Uniformed Services Accounts; Death Benefits; Court Orders and Legal Processes Affecting Thrift Savings Plan Accounts; Thrift Savings Plan, 54491-54493 [E9-25426]
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54491
Proposed Rules
Federal Register
Vol. 74, No. 203
Thursday, October 22, 2009
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
FEDERAL RETIREMENT THRIFT
INVESTMENT BOARD
5 CFR Parts 1604, 1651, 1653, and 1690
Uniformed Services Accounts; Death
Benefits; Court Orders and Legal
Processes Affecting Thrift Savings
Plan Accounts; Thrift Savings Plan
dcolon on DSK2BSOYB1PROD with PROPOSALS
AGENCY: Federal Retirement Thrift
Investment Board.
ACTION: Proposed rules with request for
comments.
SUMMARY: The Federal Retirement Thrift
Investment Board (Agency) proposes to
amend its regulations regarding
uniformed services accounts to conform
with mandatory tax provisions as well
as current record keeping practices and
allow only for pro rata court-ordered
payments.
The Agency proposes to amend its
regulations regarding death benefits to
provide for a clear process by which
children of participants can establish
parentage.
The Agency proposes to amend its
court order regulations so that when a
court order directs that payment is to
include earnings, the Agency is able to
make a payment which calculates the
payee’s award amount based on the
current price of the shares he/she was
awarded.
The Agency also proposes to amend
its court order regulations to remove a
provision which permits courts to direct
payment from only the tax-exempt
balance of a uniformed services account.
The Agency proposes to amend its
regulations at part 1690, subpart B, to
add a regulation outlining the
circumstances under which a TSP
account may be frozen.
DATES: Comments must be received on
or before November 23, 2009.
ADDRESSES: You may submit comments
using one of the following methods:
• Federal Rulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Mail: Office of General Counsel,
Attn: Thomas Emswiler, Federal
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15:06 Oct 21, 2009
Jkt 220001
Retirement Thrift Investment Board,
1250 H Street, NW., Washington, DC
20005.
• Hand Delivery/Courier: The address
for sending comments by hand delivery
or courier is the same as that for
submitting comments by mail.
• Facsimile: Comments may be
submitted by facsimile at (202) 942–
1676.
The most helpful comments explain
the reason for any recommended change
and include data, information, and the
authority that supports the
recommended change. We will post all
substantive comments (including any
personal information provided) without
change (with the exception of redaction
of SSNs, profanities, et cetera) on
https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Tim
Carey at 202–942–1666 or Laurissa
Stokes at 202–942–1645.
SUPPLEMENTARY INFORMATION: The
Agency 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 are
codified, as amended, largely at 5 U.S.C.
8351 and 8401–79. The TSP is a taxdeferred retirement savings plan for
Federal civilian employees and
members of the uniformed services. The
TSP is similar to cash or deferred
arrangements established for privatesector employees under section 401(k)
of the Internal Revenue Code (26 U.S.C.
401(k)).
Uniformed Services Accounts
The Agency proposes to amend its
regulations regarding uniformed
services accounts, and, specifically, its
provisions relating to the division of a
uniformed services account pursuant to
a court order or legal process. The
Agency seeks to remove a provision
suggesting that courts could direct the
Plan to make a court-ordered payment
other than one that is pro rata from both
taxable and tax-exempt contributions.
Uniformed services accounts are
unique in that some or all of a
uniformed services member’s
contributions may derive from taxexempt income as a result of the combat
zone tax exclusion. In 2001, the Agency
issued final regulations regarding the
uniformed services’ participation in the
TSP. Among many changes, the Agency
determined that ‘‘the TSP can honor a
PO 00000
Frm 00001
Fmt 4702
Sfmt 4702
court order or legal process that
apportions combat zone (tax-exempt)
contributions between the participant
and the payee,’’ and, therefore, the final
version of 5 CFR 1604.9(b) regarding
court-ordered payments from a
uniformed services member’s account
stated that payment will be made pro
rata from all sources ‘‘unless the court
order or legal process directs
otherwise.’’ (66 FR 50716, October 4,
2001).
