80 FR 39974 - Default Investment Fund

FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

Federal Register Volume 80, Issue 133 (July 13, 2015)

The Federal Retirement Thrift Investment Board (Agency) proposes to amend its regulations to change the default investment fund for certain participants in the Thrift Savings Plan (TSP).

[Federal Register Volume 80, Number 133 (Monday, July 13, 2015)]
[Proposed Rules]
[Pages 39974-39975]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-16867]


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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. 80, No. 133 / Monday, July 13, 2015 / 
Proposed Rules

[[Page 39974]]



FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

5 CFR Parts 1600, 1601, and 1651


Default Investment Fund

AGENCY: Federal Retirement Thrift Investment Board

ACTION: Proposed rule with request for comments.

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SUMMARY: The Federal Retirement Thrift Investment Board (Agency) 
proposes to amend its regulations to change the default investment fund 
for certain participants in the Thrift Savings Plan (TSP).

DATES: Submit comments on or before August 12, 2015.

ADDRESSES: You may submit comments using one of the following methods:
     Federal Rulemaking Portal: http://www.regulations.gov at 
Docket ID number FRTIB-2015-0002. Follow the instructions for 
submitting comments.
     Mail: Office of General Counsel, Attn: James Petrick, 
Federal Retirement Thrift Investment Board, 77 K Street NE., Suite 
1000, Washington, DC 20002.
     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.

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

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, members of the uniformed services, and spouse beneficiaries. 
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 December 18, 2014, the President signed the Smart Savings Act 
(``the Act''), Public Law 113-255 (128 Stat. 2920). The Act directed 
the Agency to invest any sums available for investment in the TSP for 
which an election has not been made in an age-appropriate target date 
asset allocation investment fund. The Act excluded contributions made 
by members of the uniformed services for which an election has not been 
made. This proposed rule would conform the Agency's regulations to the 
requirements of the Act.

New Default Investment Fund for Certain Participants

    This proposed regulation would change the TSP's default investment 
fund from the TSP's Government Securities Investment Fund (G Fund) to 
the age-appropriate TSP Lifecycle Fund (L Fund) for the following 
persons: (1) A civilian employee with a newly established TSP account; 
(2) a rehired civilian employee who has a zero account balance; and (3) 
the surviving spouse beneficiary of a deceased TSP participant for whom 
a beneficiary participant account is established. The default 
investment fund for uniformed services participants will remain the G 
Fund as required by the Act. In the case of a rehired civilian 
participant who has a positive account balance and a contribution 
allocation in effect, the participant's contribution allocation will 
remain in effect. In the case of a rehired participant who has a 
positive account balance and no contribution allocation in effect, the 
participant's new contribution will continue to be invested in the G 
Fund. Participants whose default investment fund is the age-appropriate 
L Fund will receive a notification concerning investment risk before 
enrollment or as soon as practicable thereafter.

Regulatory Flexibility Act

    I certify that this proposed regulation will not have a significant 
economic impact on a substantial number of small entities. This 
proposed regulation will affect Federal civilian employees and spouse 
beneficiaries who participate in the Thrift Savings Plan, which is a 
Federal defined contribution retirement savings plan created under the 
Federal Employees' Retirement System Act of 1986 (FERSA), Public Law 
99-335, 100 Stat. 514, and which is administered- by the Agency.

Paperwork Reduction Act

    I certify that these proposed 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 proposed regulation on state, 
local, and tribal governments and the private sector have been 
assessed. This proposed 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.

List of Subjects in 5 CFR Parts 1600, 1601, and 1651

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

0
1. The authority citation for part 1600 continues 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).

0
2. Amend Sec.  1600.37 by revising the heading, the introductory text, 
and paragraphs (c) and (d), and by adding paragraph (e) to read as 
follows:


Sec.  1600.37  Notice.

    The Board shall furnish all new employees and all rehired employees 
covered by the automatic enrollment

[[Page 39975]]

program a notice that accurately describes:
* * * * *
    (c) The fund in which the default employee and agency contributions 
will be invested unless the employee makes a contribution allocation;
    (d) The employee's ability to request a refund of any default 
employee contributions (adjusted for allocable gains and losses) and 
the procedure to request such a refund; and
    (e) That an investment in any fund other than the G Fund is made at 
the employee's risk, that the employee is not protected by the United 
States Government or the Board against any loss on the investment, and 
that neither the United States Government nor the Board guarantees any 
return on the investment.

