Additional Withdrawal Options
| Citation | 84 FR 26769 |
| Record Number | 2019-11789 |
| Published date | 10 June 2019 |
| Court | Federal Retirement Thrift Investment Board |
Federal Register, Volume 84 Issue 111 (Monday, June 10, 2019)
[Federal Register Volume 84, Number 111 (Monday, June 10, 2019)]
[Proposed Rules]
[Pages 26769-26774]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11789]
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FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
5 CFR Parts 1650 and 1651
Additional Withdrawal Options
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 provide TSP participants with
additional withdrawal options and flexibility, effective September 15,
2019.
DATES: Comments must be received on or before August 9, 2019.
ADDRESSES: You may send comments, identified by Docket ID number FRTIB-
2019-0003, by any of the following methods:
Federal eRulemaking Portal: http://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)).
On November 17, 2017, the President signed the TSP Modernization
Act of 2017 (the ``Act''), Public Law 115-84 (131 Stat. 1272). The Act
permits the TSP to offer participants additional withdrawal options and
flexibility and eliminates the requirement that a TSP participant who
has reached age 70\1/2\ and is separated from federal service make a
full withdrawal election with respect to his or her TSP account.
Although the Act does not require that implementation of these changes
become effective until November 17, 2019, the FRTIB is proposing an
effective date of September 15, 2019.
The FRTIB recognizes the importance of providing TSP participants
with more flexibility to access the money in their accounts when they
need it. Equally important is the need to ensure that participants have
the money they need to provide sufficient income during retirement.
When proposing the changes herein, the FRTIB was mindful to balance
these potentially competing interests.
Post-Separation Withdrawals
Unlimited Partial Post-Separation Withdrawals
Currently, a TSP participant is limited to one partial post-
separation withdrawal per account, unless he or she previously took an
age-based, in-service withdrawal from that account. A participant who
has previously taken an age-based, in-service withdrawal may not take a
partial post-separation withdrawal.
As required by the Act, the FRTIB is proposing to eliminate the
restriction on partial post-separation withdrawals for participants who
have taken age-based, in-service withdrawals. Further, in light of the
elimination of the full withdrawal requirement discussed in more detail
below, the FRTIB proposes to allow all separated participants to take
as many partial post-separation withdrawals as desired. In order to
avoid inadvertently processing duplicate withdrawal requests, the only
limitation on this flexibility is that only one post-separation
withdrawal request will be processed during any 30-calendar-day period.
A TSP participant with more than one account must make separate post-
separation withdrawal requests for each account and the 30-calendar-day
period will apply separately to each account.
A participant will be able to elect to receive any partial post-
separation withdrawal in the form of a single sum payment, installment
payments, a life annuity, or any combination of these options. However,
a participant may only have one installment payment series in place per
account at any given time.
Additional Installment Payment Options
Currently, a separated TSP participant may elect to receive all or
a portion of his or her account balance in the form of fixed dollar
monthly payments or monthly payments calculated based on life
expectancy. TSP participants are permitted to change the amount of
monthly payments (including a one-time election to change from monthly
payments calculated based on life expectancy to fixed dollar monthly
payments) during an annual open
[[Page 26770]]
season between October 1 and December 15.
The FRTIB proposes to make the following changes to its existing
installment payment options. First, TSP participants will be permitted
to elect to receive installment payments on an annual or quarterly
basis, as well as on a monthly basis.
Second, a TSP participant may change the amount and frequency of
his or her installment payments at any time throughout the year. This
includes the ability of a participant to make a one-time election to
change from installment payments calculated based on life expectancy to
fixed dollar installment payments. As is currently the case, once a
participant makes an election to receive fixed dollar installment
payments, he or she may not switch to life-expectancy-based installment
payments.
Third, under the new rules, a TSP participant receiving installment
payments may stop these payments at any time without receiving the
remainder of his or her account in a final withdrawal.
