In-Service Hardship Withdrawals From the Thrift Savings Plan, 1389 [06-120]

Agencies

• Federal Retirement Thrift Investment Board

[Federal Register Volume 71, Number 5 (Monday, January 9, 2006)]
[Rules and Regulations]
[Page 1389]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-120]



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Federal Register / Vol. 71, No. 5 / Monday, January 9, 2006 / Rules 
and Regulations

[[Page 1389]]



FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Part 1650


In-Service Hardship Withdrawals From the Thrift Savings Plan

AGENCY: Federal Retirement Thrift Investment Board.

ACTION: Temporary rule.

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SUMMARY: This document contains temporary regulations that lift certain 
restrictions on financial hardship inservice withdrawals from Federal 
employees' and uniformed service members' Thrift Savings Plan (TSP) 
accounts. These temporary regulations are intended to assist TSP 
participants affected by Hurricanes Katrina, Rita, and Wilma.

EFFECTIVE DATE: These regulations are effective January 1, 2006, 
through March 31, 2006.

FOR FURTHER INFORMATION CONTACT: Office of Benefits Services, Federal 
Retirement Thrift Investment Board, 1250 H Street, NW., Washington, DC 
20005, 202-942-1460.

SUPPLEMENTARY INFORMATION: The Board administers the 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 
have been 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)).
    The TSP is managed by five part-time Presidentially-appointed Board 
members and an Executive Director. FERSA gives the Executive Director 
authority to prescribe regulations permitting participants to make 
limited withdrawals from their TSP accounts before they are separated 
from Government employment. 5 U.S.C. 8433(h)(4). This temporary 
regulation is based upon that authority and the provisions of 5 U.S.C. 
553(d)(1) and (3).
    The TSP's permanent regulations prohibit participants from 
requesting a financial hardship in-service withdrawal from their 
accounts if they have received another financial hardship withdrawal 
within the last six months. In addition, a participant who obtains a 
financial hardship in-service withdrawal may not contribute to the TSP 
for a period of six months after the withdrawal is processed.
    On October 13, 2005, the TSP published a temporary regulation, 70 
FR 59621, deleting these restrictions if the financial need resulted 
from Hurricane Katrina. The temporary regulation was effective through 
December 31, 2005. Congress and the Internal Revenue Service have since 
expanded the tax relief available to hurricane victims to Hurricanes 
Rita and Wilma. This temporary regulation extends the effective date of 
the temporary change to TSP regulations from December 31, 2005, to 
March 31, 2006, and extends its effect to victims of Hurricanes 
Katrina, Rita, and Wilma.

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 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. 602, 
632, 653, 1501-1571, 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, a statement under Sec.  
1532 is not required.

List of Subjects in 5 CFR Part 1650

    Employee benefit plans, Government employees, Pensions, Retirement.

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

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

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

0
1. The authority citation for part 1650 continues to read as follows:

    Authority: 5 U.S.C. 8351, 8433, 8434, 8435, 8474(b)(5), and 
8474(c)(1).

0
2. Amend section 1650.33 by adding a new paragraph (c) to read as 
follows:


Sec.  1650.33  Contributing to the TSP after an in-service withdrawal.

* * * * *
    (c) Notwithstanding the provisions of paragraph (b) of this 
section, a participant who obtains a financial hardship in-service 
withdrawal based upon a financial need caused by Hurricane Katrina, 
Hurricane Rita, or Hurricane Wilma, and who is not, at the time of the 
second hardship withdrawal, making contributions because of a previous 
financial hardship withdrawal will not have his/her contribution 
suspension period further extended. The participant may submit a new 
TSP contribution election to resume contributions any time after 
expiration of the original six-month contribution suspension period.

0
3. Amend section 1650.42 by adding a new paragraph (c) to read as 
follows:


Sec.  1650.42  How to obtain a financial hardship withdrawal.

* * * * *
    (c) Notwithstanding the provisions of paragraph (b) of this 
section, the TSP will accept at any time a financial hardship 
withdrawal request that is based upon a financial need caused by 
Hurricane Katrina, Hurricane Rita, or Hurricane Wilma. The participant 
must certify on the application that the financial need is related to a 
hardship caused by one of the hurricanes: Katrina, Rita, or Wilma.

[FR Doc. 06-120 Filed 1-6-06; 8:45 am]
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