Federal Retirement Thrift Investment Board
The Executive Director, Federal Retirement Thrift Investment Board (Agency) is adopting as final, the Agency's proposed rule amending the Thrift Savings Plan's (TSP's) regulations to improve processing of court orders that seek to divide a TSP account pursuant to a divorce. The final rule limits the types of court orders the Agency will accept to either one that requires payment of a specific dollar amount or that requires payment of a stated percentage or fraction of the account. The Agency will no longer accept formula court orders.
This final rule is effective January 1, 2007.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Merritt Willing on (202) 942-1660.End Further Info End Preamble Start Supplemental 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. sections 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 August 9, 2006, the Agency published a proposed rule with request for comments in the Federal Register (71 FR 45437). The Agency received no comments on the proposed rule.
The rule limits acceptable court orders that divide a TSP account to those that either require payment of a specific dollar amount or that require payment of a stated percentage or fraction of the account. The Agency will no longer accept formula-based court orders because they are overly complex and often are not acceptable by the Agency or, if acceptable, would result in payments that were not anticipated by either party to the order. As a consequence, the parties must return to court and obtain an amended order. Additionally, the formula court order requires the Agency to interpret the order and results in considerable administrative expense. These expenses are borne by all TSP participants.
The rule will make it easier for the parties in a divorce to ensure that the Agency will divide a TSP account in accordance with their wishes. The rule simplifies the types of court orders the Agency will accept. The rule also contains model paragraphs that attorneys can use to ensure that, in drafting orders, the language they select will both produce the intended result and meet the Agency's processing requirements.
The rule will ensure accuracy of court order payments and will ensure that the administrative expenses of the court order program are reasonable for a retirement savings plan.
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.
Unfunded Mandates Reform Act of 1995
Pursuant to the Unfunded Mandates Reform Act of 1995, 2 U.S.C. sections 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 § 1532 is not required.
Submission to Congress and the Government Accountability Office
Pursuant to 5 U.S.C. 801(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).Start List of Subjects
List of Subjects in 5 CFR Part 1653End List of Subjects Start Signature
Gary A. Amelio,
Executive Director, Federal Retirement Thrift Investment Board.
For the reasons set forth in the preamble, the Agency amends 5 CFR chapter VI as follows:End Amendment Part Start Part
PART 1653—COURT ORDERS AND LEGAL PROCESSES AFFECTING THRIFT SAVINGS PLAN ACCOUNTSEnd Part Start Amendment Part
1. The authority citation for part 1653 continues to read as follows:End Amendment Part Start Amendment Part
2. Amend § 1653.2 by revising paragraphs (a)(3)(ii), (iii), and (iv) to read as follows:End Amendment Part
(a) * * *
(3) * * *
(i) * * *
(ii) A stated percentage or fraction of the account; or
(iii) A survivor annuity as provided in 5 U.S.C. 8435(d).
(iv) The following examples would qualify to require payment from the TSP, although ambiguous or conflicting language used elsewhere could cause the order to be rejected.
Example (1). ORDERED: [payee's name, Social Security number (SSN), and address] is awarded $___ from the [civilian or uniformed services] Thrift Savings Plan account of [participant's name, SSN, and address].
Example (2). ORDERED: [payee's name, SSN, and address] is awarded ___% of the [civilian and/or uniformed services] Thrift Savings Plan account[s] of [participant's name, SSN, and address] as of [date].Start Printed Page 54894
Example (3). ORDERED: [payee's name, SSN, and address] is awarded [fraction] of the [civilian and/or uniformed services] Thrift Savings Plan account[s] of [participant's name, SSN, and address] as of [date].
The following optional language can be used in conjunction with any of the above examples. FURTHER ORDERED: Earnings will be paid on the amount of the entitlement under this ORDER until payment is made.
[FR Doc. 06-7925 Filed 9-19-06; 8:45 am]
BILLING CODE 6760-01-P