Automatic Enrollment Program, 8767-8768 [2020-03102]

Agencies

• Federal Retirement Thrift Investment Board

[Federal Register Volume 85, Number 32 (Tuesday, February 18, 2020)]
[Proposed Rules]
[Pages 8767-8768]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03102]


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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.

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Federal Register / Vol. 85, No. 32 / Tuesday, February 18, 2020 / 
Proposed Rules

[[Page 8767]]



FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Parts 1600 and 1650


Automatic Enrollment Program

AGENCY: Federal Retirement Thrift Investment Board.

ACTION: Proposed rule.

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SUMMARY: The Federal Retirement Thrift Investment Board (FRTIB) is 
proposing to amend its regulations to increase the automatic enrollment 
percentage from 3 percent to 5 percent of basic pay for all 
participants who are automatically enrolled in the Thrift Savings Plan 
(TSP) on or after October 1, 2020 and for Blended Retirement Service 
(BRS) participants who are automatically re-enrolled in the TSP on or 
after January 1, 2021. In addition, the FRTIB is proposing a non-
substantive clarification regarding installment payments calculated 
based on life expectancy.

DATES: Comments must be received on or before April 20, 2020.

ADDRESSES: You may submit comments using one of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Fax: (202) 942-1676.
     Mail or Hand Deliver/Courier: Office of General Counsel, 
Attn: Megan G. Grumbine, Federal Retirement Thrift Investment Board, 77 
K Street NE, Suite 1000, Washington, DC 20002.

FOR FURTHER INFORMATION CONTACT: Austen Townsend, (202) 864-8647.

SUPPLEMENTARY INFORMATION: The FRTIB 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)).

Automatic Enrollment

    The Thrift Savings Plan Enhancement Act of 2009 authorized the 
FRTIB to add an automatic enrollment program for all Federal employees 
eligible to participate in the TSP. The National Defense Authorization 
Act for Fiscal Year 2016 extended the automatic enrollment program, 
with an additional automatic re-enrollment feature, to certain members 
of the uniformed services. Under the automatic enrollment program, the 
Executive Director has the statutory authority to select a default 
contribution rate for automatically enrolled participants that is no 
less than 2 percent and no more than 5 percent of basic pay.
    Currently, the following participants are automatically enrolled in 
the TSP at the statutory default rate of 3 percent: (1) Federal 
Employees Retirement System (FERS) participants hired or rehired after 
July 31, 2010; (2) Civil Service Retirement System (CSRS) participants 
rehired after July 31, 2010; (3) members of the uniformed services who 
began serving on or after January 1, 2018 (BRS participants); and (4) 
rehired BRS participants (whether automatically enrolled or opt-ins). 
In addition, BRS participants subject to automatic enrollment who 
terminate their TSP contributions at any point during the year and do 
not elect to resume them by the last full pay period of the year are 
automatically re-enrolled at a contribution rate of 3 percent as of 
January 1st of the following year.
    The FRTIB proposes to increase the automatic enrollment rate and 
the automatic re-enrollment rate to 5 percent, effective October 1, 
2020 and January 1, 2021, respectively. Participants who are 
automatically enrolled in the TSP as of September 30, 2020 will not be 
affected by the automatic enrollment rate increase. However, BRS 
participants who are automatically enrolled in the TSP as of September 
30, 2020 and subsequently terminate their TSP contributions will be 
affected by the automatic re-enrollment rate increase unless they elect 
to resume TSP contributions by the last full pay period of the year. 
All participants may elect to change their contribution rates at any 
time by contacting their respective agencies.
    The TSP's goal is to help federal employees and members of the 
uniformed services retire with dignity. As of December 31, 2018, 26 
percent of TSP participants were contributing less than 5 percent to 
their accounts, which means they were not receiving the full amount of 
Agency/Service Matching Contributions they are entitled to.
    Increasing the rate to 5 percent not only increases the amount that 
a participant saves from his or her basic pay, but also ensures that 
that participant receives the full amount of Agency/Service Matching 
Contributions he or she is entitled to, both of which will allow the 
participant, everything else being equal, to achieve significantly 
greater retirement savings.

Installment Payments Calculated Based on Life Expectancy

    The FRTIB is proposing to amend its rule regarding installment 
payments calculated based on life expectancy to clarify that, for each 
year following the year in which the installment payments begin, the 
installment payment amount for the year will be calculated on the first 
installment payment date of that year.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities. This regulation will 
affect Federal employees, members of the uniformed services who 
participate in the TSP, and beneficiary participants.

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, and 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 2 U.S.C. 1532 is not required.

[[Page 8768]]

List of Subjects

5 CFR Part 1600

    Government employees, Pensions, Retirement.

5 CFR Part 1650

    Alimony, Claims, Government employees, Pensions, Retirement.

Ravindra Deo,
Executive Director, Federal Retirement Thrift Investment Board.

    For the reasons stated in the preamble, the FRTIB proposes to amend 
5 CFR Chapter VI as follows:

PART 1600--EMPLOYEE CONTRIBUTION ELECTIONS, CONTRIBUTION 
ALLOCATIONS, AND AUTOMATIC ENROLLMENT PROGRAM

0
 1. The authority citation will continue to read as follows:

    Authority: 5 U.S.C. 8351, 8432(a), 8432(b), 8432(c), 8432(j), 
8432d, 8474(b)(5) and (c)(1), and 8440e.


Sec.  1600.34  [Amended]

0
2. In Sec.  1600.34, amend paragraphs (a), (b), and (c) by removing the 
term ``3%'' and adding the term ``5%'' in its place.


Sec.  1600.37  [Amended]

0
3. In Sec.  1600.37, amend paragraph (a) by removing the term ``3 
percent'' and adding the term ``5 percent'' in its place.

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

0
4. The authority citation continues to read as follows:

    Authority:  5 U.S.C. 8351, 8432d, 8433, 8434, 8435, 8474(b)(5) 
and 8474(c)(1).

0
5. Amend Sec.  1650.13 by revising paragraph (a)(2) to read as follows:


Sec.  1650.13  Installment payments.

    (a) * * *
    (2) An installment payment amount calculated based on life 
expectancy. Payments based on life expectancy are determined using the 
factors set forth in the Internal Revenue Service life expectancy 
tables codified at 26 CFR 1.401(a)(9)-9, Q&A 1 and 2. The installment 
payment amount is calculated by dividing the account balance by the 
factor from the IRS life expectancy tables based upon the participant's 
age as of his or her birthday in the year payments are to begin. This 
amount is then divided by the number of installment payments to be made 
per calendar year to yield the installment payment amount. In 
subsequent years, the installment payment amount is recalculated on the 
first installment payment date of the year by dividing the prior 
December 31 account balance by the factor in the IRS life expectancy 
tables based upon the participant's age as of his or her birthday in 
the year payments will be made. There is no minimum amount for an 
installment payment calculated based on this method.
* * * * *
[FR Doc. 2020-03102 Filed 2-14-20; 8:45 am]
 BILLING CODE 6760-01-P