80 FR 39974 - Default Investment Fund

FEDERAL RETIREMENT THRIFT INVESTMENT BOARD

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

Page Range		39974-39975
FR Document		2015-16867
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 Issue 133 (Monday, July 13, 2015)
[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]


========================================================================
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. 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.

-----------------------------------------------------------------------

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
39974

Proposed Rules Federal Register
Vol. 80, No. 133

Monday, July 13, 2015

This section of the FEDERAL REGISTER the uniformed services, and spouse the Thrift Savings Plan, which is a
contains notices to the public of the proposed beneficiaries. The TSP is similar to cash Federal defined contribution retirement
issuance of rules and regulations. The or deferred arrangements established for savings plan created under the Federal
purpose of these notices is to give interested private-sector employees under section Employees’ Retirement System Act of
persons an opportunity to participate in the 401(k) of the Internal Revenue Code (26 1986 (FERSA), Public Law 99–335, 100
rule making prior to the adoption of the final
U.S.C. 401(k)). Stat. 514, and which is administered- by
rules.
On December 18, 2014, the President the Agency.
signed the Smart Savings Act (‘‘the
Act’’), Public Law 113–255 (128 Stat. Paperwork Reduction Act
FEDERAL RETIREMENT THRIFT
INVESTMENT BOARD 2920). The Act directed the Agency to I certify that these proposed
invest any sums available for regulations do not require additional
5 CFR Parts 1600, 1601, and 1651 investment in the TSP for which an reporting under the criteria of the
election has not been made in an age- Paperwork Reduction Act.
Default Investment Fund appropriate target date asset allocation
investment fund. The Act excluded Unfunded Mandates Reform Act of
AGENCY: Federal Retirement Thrift contributions made by members of the 1995
Investment Board uniformed services for which an
ACTION: Proposed rule with request for Pursuant to the Unfunded Mandates
election has not been made. This
comments. Reform Act of 1995, 2 U.S.C. 602, 632,
proposed rule would conform the
Agency’s regulations to the 653, 1501–1571, the effects of this
SUMMARY: The Federal Retirement Thrift proposed regulation on state, local, and
requirements of the Act.
Investment Board (Agency) proposes to tribal governments and the private
amend its regulations to change the New Default Investment Fund for sector have been assessed. This
default investment fund for certain Certain Participants proposed regulation will not compel the
participants in the Thrift Savings Plan This proposed regulation would expenditure in any one year of $100
(TSP). change the TSP’s default investment million or more by state, local, and
DATES: Submit comments on or before fund from the TSP’s Government tribal governments, in the aggregate, or
August 12, 2015. Securities Investment Fund (G Fund) to by the private sector. Therefore, a
the age-appropriate TSP Lifecycle Fund statement under section 1532 is not
ADDRESSES: You may submit comments
(L Fund) for the following persons: (1) required.
using one of the following methods:
• Federal Rulemaking Portal: http:// A civilian employee with a newly List of Subjects in 5 CFR Parts 1600,
www.regulations.gov at Docket ID established TSP account; (2) a rehired 1601, and 1651
number FRTIB–2015–0002. Follow the civilian employee who has a zero
instructions for submitting comments. account balance; and (3) the surviving Government employees, Pensions,
• Mail: Office of General Counsel, spouse beneficiary of a deceased TSP Retirement.
Attn: James Petrick, Federal Retirement participant for whom a beneficiary
Gregory T. Long,
Thrift Investment Board, 77 K Street participant account is established. The
default investment fund for uniformed Executive Director, Federal Retirement Thrift
NE., Suite 1000, Washington, DC 20002. Investment Board.
• Hand Delivery/Courier: The address services participants will remain the G
for sending comments by hand delivery Fund as required by the Act. In the case For the reasons stated in the
or courier is the same as that for of a rehired civilian participant who has preamble, the Agency proposes to
submitting comments by mail. a positive account balance and a amend 5 CFR chapter VI as follows:
• Facsimile: Comments may be contribution allocation in effect, the
participant’s contribution allocation PART 1600—EMPLOYEE
submitted by facsimile at (202) 942– CONTRIBUTION ELECTIONS,
1676. will remain in effect. In the case of a
rehired participant who has a positive CONTRIBUTION ALLOCATIONS, AND
The most helpful comments explain AUTOMATIC ENROLLMENT
the reason for any recommended change account balance and no contribution
allocation in effect, the participant’s PROGRAM
and include data, information, and the
authority that supports the new contribution will continue to be
invested in the G Fund. Participants ■ 1. The authority citation for part 1600
recommended change.
whose default investment fund is the continues to read as follows:
FOR FURTHER INFORMATION CONTACT:
age-appropriate L Fund will receive a Authority: 5 U.S.C. 8351, 8432(a), 8432(b),
Austen Townsend at (202) 864–8647. notification concerning investment risk 8432(c), 8432(j), 8432d, 8474(b)(5) and (c)(1).
SUPPLEMENTARY INFORMATION: The before enrollment or as soon as
Agency administers the TSP, which was practicable thereafter. ■ 2. Amend § 1600.37 by revising the
srobinson on DSK5SPTVN1PROD with PROPOSALS

