph (b) and associated 
breakage will be posted to the participant's account based on the 
participant's contribution allocation on the posting date. Breakage 
will be calculated in accordance with Sec.  1605.2.
* * * * *
    (d) Prior withdrawal of TSP account. If a participant has withdrawn 
his or her TSP account other than by purchasing an annuity, and the 
separation from Federal service upon which the withdrawal 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 
withdrawn to his or her TSP account. The right to restore the withdrawn 
funds will expire if the participant does not notify the Board within 
90 days of reinstatement. If the participant returns the funds that 
were withdrawn, the number of shares purchased will be determined by 
using

[[Page 32212]]

the share price of the applicable investment fund on the posting date. 
Restored funds will not incur breakage.
* * * * *

0
36. Amend Sec.  1605.14 by removing the word ``excess'' from the last 
sentence of paragraph (a)(1) and by revising paragraphs (b)(4) and 
(c)(3) to read as follows:


Sec.  1605.14  Misclassified retirement system coverage.

* * * * *
    (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 three sources. Breakage will be calculated 
pursuant to Sec.  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 will consider a participant to be separated from 
Federal service for all TSP purposes and the employing agency must 
submit an employee data record to reflect separation from Federal 
service. If the participant has an outstanding loan, it will be subject 
to the provisions of 5 CFR 1655.13. The participant may make a TSP 
post-employment withdrawal election pursuant to 5 CFR part 1650, 
subpart B, and the withdrawal will be subject to the provisions of 5 
CFR 1650.60(b).
* * * * *

0
37. Amend Sec.  1605.16 by revising paragraphs (a) and (b) to read as 
follows:


Sec.  1605.16  Claims for correction of employing agency errors; time 
limits.

    (a) Agency's discovery of error. Upon discovery of an error made 
within the past six months involving the correct or timely remittance 
of payments to the TSP (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.
    (b) Participant's discovery of error. 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 (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.
* * * * *

Subpart C--Board or TSP Record Keeper Errors

0
38. Revise Sec.  1605.21 to read as follows:


Sec.  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 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 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 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 G Fund rate of return for the relevant period and return the money 
to the participant.
    (b) Other corrections. The Executive Director may, in his 
discretion 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.

0
39. Amend Sec.  1605.22 by revising paragraph (c)(2) to read as 
follows:


Sec.  1605.22  Claims for correction of Board or TSP record keeper 
errors; time limitations.

* * * * *
    (c) * * *
    (2) For errors involving contribution allocations or interfund 
transfers of which a participant or beneficiary has knowledge, he or 
she may file a claim for correction with the Board or TSP record keeper 
no later than 30 days after the TSP provides the participant with a 
transaction confirmation reflecting the error, or makes available on 
its Web site a participant statement detailing the error. The Board or 
TSP record keeper must promptly correct such errors.
* * * * *

Subpart D--Miscellaneous Provisions

0
40. Amend Sec.  1605.31 by revising paragraphs (b), (c)(1) and (d) to 
read as follows:


Sec.  1605.31  Contributions missed as a result of military service.

* * * * *
    (b) Missed employee contributions. An employee who separates or 
enters nonpay status to perform military service may be eligible to 
make up TSP contributions when he or she is reemployed or restored to 
pay status in the civilian service. Eligibility for making up missed 
employee contributions will be determined in accordance with the rules 
specified at 5 CFR part 1620, subpart E. Missed employee contributions 
must be made up in accordance with the rules set out in Sec.  
1605.11(c) and 5 CFR 1620.42.
    (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 agency automatic (1%) makeup contributions and report 
those contributions to the record keeper.
* * * * *
    (d) Breakage. The employee is entitled to breakage on agency 
contributions made under paragraph (c) of this section. The employee 
will elect

[[Page 32213]]

to have the calculation based on either the contribution allocation(s) 
on file for the participant during the period of military service or 
the G Fund; the participant must make this election at the same time 
his or her makeup schedule is established pursuant to Sec.  1605.11(c).

PART 1606--[REMOVED AND RESERVED]

0
41. Under the authority of 5 U.S.C. 8474(c)(1), remove and reserve part 
1606.