Finally, a TSP participant receiving installment payments may elect
to receive some or all of his or her remaining account balance in the
form of a single sum payment, an annuity, or a combination of these
options.
Traditional, Roth, or Pro Rata
Under existing rules, all post-separation withdrawals are taken
from a participant's traditional and Roth balances on a pro rata basis.
Under the proposed rules, a participant would still be permitted to use
this method, but would also have the option to take his or her
withdrawal only from the Roth balance or only from the traditional
balance. If a participant elects to receive installment payments from
either his or her Roth balance only or traditional balance only,
payments will automatically continue from the non-elected balance once
the elected balance has been depleted unless the participant elects to
stop or change installment payments.
Spousal Rights
The FRTIB is proposing to update its rules to clarify how spousal
rights will apply in light of the new post-separation withdrawal
options. Specifically, spousal consent, in the case of a married
Federal Employees' Retirement System (FERS) or uniformed services
participant, or spousal notification, in the case of a married Civil
Service Retirement System (CSRS) participant, is generally required
every time a married participant makes a post-separation withdrawal
election in any form other than a joint life annuity with a 50 percent
survivor benefit, level payments, and no cash refund. In addition,
spousal consent or notification, as appropriate, is required when a
married participant elects to change the amount or frequency of his or
her installment payments.
In-Service Withdrawals
Age-Based, In-Service Withdrawals
Currently, a TSP participant who is 59\1/2\ or older and not
separated from federal service may make a one-time election to receive
all or part of his account balance in a single sum payment. The FRTIB
is proposing to permit participants to take up to four age-based, in-
service withdrawals per calendar year. The 30-calendar-day processing
period applicable to partial post-separation withdrawals will also
apply. For participants with more than one TSP account, these limits
apply separately to each account.
Hardship Withdrawals
Currently when a participant takes a hardship withdrawal, his or
her TSP contributions are suspended for a period of six months after
the withdrawal is processed. After the expiration of the six-month
period, the participant may restart contributions by submitting a new
TSP contribution election. Contributions are not restarted
automatically.
Under the proposed rule, any six-month suspension period in effect
will automatically expire on September 15, 2019 and affected
participants may restart contributions by submitting a new TSP
contribution election. In addition, a participant who takes a hardship
withdrawals on or after September 15, 2019 will not have his or her TSP
contributions suspended.
Traditional, Roth, or Pro Rata
Under existing rules, all in-service withdrawals are taken from a
participant's traditional and Roth balances on a pro rata basis. Under
the proposed rules, a participant would still be permitted to use this
method, but would also have the option to take his or her withdrawal
only from the Roth balance or only from the traditional balance.
Spousal Rights
The FRTIB is proposing to update its rules to clarify how spousal
rights will apply in light of the changes to its in-service withdrawal
options. Specifically, spousal consent, in the case of a married FERS
or uniformed services participant, or spousal notification, in the case
of a married CSRS participant, is generally required every time a
married participant makes an in-service withdrawal election.
Elimination of Full Withdrawal Election Requirement
Current Rules
Historically, TSP rules required a participant to make an election
to begin receiving monthly payments, purchase a life annuity, withdraw
his/her account balance in a single payment, or use a combination of
these three options (a ``Full Withdrawal Election'') no later than
April 1 of the year following the year in which the participant reaches
age 70\1/2\ and is separated from federal service (the ``Full
Withdrawal Deadline''). If a TSP participant failed to make a Full
Withdrawal Election by the Full Withdrawal Deadline, the TSP initiated
an account abandonment process in the year in which the Full Withdrawal
Deadline occurred.
In addition to the TSP's Full Withdrawal Election rules, Internal
Revenue Service (``IRS'') rules regarding required minimum
distributions (``RMDs'') apply to TSP participants. Under IRS rules, a
TSP participant must receive RMDs beginning on April 1 of the year
following the year in which the participant reaches age 70\1/2\ and is
separated from service (the ``Required Beginning Date'') and annually
thereafter.