The Agency recently analyzed its
authority and record keeping capability
to issue payments from, as the
regulation suggests, only one source of
contributions in a uniformed services
participant’s account. The Agency has
concluded that the Internal Revenue
Code (I.R.C.) permits only pro rata
payments from both taxable and taxexempt funds, and that a court cannot
direct the Plan to make a payment from,
for example, only tax-exempt funds.
Specifically, I.R.C. sections 72 and
402(e)(1)(A) preclude an allocation of
basis pursuant to a court order if such
allocation is other than pro rata. In
particular, for purposes of determining
tax liability, a spousal alternate payee is
treated the same as the participant and,
therefore, a distribution to a spouse or
former spouse made pursuant to a court
order must be made pro rata from
taxable and tax-exempt amounts in a
uniformed services account. 26 U.S.C.
402(e)(1)(A). Therefore, the Agency’s
regulation permitting courts to order a
payment other than pro rata is not
permitted by the I.R.C. and must be
changed.
Additionally, the Agency’s record
keeping system cannot issue a payment
from only one source of funds because
it is programmed to make all payments
from uniformed services accounts on a
pro rata basis from taxable and taxexempt balances. Therefore, changing
this regulation to remove the language
which suggests a court could direct the
Agency to issue a payment other than
one which is pro rata is not only
technically correct but also reflects
current record keeping processes.
Death Benefits
The Agency proposes to amend its
regulations regarding death benefits,
and, in particular, its regulation
regarding payment to a participant’s
child or children. Specifically, the
Agency seeks to clarify the
documentation children should submit
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54492
Federal Register / Vol. 74, No. 203 / Thursday, October 22, 2009 / Proposed Rules
dcolon on DSK2BSOYB1PROD with PROPOSALS
in the event that the identity of their
father or mother is in dispute or unclear.
As familial matters, including
guidelines related to parentage, are
rooted in state, not Federal, law, the
Agency cannot adjudicate or otherwise
determine matters of paternity or
maternity. In support of their contention
that they are the proper beneficiary of
their parent’s account, children of
deceased participants often submit
insufficient or otherwise unclear
documentation (e.g., copies of obituaries
and personal mementos). A lack of
guidance regarding which documents to
submit in support of parentage adds
unnecessary time and inconvenience to
the processing of death benefit
determinations.
The Agency, therefore, proposes to
augment its death benefits regulations to
describe the documentation it requires
in support of a purported child’s claim
that a participant was his or her parent.
Specifically, the Agency requests that
affected children submit a court order or
administrative finding or
documentation which would establish
parentage in the state in which the
participant resided prior to his death.
Court Orders and Legal Processes
Affecting Thrift Savings Plan Accounts
The Agency is proposing to change its
court order regulations to allow for
court-awarded payments which account
for investment earnings and losses as
well as to reflect the previouslydiscussed requirement that all payments
from participants’ accounts be paid pro
rata.
Currently, in order for the Agency to
take into account investment losses, a
court order has to divide the account as
of the date of distribution or identify a
fixed amount that the parties agreed
upon. Further, per the Agency’s
regulations, if a court order specifies
that earnings are to be awarded and no
specific rate is provided, even when an
account experiences investment losses,
the Agency awards earnings using its
Government Securities Investment (G)
Fund rate. 5 CFR 1653.4(f)(3).
The Agency, which receives many
court orders directing that payments
reflect earnings and losses until the date
of distribution, proposes to change its
regulations so that the division of an
account factors in the current price of
those shares included in a payee’s
award amount.
In particular, if earnings, defined to
include losses, are requested and a rate
is not specified, the Agency proposes to
determine the amount to be awarded by
determining the payee’s award amount
(e.g., the percentage or fraction of the
participant’s account), and, based on the
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15:06 Oct 21, 2009
Jkt 220001
participant’s investment allocation as of
the effective date of the court order, the
number and composition of shares that
the payee’s award amount would have
purchased as of the effective date.