PART 1620--EXPANDED AND CONTINUING ELIGIBILITY

0
42. The authority citation for Part 1620 is revised 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.

Subpart A--General


Sec.  1620.1  [Amended]

0
43. Amend Sec.  1620.1 by removing ``, waives open season rules,'' from 
the third sentence.

0
44. Revise Sec.  1620.2 to read as follows:


Sec.  1620.2  Definitions.

    The definitions generally applicable to the Thrift Savings Plan are 
set forth at 5 CFR 1690.1.

Subpart B--Cooperative Extension Service, Union, and 
Intergovernmental Personnel Act Employees

0
45. Amend Sec.  1620.12 by revising the third sentence to read as 
follows:


Sec.  1620.12  Employing authority contributions.

    * * * The employing authority can commence or terminate employer 
contributions at any time after providing all affected employees with 
notice of a decision to commence or terminate such contributions at 
least 45 days before the beginning of the applicable election period. * 
* *

0
46. Revise the Subpart C heading to read as follows:

Subpart C--Justices and Judges


Sec.  1620.20  [Amended]

0
47. Amend Sec.  1620.20 by adding the word ``judge'' to paragraphs 
(a)(2) and (b) after the word ``magistrate''.

0
48. Amend Sec.  1620.21 by adding the word ``judge'' to paragraph 
(b)(2) after the word ``magistrate'', and by revising paragraph (a) to 
read as follows:


Sec.  1620.21  Contributions.

    (a) An individual covered under this subpart can make contributions 
to the TSP from basic pay in the amount described at 5 CFR 
1600.22(a)(1). Unless stated otherwise in this subpart, he or she is 
covered by the same rules that apply to a CSRS participant in the TSP.
* * * * *


Sec.  1620.22  [Amended]

0
49. Amend Sec.  1620.22 by adding the word ``judge'' to paragraph 
(a)(2)(ii) after the word ``magistrate''.

0
50. Amend Sec.  1620.23 by revising paragraph (b) to read as follows:


Sec.  1620.23  Spousal rights.

* * * * *
    (b) A current or former spouse of a bankruptcy judge, a United 
States magistrate judge, or a judge of the United States Court of 
Federal Claims, possesses the rights described at 5 U.S.C. 8435 and 
8467 if the judge is covered under this subpart.

Subpart D--Nonappropriated Fund Employees


Sec.  1620.33  [Removed and Reserved]

0
51. Remove and reserve Sec.  1620.33.

Subpart E--Uniformed Services Employment and Reemployment Rights 
Act (USERRA)--Covered Military Service

0
52. Revise Sec.  1620.42 to read as follows:


Sec.  1620.42  Processing TSP contribution elections.

    (a) Current contribution election. If the employee entered nonpay 
status with a valid contribution election on file, the agency must 
immediately reinstate that election for current contributions when the 
employee returns to pay status, unless the employee files a new 
contribution election. If the employee separated to perform military 
service, he or she must make a new contribution election to begin 
current contributions.
    (b) Makeup contribution election. Upon reemployment or return to 
pay status, an employee has 60 days to elect to make up missed 
contributions. An employee's right to make retroactive TSP 
contributions will expire if an election is not made within 60 days of 
the participant's reemployment or return to pay status.
    (c) Makeup contributions. Makeup contributions will be processed as 
follows:
    (1) If the employee had a valid contribution election on file when 
he or she separated or entered nonpay status to perform military 
service, that election form will be reinstated for purposes of 
determining the makeup contributions, unless the employee submits a new 
contribution election which he or she could otherwise have made but for 
the performance of military service.
    (2) An employee who terminated contributions within two months of 
entering military service will also be eligible to make a retroactive 
contribution election to be effective on the date the contributions 
were terminated.

0
53. Revise Sec.  1620.43 to read as follows:


Sec.  1620.43  Agency payments to record keeper; agency ultimately 
responsible.