PART 1601--PARTICIPANTS' CHOICES OF TSP FUNDS

0
3. The authority citation for part 1601 continues to read as follows:

    Authority:  5 U.S.C. 8351, 8432d, 8438, 8474(b)(5) and (c)(1).

0
4. Amend Sec.  1601.13, by revising paragraphs (a)(3) and (4), 
redesignating paragraph (a)(5) as (a)(6) and revising it, and adding a 
new paragraph (a)(5) to read as follows:


Sec.  1601.13  Elections.

    (a) * * *
    (3) A uniformed services participant or a participant enrolled 
prior to [EFFECTIVE DATE OF FINAL REGULATION] who elects for the first 
time to invest in a TSP Fund other than the G Fund must execute an 
acknowledgement of risk in accordance with Sec.  1601.33;
    (4) All deposits made on behalf of a participant enrolled prior to 
[EFFECTIVE DATE OF FINAL REGULATION] or a uniformed services 
participant who does not have a contribution allocation in effect will 
be invested in the G Fund. A participant who is enrolled prior to 
[EFFECTIVE DATE OF FINAL REGULATION] and subsequently rehired after 
[EFFECTIVE DATE OF FINAL REGULATION] and has a positive account balance 
will be considered enrolled prior to [EFFECTIVE DATE OF FINAL 
REGULATION] for purposes of this paragraph;
    (5) All deposits made on behalf of a participant first enrolled on 
or after [EFFECTIVE DATE OF FINAL REGULATION] who does not have a 
contribution allocation in effect will be invested in the age-
appropriate TSP Lifecycle Fund; and
    (6) Once a contribution allocation becomes effective, it remains in 
effect until it is superseded by a subsequent contribution allocation 
or the participant's account balance is reduced to zero. If a rehired 
participant has a positive account balance and a contribution 
allocation in effect, then the participant's contribution allocation 
will remain in effect until a new allocation is made. If, however, the 
participant has a zero account balance, then the participant's 
contributions will be allocated to the age-appropriate TSP Lifecycle 
Fund until a new allocation is made.
* * * * *


Sec.  1601.22  [Amended]

0
5. Amend Sec.  1601.22 by removing paragraph (a)(3).
0
6. Amend Sec.  1601.33 by revising the first sentence of paragraph (a), 
to read as follows:


Sec.  1601.33  Acknowledgement of risk.

    (a) A uniformed services participant or a participant enrolled 
prior to [EFFECTIVE DATE OF FINAL REGULATION] who wants to invest in a 
TSP Fund other than the G Fund must execute an acknowledgement of risk 
for that fund. * * *
* * * * *

PART 1651--DEATH BENEFITS

0
7. The authority citation for part 1651 continues to read as follows:

    Authority:  5 U.S.C. 8424(d), 8432d, 8432(j), 8433(e), 
8435(c)(2), 8474(b)(5) and 8474(c)(1).

0
8. Amend Sec.  1651.2, by revising the last sentence of paragraph (d) 
to read as follows:


Sec.  1651.2  Entitlement to funds in a deceased participant's account.

* * * * *
    (d) * * * The account will accrue earnings at the G Fund rate in 
accordance with 5 CFR part 1645 until it is paid out or a beneficiary 
participant account is established under this part.
0
3. Amend Sec.  1651.19, by revising the first sentence of paragraph (a) 
to read as follows:


Sec.  1651.19  Beneficiary participant accounts.

* * * * *
    (a) * * * Regardless of the allocation of the deceased 
participant's account balance at the time of his or her death, each 
beneficiary participant account, once established, will be allocated 
100 percent to the age-appropriate TSP Lifecycle Fund based on the 
beneficiary participant's date of birth. * * *
* * * * *
[FR Doc. 2015-16867 Filed 7-10-15; 8:45 am]
 BILLING CODE 6760-01-P