(Determining the shares as of the
effective date of the court order, and not
a later date, preserves the court’s intent
and protects the payee from investment
decisions made by the participant after
the effective date of the court order.)
The Agency will then multiply the price
per share as of the payment date, which
is generally two business days prior to
the date of the award’s disbursement, by
the number and composition of shares
comprising the payee’s award amount as
of the court order’s effective date.
The Agency believes that this
calculation will result in more equitable
awards as well as more efficient court
order processing as parties are not
required to return to court for additional
or clarifying language.
As previously discussed, the Agency
also proposes to amend its court order
and legal process regulations in order to
conform with the I.R.C. and current
record keeping procedures. In
particular, the Agency seeks to remove
language from § 1653.5(d) which states
that a court may specify a particular
payment from the tax-exempt balance of
a uniformed services account. Please see
the Supplemental Information
discussion regarding Uniformed
Services Accounts for an overview as to
why the Agency is proposing to remove
such language.
Thrift Savings Plan
The Agency wishes to add a
regulation outlining the circumstances
under which a participant’s account
may be frozen and when access to the
Agency’s web site and ThriftLine may
be blocked. Though uncommon, freezes
(or administrative holds) prevent a
participant from withdrawing funds,
including loans, from his or her
account, and, therefore, the Agency
seeks to place its participants on notice
regarding the circumstances under
which such a hold may occur and also
the consequences of such a hold.
Regulatory Flexibility Act
I certify that this regulation will not
have a significant economic impact on
a substantial number of small entities.
Paperwork Reduction Act
I certify that these regulations do not
require additional reporting under the
criteria of the Paperwork Reduction Act.
PO 00000
Frm 00002
Fmt 4702
Sfmt 4702
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 section 1532 is not
required.
Submission to Congress and the
Government Accountability Office
Pursuant to 5 U.S.C. 810(a)(1)(A), the
Agency 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. 804(2).
List of Subjects
5 CFR Part 1604
Military personnel, Pensions,
Retirement.
5 CFR Part 1651
Claims, Government employees,
Pensions, Retirement.
5 CFR Part 1653
Alimony, Child support, Claims,
Government employees, Pensions,
Retirement.
5 CFR Part 1690
Government employees, Pensions,
Retirement.
Gregory T. Long,
Executive Director, Federal Retirement Thrift
Investment Board.
For the reasons stated in the
preamble, the Agency proposes to
amend 5 CFR chapter VI as follows:
PART 1604—UNIFORMED SERVICES
ACCOUNTS
1. The authority citation for part 1604
continues to read as follows:
Authority: 5 U.S.C. 8440e, 8474(b)(5) and
(c)(1).
2. Amend § 1604.9 to revise paragraph
(b) to read as follows:
§ 1604.9
Court orders and legal processes.
*
*
*
*
*
(b) Combat zone contributions. If a
service member account contains
combat zone contributions, the payment
will be made pro rata from all sources.
*
*
*
*
*
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Federal Register / Vol. 74, No. 203 / Thursday, October 22, 2009 / Proposed Rules
PART 1651—DEATH BENEFITS
3. The authority citation for part 1651
continues to read as follows:
Authority: 5 U.S.C. 8424(d), 8432(j),
8433(e), 8435(c)(2), 8474(b)(5) and 8474(c)(1).
4. Amend § 1651.1 to add the
definition of ‘‘Administrative finding’’,
in alphabetical order, in paragraph (b) to
read as follows:
§ 1651.1
Definitions.
*
*
*
*
*
(b) * * *
Administrative finding means an
evidence-based determination reached
by a hearing, inquiry, investigation, or
trial before an administrative agency of
competent jurisdiction in any State,
territory or possession of the United
States.
*
*
*
*
*
5. Amend § 1651.6 to add a paragraph
(d) to read as follows:
§ 1651.6
Child or children.