    (a) Agency making payments to record keeper. The current employing 
agency is responsible for making payments to the record keeper for all 
contributions, regardless of whether some of that expense is ultimately 
chargeable to a prior employing agency.
    (b) Agency ultimately chargeable with expense. The agency that 
reemployed the participant is ordinarily the agency ultimately 
chargeable with the expense of agency contributions and the breakage 
attributable to them. 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 record keeper for agency 
contributions is not the agency ultimately chargeable for that expense, 
the agency that made the payments to the record keeper may, but is not 
required to, obtain reimbursement from the agency ultimately chargeable 
with the expense.

0
54. Amend Sec.  1620.45 by revising paragraphs (a)(1), (a)(2), (c)(2) 
and (d) to read as follows:


Sec.  1620.45  Suspending TSP loans, restoring post-employment 
withdrawals, and reversing taxable distributions.

    (a) * * *
    (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 will reamortize the

[[Page 32214]]

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 may close the loan account and declare it to be a 
taxable distribution if the TSP does not receive documentation that the 
employee entered into nonpay status. However, the taxable distribution 
can be reversed in accordance with paragraph (c) of this section.
* * * * *
    (c) * * *
    (2) A taxable loan distribution 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
* * * * *
    (d) Breakage. Employees will not receive breakage on amounts 
returned to their accounts under this section.

0
55. Amend Sec.  1620.46 by revising paragraphs (b), (d) and (e) to read 
as follows:


Sec.  1620.46  Agency responsibilities.

* * * * *
    (b) Agency records; procedure for reimbursement. The agency making 
payments to the record keeper for all contributions and attributable 
breakage will obtain from prior employing agencies whatever information 
is necessary to make accurate payments. If a prior employing agency is 
ultimately chargeable under Sec.  1620.43(b) for all or part of this 
expense, the agency making the payments to the record keeper will 
determine the procedure to follow in order to collect amounts owed to 
it by the agency ultimately chargeable with the expense.
* * * * *
    (d) Agency automatic (1%) contributions. Employing agencies must 
calculate the agency automatic (1%) contributions for all reemployed 
(or restored) FERS employees and report those contributions to the 
record keeper within 60 days of reemployment.
    (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 complete and file the appropriate paper TSP form with the 
TSP record keeper in accordance with the form's instructions to have 
those funds restored.
* * * * *

PART 1640--PERIODIC PARTICIPANT STATEMENTS

0
56. 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).


0
57. Amend Sec.  1640.3 by revising paragraph (f)(3) to read as follows:


Sec.  1640.3  Statement of individual account.

* * * * *
    (f) * * *
    (3) The account balance and activity in each TSP Fund, including 
the dollar amount of the transaction, the share price, and the number 
of shares; and
* * * * *

0
58. Amend Sec.  1640.4 by revising paragraphs (a)(5) and (b)(2) to read 
as follows:


Sec.  1640.4  Account transactions.

    (a) * * *
    (5) Transfers among TSP Funds;
* * * * *
    (b) * * *
    (2) TSP Funds affected;
* * * * *

0
59. Amend Sec.  1640.5 by revising the section heading and the first 
sentence of the introductory language to read as follows:


Sec.  1640.5  TSP Fund information.

    The Board will provide to each participant four (4) times each 
calendar year a statement concerning each of the TSP Funds. * * *
* * * * *

PART 1645--CALCULATION OF SHARE PRICES

0
60. The authority citation for Part 1645 continues to read as follows:

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


0
61. Revise Sec.  1645.2 to read as follows:


Sec.  1645.2  Posting of transactions.

    Contributions, loan payments, loan disbursements, withdrawals, 
interfund transfers, and other transactions will be posted in dollars 
and in shares by source and by TSP Fund to the appropriate individual 
account by the TSP record keeper, using the share price for the date 
the transaction is posted.

0
62. Revise Sec.  1645.3 to read as follows:


Sec.  1645.3  Calculation of total net earnings for each TSP Fund.