established by the Federal Employees’ heading, the introductory text, and
Retirement System Act of 1986 Regulatory Flexibility Act paragraphs (c) and (d), and by adding
(FERSA), Public Law 99–335, 100 Stat. I certify that this proposed regulation paragraph (e) to read as follows:
514. The TSP provisions of FERSA are will not have a significant economic
§ 1600.37 Notice.
codified, as amended, largely at 5 U.S.C. impact on a substantial number of small
8351 and 8401–79. The TSP is a tax- entities. This proposed regulation will The Board shall furnish all new
deferred retirement savings plan for affect Federal civilian employees and employees and all rehired employees
Federal civilian employees, members of spouse beneficiaries who participate in covered by the automatic enrollment

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Federal Register / Vol. 80, No. 133 / Monday, July 13, 2015 / Proposed Rules 39975

program a notice that accurately (6) Once a contribution allocation Lifecycle Fund based on the beneficiary
describes: becomes effective, it remains in effect participant’s date of birth. * * *
* * * * * until it is superseded by a subsequent * * * * *
(c) The fund in which the default contribution allocation or the [FR Doc. 2015–16867 Filed 7–10–15; 8:45 am]
employee and agency contributions will participant’s account balance is reduced BILLING CODE 6760–01–P
be invested unless the employee makes to zero. If a rehired participant has a
a contribution allocation; positive account balance and a
(d) The employee’s ability to request contribution allocation in effect, then FEDERAL RETIREMENT THRIFT
a refund of any default employee the participant’s contribution allocation INVESTMENT BOARD
contributions (adjusted for allocable will remain in effect until a new
gains and losses) and the procedure to allocation is made. If, however, the 5 CFR Part 1653
request such a refund; and participant has a zero account balance,
then the participant’s contributions will Criminal Restitution Orders
(e) That an investment in any fund
other than the G Fund is made at the be allocated to the age-appropriate TSP AGENCY: Federal Retirement Thrift
employee’s risk, that the employee is Lifecycle Fund until a new allocation is Investment Board.
not protected by the United States made. ACTION: Proposed rule with request for
Government or the Board against any * * * * * comments.
loss on the investment, and that neither
§ 1601.22 [Amended] SUMMARY: The Federal Retirement Thrift
the United States Government nor the
Board guarantees any return on the ■ 5. Amend § 1601.22 by removing Investment Board (Agency) proposes to
investment. paragraph (a)(3). amend its procedures for processing
criminal restitution orders to: (1)
■ 6. Amend § 1601.33 by revising the
PART 1601—PARTICIPANTS’ Require an enforcement letter from the
first sentence of paragraph (a), to read as Department of Justice stating that
CHOICES OF TSP FUNDS follows: restitution has been ordered under the
■ 3. The authority citation for part 1601 § 1601.33 Acknowledgement of risk. Mandatory Victims Restitution Act; and
continues to read as follows: (2) provide that the Agency will treat a
(a) A uniformed services participant judgment ordering restitution under the
Authority: 5 U.S.C. 8351, 8432d, 8438,
8474(b)(5) and (c)(1). or a participant enrolled prior to Mandatory Victims Restitution Act as a
[EFFECTIVE DATE OF FINAL final judgment. The Agency also
■ 4. Amend § 1601.13, by revising REGULATION] who wants to invest in
paragraphs (a)(3) and (4), redesignating proposes to make two technical
a TSP Fund other than the G Fund must corrections.
paragraph (a)(5) as (a)(6) and revising it, execute an acknowledgement of risk for