*
*
*
*
*
(d) Parentage disputes. If the identity
of the father or mother of a child is in
dispute or otherwise unclear (e.g., only
one parent is listed on a birth
certificate), the purported child must
submit to the TSP either:
(1) A court order or other
administrative finding establishing
parentage; or
(2) Documentation sufficient for
establishing parentage under the law of
the state in which the participant was
domiciled at the time of death.
PART 1653—COURT ORDERS AND
LEGAL PROCESSES AFFECTING
THRIFT SAVINGS PLAN ACCOUNTS
6. The authority citation for part 1653
continues to read as follows:
Authority: 5 U.S.C. 8435, 8436(b), 8437(e),
8439(a)(3), 8467, 8474(b)(5) and 8474(c)(1).
7. Amend § 1653.1 to add the
definitions of ‘‘Payment date’’ and ‘‘TSP
investment earnings or earnings’’, in
alphabetical order in paragraph (b) to
read as follows:
§ 1653.1
Definitions.
dcolon on DSK2BSOYB1PROD with PROPOSALS
*
*
*
*
*
(b) * * *
*
*
*
*
*
Payment date refers to the date on
which earnings are determined and is
generally two business days prior to the
date of an award’s disbursement.
*
*
*
*
*
TSP investment earnings or earnings
means both positive and negative fund
performance attributable to differences
in TSP fund share prices.
*
*
*
*
*
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15:06 Oct 21, 2009
Jkt 220001
8. Amend § 1653.4 to revise paragraph
(f)(3) and remove paragraph (f)(4) to
read as follows:
§ 1653.4
Calculating entitlements.
*
*
*
*
*
(f) * * *
(3) If earnings are awarded and the
rate is not specified, the Agency will
calculate the amount to be awarded by:
(i) Determining the payee’s award
amount (e.g., the percentage or fraction
of the participant’s account);
(ii) Determining, based on the
participant’s investment allocation as of
the effective date of the court order, the
number and composition of shares that
the amount in paragraph (f)(3)(i) of this
section would have purchased as of the
effective date; and
(iii) Multiplying the price per share as
of the payment date by the number and
composition of shares calculated in
paragraph (f)(3)(ii) of this section.
*
*
*
*
*
§ 1653.5
54493
contributions, changing contribution
allocations, and making interfund
transfers.
(c) The Agency will notify the
participant that his or her account has
been frozen unless it determines it
prudent to not notify the participant
that his of her account has been frozen.
(d) A participant may block on-line
and ThriftLine access to his or her
account by writing to the TSP or by
submitting a request at https://
www.tsp.gov.
(e) A participant may remove a
participant-initiated freeze
(administrative hold) by submitting a
notarized request to the TSP.
[FR Doc. E9–25426 Filed 10–21–09; 8:45 am]
BILLING CODE 6760–01–P
DEPARTMENT OF AGRICULTURE
Food Safety and Inspection Service
9 CFR Parts 321, 332, and 381
[Amended]
9. Amend § 1653.5 by removing the
last sentence of paragraph (d).
[Docket No. FSIS–2008–0039]
RIN 0583–AD37
PART 1690—THRIFT SAVINGS PLAN
10. The authority citation for part
1690 continues to read as follows:
Authority: 5 U.S.C. 8474.
10. Add § 1690.15 to read as follows:
§ 1690.15 Freezing an account—
administrative holds.
(a) The TSP may freeze (e.g., place an
administrative hold on) a participant’s
account for any of the following reasons:
(1) Pursuant to a qualifying retirement
benefits court order as set forth in part
1653 of this chapter;
(2) Pursuant to a request from the
Department of Justice under the
Mandatory Victims Restitution Act;
(3) Upon the death of a participant;
(4) Upon suspicion or knowledge of
fraudulent account activity or identity
theft;
(5) In response to litigation pertaining
to an account;
(6) For operational reasons (e.g., to
correct a processing error or to stop
payment on a check when account
funds are insufficient);
(7) Pursuant to a written request from
a participant; and
(8) For any other reason the TSP
deems prudent.