    (a) Each business day, net earnings will be calculated separately 
for each TSP Fund.
    (b) Net earnings for each fund will equal:
    (1) The sum of the following items, if any, accrued since the last 
business day:
    (i) Interest on money of that fund which is invested in the 
Government Securities Investment Fund;
    (ii) Interest on other short-term investments of the fund;
    (iii) Other income (such as dividends, interest, or securities 
lending income) on investments of the fund; and
    (iv) Capital gains or losses on investments of the fund, net of 
transaction costs.
    (2) Minus the accrued administrative expenses of the fund, 
determined in accordance with Sec.  1645.4.
    (c) The net earnings for each TSP fund determined in accordance 
with paragraph (b) of this section will be added to the residual net 
earnings for that fund from the previous business day, as described in 
Sec.  1645.5(b), to produce the total net earnings. The total net 
earnings will be used to calculate the share price for that business 
day.

0
63. Revise Sec.  1645.4 to read as follows:


Sec.  1645.4  Administrative expenses attributable to each TSP Fund.

    A portion of the administrative expenses accrued during each 
business day will be charged to each TSP 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 accrued forfeitures 
and accrued earnings on forfeitures, abandoned accounts, and unapplied 
deposits;
    (b) Investment management fees and other accrued administrative 
expenses attributable only to a particular fund will be charged solely 
to that fund.
    (c) The amount of accrued administrative expenses not covered by 
forfeitures 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 Funds, based on the respective fund balances on the last 
business day of the prior month end.

0
64. Revise Sec.  1645.5 to read as follows:


Sec.  1645.5  Calculation of share prices.

    (a) Calculation of share price. The share price for each TSP Fund 
for each business day will apply to all sources of contributions for 
that fund. The total net earnings (as computed under Sec.  1645.3)

[[Page 32215]]

for each fund will be divided by the total fund basis (as computed 
under Sec.  1645.6) for that fund. The resulting number, computed to 
ten decimal places, represents the incremental change in the value of 
that fund from the last business day to the current business day. The 
share price for that fund for the current business day is the sum of 
the incremental change in the share price for the current business day 
plus the share price for the prior business day, truncated to two 
decimal places.
    (b) Residual net earnings. When the total net earnings for each 
business day for each TSP Fund are divided by the total fund basis in 
that fund, there will be residual net earnings attributable to the 
truncation described in paragraph (a) of this section which will not be 
included in the incremental change in the share price of the fund for 
that business day. The residual net earnings that are not included in 
the incremental share price for the fund may be added to the earnings 
for that fund on the next business day.

0
65. Revise Sec.  1645.6 to read as follows:


Sec.  1645.6  Basis for calculation of share prices.

    The total fund basis for a TSP Fund will be the sum of the number 
of shares in all individual accounts from all sources of contributions 
in that fund as of the opening of business on each business day.

PART 1650--METHODS OF WITHDRAWING FUNDS FROM THE THRIFT SAVINGS 
PLAN

0
66. The authority citation for Part 1650 continues to read as follows:

    Authority: 5 U.S.C. 8531, 8433, 8434, 8435, 8474(b)(5) and 
8474(c)(1).

Subpart A--General


Sec.  1650.1  [Amended]

0
67. Amend Sec.  1650.1 by removing from paragraph (b) the definitions 
of ``Eligible employer plan'' and Traditional IRA''.

0
68. Revise Sec.  1650.4 to read as follows:


Sec.  1650.4  Certification of truthfulness.

    By signing a TSP withdrawal form, electronically or on paper, the 
participant certifies, under penalty of perjury, that all information 
provided to the TSP during the withdrawal process is true and complete, 
including statements concerning the participant's marital status and, 
where applicable, the spouse's address at the time the application is 
filed or the current spouse's consent to the withdrawal.

0
69. Add a new Sec.  1650.6 to read as follows:


Sec.  1650.6  Deceased participant.

    (a) The TSP will cancel a pending withdrawal request if it 
processes a written notice that a participant is deceased. The TSP 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.
    (b) If the TSP processes a withdrawal request before being notified 
that a participant is deceased, the funds cannot be returned to the 
TSP.

Subpart B--Post-Employment Withdrawals

0
70. Amend Sec.  1650.11 by adding a new paragraph (c) to read as 
follows:


Sec.  1650.11  Withdrawal elections.

* * * * *
    (c) If a participant's vested account balance is less than $200 
when he or she separates from Federal service, the TSP will 
automatically pay the balance to the participant at his o