Uniformed Services Accounts; Death Benefits; Court Orders and Legal Processes Affecting Thrift Savings Plan Accounts; Thrift Savings Plan, 54491-54493 [E9-25426]

Download as PDF 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: http:// www.regulations.gov. Follow the instructions for submitting comments. • Mail: Office of General Counsel, Attn: Thomas Emswiler, Federal VerDate Nov<24>2008 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 http://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 E:\FR\FM\22OCP1.SGM 22OCP1 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 VerDate Nov<24>2008 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. * * * * * E:\FR\FM\22OCP1.SGM 22OCP1 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. * * * * * VerDate Nov<24>2008 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 http:// 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 http:// 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 22OCP1

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: http://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 http://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 http://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