(b) An account freeze (i.e.,
administrative hold) prohibits a
participant from withdrawing funds,
including loans, from his or her
account. The participant continues to
have the capability to conduct all other
transactions including making
PO 00000
Frm 00003
Fmt 4702
Sfmt 4702
Cooperative Inspection Programs:
Interstate Shipment of Meat and
Poultry Products
AGENCY: Food Safety and Inspection
Service, USDA.
ACTION: Notice of public meetings.
SUMMARY: The Food Safety and
Inspection Service (FSIS) is announcing
that it will hold two public meetings on
proposed regulations that it recently
published to implement a new
voluntary cooperative program under
which State-inspected establishments
with 25 or fewer employees will be
eligible to ship meat and poultry
products in interstate commerce (74 FR
47648, September 16, 2009). To provide
stakeholders with ready access to the
public meetings, FSIS will conduct
these meetings by teleconference. This
notice provides information on the
public meetings.
DATES: The teleconferences will be held
on October 27, 2009, from 12:30 p.m. to
4:30 p.m. EST, and on November 5,
2009, from 12:30 p.m. to 4:30 p.m. EST.
ADDRESSES:
Registration: Pre-registration for these
meetings is required. To pre-register,
access the FSIS Web site, at https://
www.fsis.usda.gov/News/
Meetings_&_Events/. Call-in information
will be provided via e-mail to preregistered participants. We are also
asking that anyone interested in making
a public comment during the
E:\FR\FM\22OCP1.SGM
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]]>Agencies
[Federal Register Volume 74, Number 203 (Thursday, October 22, 2009)]
[Proposed Rules]
[Pages 54491-54493]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-25426]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 74, No. 203 / Thursday, October 22, 2009 /
Proposed Rules
[[Page 54491]]
FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
5 CFR Parts 1604, 1651, 1653, and 1690
Uniformed Services Accounts; Death Benefits; Court Orders and
Legal Processes Affecting Thrift Savings Plan Accounts; Thrift Savings
Plan
AGENCY: Federal Retirement Thrift Investment Board.
ACTION: Proposed rules with request for comments.
-----------------------------------------------------------------------
SUMMARY: The Federal Retirement Thrift Investment Board (Agency)
proposes to amend its regulations regarding uniformed services accounts
to conform with mandatory tax provisions as well as current record
keeping practices and allow only for pro rata court-ordered payments.
The Agency proposes to amend its regulations regarding death
benefits to provide for a clear process by which children of
participants can establish parentage.
The Agency proposes to amend its court order regulations so that
when a court order directs that payment is to include earnings, the
Agency is able to make a payment which calculates the payee's award
amount based on the current price of the shares he/she was awarded.
The Agency also proposes to amend its court order regulations to
remove a provision which permits courts to direct payment from only the
tax-exempt balance of a uniformed services account.
The Agency proposes to amend its regulations at part 1690, subpart
B, to add a regulation outlining the circumstances under which a TSP
account may be frozen.
DATES: Comments must be received on or before November 23, 2009.
ADDRESSES: You may submit comments using one of the following methods:
Federal Rulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Office of General Counsel, Attn: Thomas Emswiler,
Federal Retirement Thrift Investment Board, 1250 H Street, NW.,
Washington, DC 20005.
Hand Delivery/Courier: The address for sending comments by
hand delivery or courier is the same as that for submitting comments by
mail.
Facsimile: Comments may be submitted by facsimile at (202)
942-1676.
The most helpful comments explain the reason for any recommended
change and include data, information, and the authority that supports
the recommended change. We will post all substantive comments
(including any personal information provided) without change (with the
exception of redaction of SSNs, profanities, et cetera) on https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Tim Carey at 202-942-1666 or Laurissa
Stokes at 202-942-1645.
SUPPLEMENTARY INFORMATION: The Agency 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
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)).
