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Rule

Employee Contribution Elections and Contribution Allocations

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Information about this document as published in the Federal Register.

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AGENCY:

Federal Retirement Thrift Investment Board.

ACTION:

Interim final rule with request for comments.

SUMMARY:

The Federal Retirement Thrift Investment Board (FRTIB) is amending its regulation pertaining to the timing of agency contributions to reflect changes the FRTIB anticipates will be made by the Thrift Savings Plan Enhancement Act of 2009 (Act). The Act provides that Agency Automatic (1%) Contributions and Agency Matching Contributions shall commence immediately. The regulatory amendment is necessary because FRTIB regulations follow current law, which provides that Agency Automatic (1%) Contributions and Agency Matching Contributions shall not commence until the equivalent of the second open season that begins after the employee commenced employment. The FRTIB is setting a August 1, 2009 effective date for this regulation to allow employing agencies sufficient time to make the necessary computer programming changes to implement it.

DATES:

Effective Date: This interim final rule takes effect either June 19, 2009 or later, if the President has not signed the Act into law on that date. If you want to know the effective date of this rule, call or write the FRTIB's contact person. The FRTIB will publish a document announcing the effective date in the Federal Register.

Comment Date: Comments on this interim final rule must be received on or before July 20, 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: Laurissa Stokes, 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.

This is an interim final rule with a request for public comment. 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.

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FOR FURTHER INFORMATION CONTACT:

Laurissa Stokes at (202) 942-1645.

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SUPPLEMENTARY INFORMATION:

The Agency 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)).

Employee Contribution Elections and Contribution Allocations

The FRTIB is amending its regulations pertaining to the timing of agency contributions. H.R. 1256, which includes the Thrift Savings Plan Enhancement Act of 2009 (Act), passed the United States Senate on June 11, 2009, and passed the United States House of Representatives on June 12, 2009. The White House has indicated that the President will sign the Act into law.

Among other things, the Act would provide for immediate Agency Automatic (1%) and Matching Contributions.

Under the law in force prior to the Thrift Savings Plan Open Elections Act of 2004, newly hired Federal employees and members of the uniformed services had a 60-day period in which they could begin making TSP contributions. If they failed to do so, they were required to wait until an open season period to begin making contributions. Open seasons ran each year from April 15 to June 30 and from October 15 to December 31. In addition, TSP participants could only change their contributions during an open season. Agency Automatic (1%) Contributions and Agency Matching Contributions would begin for newly eligible employees during the second open season after which an employee was first eligible to participate in the TSP.

The Thrift Savings Plan Open Elections Act (bill) eliminated the statutory provisions relating to open seasons. It thereby allowed Federal employees and members of the uniformed services to begin or alter their contributions at any time. The bill did not, however, change when agency contributions would begin for newly eligible employees. As a consequence, agency contributions would still not start until the second open season that began after the employee commenced employment.

However, since the bill eliminated the statutory provisions relating to open seasons, it was necessary for the FRTIB to promulgate a regulation explaining when Agency Automatic (1%) and Matching Contributions would commence. Its regulation is codified at 5 CFR 1600.13. Since the Act provides for immediate Agency Automatic (1%) and Matching Contributions, it is necessary that the Agency immediately promulgate an interim final rule that is consistent with the Act.

Pursuant to his authority to prescribe such regulations as may be necessary for the administration of the Thrift Savings Plan, (5 U.S.C. 8474(b)(5)), to include section 8432 (id.) and as may be necessary to carry out his responsibilities as Executive Director (5 U.S.C. 8474(b)(5)), the Executive Director has given employing agencies until the first full pay period in August 2009 to implement this regulation. He selected the first full pay period in August 2009 implementation date after Start Printed Page 29112consulting with employing agencies and determining that this would give agencies sufficient time to modify their personnel and payroll systems to provide for immediate agency contributions. That is, in order to efficiently administer the Thrift Savings Plan and to carry out his responsibilities as Executive Director, he determined it necessary to give employing agencies sufficient time to modify their computer systems to carry out the requirements of this regulation and the law that was passed by the House less than eighteen hours after it was passed by the Senate. This flexibility will also benefit those participants whose employing agencies are capable of implementing sooner. That is, their employing agencies may begin making contributions on behalf of these employees as soon as practicable.

Providing implementing flexibility is consistent with the grant of authority given to the Executive Director by the Thrift Savings Plan Enhancement Act of 2009. Section 102 of the Act provides for “Automatic Enrollments and Immediate Employing Agency Contributions.” Immediate Employing Agency Contributions was meant as an enhancement to automatic enrollment. For example, it envisions a 3 percent default contribution rate in order to provide participants with a dollar for dollar match on their contributions. It specifies that the default contribution rate may not exceed 5 percent, which would provide participants with the greatest matching contributions allowed by law. Section 102 gives the Executive Director the authority to promulgate regulations pertaining to automatic enrollment. The Executive Director relies on this authority as well as the authorities specified above in promulgating this regulation.

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 and members of the uniformed services.

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 General Accounting 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. 814(2).

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List of Subjects in 5 CFR Part 1600

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Gregory T. Long,

Executive Director, Federal Retirement Thrift Investment Board.

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For the reasons stated in the preamble, the Federal Retirement Thrift Investment Board amends part 1600 of title 5 of the Code of Federal Regulations as follows:

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PART 1600—EMPLOYEE CONTRIBUTION ELECTIONS AND CONTRIBUTION ALLOCATIONS

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1. The authority citation for part 1600 is revised to read as follows:

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Authority: 5 U.S.C. 8351, 8432(a), 8432(b), 8432(c), 8432(j), 8474(b)(5) and (c)(1), Thrift Savings Plan Enhancement Act of 2009, section 102.

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2. Revise § 1600.13 to read as follows:

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Timing of agency contributions.

An employee appointed or reappointed to a position covered by FERS is immediately eligible to receive agency contributions. In order to enable agencies to modify their personnel and payroll systems, agencies must implement this regulation as soon as practicable, but in no case later than the first full pay period in August 2009. Effective with the first full pay period of August 2009, all eligible employees must receive immediate agency contributions.

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[FR Doc. E9-14478 Filed 6-18-09; 8:45 am]

BILLING CODE 6760-01-P