and adding a new paragraph (a)(5) to that fund. * * * DATES: Submit comments on or before
read as follows: August 12, 2015.
* * * * *
ADDRESSES: You may submit comments
§ 1601.13 Elections.
PART 1651—DEATH BENEFITS using one of the following methods:
(a) * * * • Federal Rulemaking Portal: http://
(3) A uniformed services participant ■ 7. The authority citation for part 1651 www.regulations.gov at Docket ID
or a participant enrolled prior to continues to read as follows: number FRTIB–2015–0001. Follow the
[EFFECTIVE DATE OF FINAL instructions for submitting comments.
Authority: 5 U.S.C. 8424(d), 8432d,
REGULATION] who elects for the first 8432(j), 8433(e), 8435(c)(2), 8474(b)(5) and • Mail: Office of General Counsel,
time to invest in a TSP Fund other than 8474(c)(1). Attn: James Petrick, Federal Retirement
the G Fund must execute an Thrift Investment Board, 77 K Street
acknowledgement of risk in accordance ■ 8. Amend § 1651.2, by revising the NE., Suite 1000, Washington, DC 20002.
with § 1601.33; last sentence of paragraph (d) to read as • Hand Delivery/Courier: The address
(4) All deposits made on behalf of a follows: for sending comments by hand delivery
participant enrolled prior to or courier is the same as that for
§ 1651.2 Entitlement to funds in a
[EFFECTIVE DATE OF FINAL submitting comments by mail.
deceased participant’s account.
REGULATION] or a uniformed services • Facsimile: Comments may be
participant who does not have a * * * * * submitted by facsimile at (202) 942–
contribution allocation in effect will be (d) * * * The account will accrue 1676.
invested in the G Fund. A participant earnings at the G Fund rate in The most helpful comments explain
who is enrolled prior to [EFFECTIVE accordance with 5 CFR part 1645 until the reason for any recommended change
DATE OF FINAL REGULATION] and it is paid out or a beneficiary participant and include data, information, and the
subsequently rehired after [EFFECTIVE account is established under this part. authority that supports the
DATE OF FINAL REGULATION] and ■ 3. Amend § 1651.19, by revising the recommended change.
has a positive account balance will be first sentence of paragraph (a) to read as FOR FURTHER INFORMATION CONTACT:
considered enrolled prior to follows: Laurissa Stokes at (202) 942–1645.
[EFFECTIVE DATE OF FINAL SUPPLEMENTARY INFORMATION: The
REGULATION] for purposes of this § 1651.19 Beneficiary participant Agency administers the Thrift Savings
srobinson on DSK5SPTVN1PROD with PROPOSALS

accounts.
paragraph; Plan (TSP), which was established by
(5) All deposits made on behalf of a * * * * * the Federal Employees’ Retirement
participant first enrolled on or after (a) * * * Regardless of the allocation System Act of 1986 (FERSA), Public
[EFFECTIVE DATE OF FINAL of the deceased participant’s account Law 99–335, 100 Stat. 514. The TSP
REGULATION] who does not have a balance at the time of his or her death, provisions of FERSA are codified, as
contribution allocation in effect will be each beneficiary participant account, amended, largely at 5 U.S.C. 8351 and
invested in the age-appropriate TSP once established, will be allocated 100 8401–79. The TSP is a tax-deferred
Lifecycle Fund; and percent to the age-appropriate TSP retirement savings plan for Federal

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Document Created: 2018-02-23 09:17:59
Document Modified: 2018-02-23 09:17:59
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Proposed Rules
Action		Proposed rule with request for comments.
Dates		Submit comments on or before August 12, 2015.
Contact		Austen Townsend at (202) 864-8647.
FR Citation		80 FR 39974
CFR Citation		5 CFR 1600 5 CFR 1601 5 CFR 1651
CFR Associated		Government Employees; Pensions and Retirement