Uniformed Services Accounts
The Agency proposes to amend its regulations regarding uniformed
services accounts, and, specifically, its provisions relating to the
division of a uniformed services account pursuant to a court order or
legal process. The Agency seeks to remove a provision suggesting that
courts could direct the Plan to make a court-ordered payment other than
one that is pro rata from both taxable and tax-exempt contributions.
Uniformed services accounts are unique in that some or all of a
uniformed services member's contributions may derive from tax-exempt
income as a result of the combat zone tax exclusion. In 2001, the
Agency issued final regulations regarding the uniformed services'
participation in the TSP. Among many changes, the Agency determined
that ``the TSP can honor a court order or legal process that apportions
combat zone (tax-exempt) contributions between the participant and the
payee,'' and, therefore, the final version of 5 CFR 1604.9(b) regarding
court-ordered payments from a uniformed services member's account
stated that payment will be made pro rata from all sources ``unless the
court order or legal process directs otherwise.'' (66 FR 50716, October
4, 2001).
The Agency recently analyzed its authority and record keeping
capability to issue payments from, as the regulation suggests, only one
source of contributions in a uniformed services participant's account.
The Agency has concluded that the Internal Revenue Code (I.R.C.)
permits only pro rata payments from both taxable and tax-exempt funds,
and that a court cannot direct the Plan to make a payment from, for
example, only tax-exempt funds.
Specifically, I.R.C. sections 72 and 402(e)(1)(A) preclude an
allocation of basis pursuant to a court order if such allocation is
other than pro rata. In particular, for purposes of determining tax
liability, a spousal alternate payee is treated the same as the
participant and, therefore, a distribution to a spouse or former spouse
made pursuant to a court order must be made pro rata from taxable and
tax-exempt amounts in a uniformed services account. 26 U.S.C.
402(e)(1)(A). Therefore, the Agency's regulation permitting courts to
order a payment other than pro rata is not permitted by the I.R.C. and
must be changed.
Additionally, the Agency's record keeping system cannot issue a
payment from only one source of funds because it is programmed to make
all payments from uniformed services accounts on a pro rata basis from
taxable and tax-exempt balances. Therefore, changing this regulation to
remove the language which suggests a court could direct the Agency to
issue a payment other than one which is pro rata is not only
technically correct but also reflects current record keeping processes.
Death Benefits
The Agency proposes to amend its regulations regarding death
benefits, and, in particular, its regulation regarding payment to a
participant's child or children. Specifically, the Agency seeks to
clarify the documentation children should submit
[[Page 54492]]
in the event that the identity of their father or mother is in dispute
or unclear.
As familial matters, including guidelines related to parentage, are
rooted in state, not Federal, law, the Agency cannot adjudicate or
otherwise determine matters of paternity or maternity. In support of
their contention that they are the proper beneficiary of their parent's
account, children of deceased participants often submit insufficient or
otherwise unclear documentation (e.g., copies of obituaries and
personal mementos). A lack of guidance regarding which documents to
submit in support of parentage adds unnecessary time and inconvenience
to the processing of death benefit determinations.
The Agency, therefore, proposes to augment its death benefits
regulations to describe the documentation it requires in support of a
purported child's claim that a participant was his or her parent.
Specifically, the Agency requests that affected children submit a court
order or administrative finding or documentation which would establish
parentage in the state in which the participant resided prior to his
death.
Court Orders and Legal Processes Affecting Thrift Savings Plan Accounts
The Agency is proposing to change its court order regulations to
allow for court-awarded payments which account for investment earnings
and losses as well as to reflect the previously-discussed requirement
that all payments from participants' accounts be paid pro rata.
Currently, in order for the Agency to take into account investment
losses, a court order has to divide the account as of the date of
distribution or identify a fixed amount that the parties agreed upon.
Further, per the Agency's regulations, if a court order specifies that
earnings are to be awarded and no specific rate is provided, even when
an account experiences investment losses, the Agency awards earnings
using its Government Securities Investment (G) Fund rate. 5 CFR
1653.4(f)(3).
The Agency, which receives many court orders directing that
payments reflect earnings and losses until the date of distribution,
proposes to change its regulations so that the division of an account
factors in the current price of those shares included in a payee's
award amount.
In particular, if earnings, defined to include losses, are
requested and a rate is not specified, the Agency proposes to determine
the amount to be awarded by determining the payee's award amount (e.g.,
the percentage or fraction of the participant's account), and, based on
the participant's investment allocation as of the effective date of the
court order, the number and composition of shares that the payee's
award amount would have purchased as of the effective date.
(Determining the shares as of the effective date of the court order,
and not a later date, preserves the court's intent and protects the
payee from investment decisions made by the participant after the
effective date of the court order.) The Agency will then multiply the
price per share as of the payment date, which is generally two business
days prior to the date of the award's disbursement, by the number and
composition of shares comprising the payee's award amount as of the
court order's effective date.
The Agency believes that this calculation will result in more
equitable awards as well as more efficient court order processing as
parties are not required to return to court for additional or
clarifying language.
As previously discussed, the Agency also proposes to amend its
court order and legal process regulations in order to conform with the
I.R.C. and current record keeping procedures. In particular, the Agency
seeks to remove language from Sec. 1653.5(d) which states that a court
may specify a particular payment from the tax-exempt balance of a
uniformed services account. Please see the Supplemental Information
discussion regarding Uniformed Services Accounts for an overview as to
why the Agency is proposing to remove such language.
Thrift Savings Plan
The Agency wishes to add a regulation outlining the circumstances
under which a participant's account may be frozen and when access to
the Agency's web site and ThriftLine may be blocked. Though uncommon,
freezes (or administrative holds) prevent a participant from
withdrawing funds, including loans, from his or her account, and,
therefore, the Agency seeks to place its participants on notice
regarding the circumstances under which such a hold may occur and also
the consequences of such a hold.
Regulatory Flexibility Act
I certify that this regulation will not have a significant economic
impact on a substantial number of small entities.
Paperwork Reduction Act
I certify that these regulations do not require additional
reporting under the criteria of the Paperwork Reduction Act.
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
section 1532 is not required.
Submission to Congress and the Government Accountability Office
Pursuant to 5 U.S.C. 810(a)(1)(A), the Agency 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. 804(2).
List of Subjects
5 CFR Part 1604
Military personnel, Pensions, Retirement.
5 CFR Part 1651
Claims, Government employees, Pensions, Retirement.
5 CFR Part 1653
Alimony, Child support, Claims, Government employees, Pensions,
Retirement.
5 CFR Part 1690
Government employees, Pensions, Retirement.
Gregory T. Long,
Executive Director, Federal Retirement Thrift Investment Board.
For the reasons stated in the preamble, the Agency proposes to
amend 5 CFR chapter VI as follows:
PART 1604--UNIFORMED SERVICES ACCOUNTS
1. The authority citation for part 1604 continues to read as
follows:
Authority: 5 U.S.C. 8440e, 8474(b)(5) and (c)(1).
2. Amend Sec. 1604.9 to revise paragraph (b) to read as follows:
Sec. 1604.9 Court orders and legal processes.
* * * * *
(b) Combat zone contributions. If a service member account contains
combat zone contributions, the payment will be made pro rata from all
sources.
* * * * *
[[Page 54493]]
PART 1651--DEATH BENEFITS
3. The authority citation for part 1651 continues to read as
follows:
Authority: 5 U.S.C. 8424(d), 8432(j), 8433(e), 8435(c)(2),
8474(b)(5) and 8474(c)(1).
4. Amend Sec. 1651.1 to add the definition of ``Administrative
finding'', in alphabetical order, in paragraph (b) to read as follows:
Sec. 1651.1 Definitions.
* * * * *
(b) * * *
Administrative finding means an evidence-based determination
reached by a hearing, inquiry, investigation, or trial before an
administrative agency of competent jurisdiction in any State, territory
or possession of the United States.
* * * * *
5. Amend Sec. 1651.6 to add a paragraph (d) to read as follows:
Sec. 1651.6 Child or children.
* * * * *
(d) Parentage disputes. If the identity of the father or mother of
a child is in dispute or otherwise unclear (e.g., only one parent is
listed on a birth certificate), the purported child must submit to the
TSP either:
(1) A court order or other administrative finding establishing
parentage; or
(2) Documentation sufficient for establishing parentage under the
law of the state in which the participant was domiciled at the time of
death.
PART 1653--COURT ORDERS AND LEGAL PROCESSES AFFECTING THRIFT
SAVINGS PLAN ACCOUNTS
6. The authority citation for part 1653 continues to read as
follows:
Authority: 5 U.S.C. 8435, 8436(b), 8437(e), 8439(a)(3), 8467,
8474(b)(5) and 8474(c)(1).
7. Amend Sec. 1653.1 to add the definitions of ``Payment date''
and ``TSP investment earnings or earnings'', in alphabetical order in
paragraph (b) to read as follows:
Sec. 1653.1 Definitions.
* * * * *
(b) * * *
* * * * *
Payment date refers to the date on which earnings are determined
and is generally two business days prior to the date of an award's
disbursement.
* * * * *
TSP investment earnings or earnings means both positive and
negative fund performance attributable to differences in TSP fund share
prices.
* * * * *
8. Amend Sec. 1653.4 to revise paragraph (f)(3) and remove
paragraph (f)(4) to read as follows:
Sec. 1653.4 Calculating entitlements.
* * * * *
(f) * * *
(3) If earnings are awarded and the rate is not specified, the
Agency will calculate the amount to be awarded by:
(i) Determining the payee's award amount (e.g., the percentage or
fraction of the participant's account);
(ii) Determining, based on the participant's investment allocation
as of the effective date of the court order, the number and composition
of shares that the amount in paragraph (f)(3)(i) of this section would
have purchased as of the effective date; and
(iii) Multiplying the price per share as of the payment date by the
number and composition of shares calculated in paragraph (f)(3)(ii) of
this section.
* * * * *
Sec. 1653.5 [Amended]
9. Amend Sec. 1653.5 by removing the last sentence of paragraph
(d).
PART 1690--THRIFT SAVINGS PLAN
10. The authority citation for part 1690 continues to read as
follows:
Authority: 5 U.S.C. 8474.
10. Add Sec. 1690.15 to read as follows:
Sec. 1690.15 Freezing an account--administrative holds.
(a) The TSP may freeze (e.g., place an administrative hold on) a
participant's account for any of the following reasons:
(1) Pursuant to a qualifying retirement benefits court order as set
forth in part 1653 of this chapter;
(2) Pursuant to a request from the Department of Justice under the
Mandatory Victims Restitution Act;
(3) Upon the death of a participant;
(4) Upon suspicion or knowledge of fraudulent account activity or
identity theft;
(5) In response to litigation pertaining to an account;
(6) For operational reasons (e.g., to correct a processing error or
to stop payment on a check when account funds are insufficient);
(7) Pursuant to a written request from a participant; and
(8) For any other reason the TSP deems prudent.
(b) An account freeze (i.e., administrative hold) prohibits a
participant from withdrawing funds, including loans, from his or her
account. The participant continues to have the capability to conduct
all other transactions including making contributions, changing
contribution allocations, and making interfund transfers.
(c) The Agency will notify the participant that his or her account
has been frozen unless it determines it prudent to not notify the
participant that his of her account has been frozen.
(d) A participant may block on-line and ThriftLine access to his or
her account by writing to the TSP or by submitting a request at https://www.tsp.gov.
(e) A participant may remove a participant-initiated freeze
(administrative hold) by submitting a notarized request to the TSP.
[FR Doc. E9-25426 Filed 10-21-09; 8:45 am]
BILLING CODE 6760-01-P