As required by the IRS RMD rules, the TSP distributed the first RMD
payment to each participant by his/her Required Beginning Date
regardless of whether the participant has made a Full Withdrawal
Election. However, because the accounts of participants who failed to
make a Full Withdrawal Election by the Full Withdrawal Deadline were
abandoned later that same year, the TSP did not (and was not required
to) make any additional RMD payments to those participants.
Proposed Changes
Effective January 1, 2019, the FRTIB ceased the abandonment of
accounts for participants who have reached age 70\1/2\ and separated
from federal service but have not made Full Withdrawal Elections by the
Full Withdrawal Deadline and is proposing to amend its regulations to
reflect this change. Stopping the abandonment process means that
participants who otherwise would have had their accounts abandoned in
2019 will no longer be abandoned and will be poised to take advantage
of the additional withdrawal options that will be available on
September 15, 2019.
[[Page 26771]]
As a result of the elimination of the account abandonment process,
the FRTIB will automatically distribute IRS RMDs each year to all
affected participants, regardless of whether they have made Full
Withdrawal Elections.
In addition, the FRTIB is proposing certain non-substantive
clarifications to its rules regarding IRS RMDs to beneficiary
participants. Beneficiary participants are not subject to the Full
Withdrawal Election rules.
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.
List of Subjects
Claims, Government employees, Pensions, Retirement.
5 CFR Part 1650
Alimony, Claims, Government employees, Pensions, Retirement.
5 CFR Part 1651
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 1650--METHODS OF WITHDRAWING FUNDS FROM THE THRIFT SAVINGS
PLAN
0
1. 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
2. Amend paragraph (b) of Sec. 1650.1 by adding in alphabetical order
the definitions of ``Required Beginning Date'', and ``Required Minimum
Distribution'' to read as follows:
* * * * *
(b) * * *
Required Beginning Date means April 1 of the year following the
year in which the participant reaches 70\1/2\ years of age or separates
from Government service, whichever is later.
Required Minimum Distribution means the amount required to be
distributed to a participant beginning on the required beginning date
and every year thereafter pursuant to Internal Revenue Code Sec.
401(a)(9) and the regulations promulgated thereunder, as applicable.
0
3. Amend Sec. 1650.2 by revising paragraphs (a), (b), (f), (g), and
(h) to read as follows:
Sec. 1650.2 Eligibility and general rules for a TSP withdrawal.
(a) A participant who is separated from Government service can
elect to withdraw all or a portion of his or her account balance by one
or a combination of the withdrawal methods described in subpart B of
this part.
(b) A post-employment withdrawal will not be paid unless TSP
records indicate that the participant is separated from Government
service. The TSP will, when possible, cancel a pending post-employment
withdrawal election upon receiving information from an employing agency
that a participant is no longer separated.
* * * * *
(f) A participant can elect to have any portion of a single or
installment payment that is not transferred to an eligible employer
plan, traditional IRA, or Roth IRA deposited directly, by electronic
funds transfer (EFT), into a savings or checking account at a financial
institution in the United States.
(g) If a participant has a civilian TSP account and a uniformed
services TSP account, the rules in this part apply to each account
separately. For example, the participant is eligible to make four age-
based in-service withdrawals from the civilian account and four age-
based in-service withdrawals from the uniformed services account per
calendar year. A separate withdrawal request must be made for each
account.
(h) A participant may elect to have his or her withdrawal
distributed from the participant's traditional balance only, Roth
balance only, or pro rata from the participant's traditional and Roth
balances. Any distribution from the traditional balance will be
prorated between the tax-deferred balance and any tax-exempt balance.
Any distribution from the Roth balance will be prorated between
contributions in the Roth balance and earnings in the Roth balance. In
addition, all withdrawals will be distributed pro rata from all TSP
Funds in which the participant's account is invested. All prorated
amounts will be based on the balances in each TSP Fund or source of
contributions on the day the withdrawal is processed.
0
4. Amend Sec. 1650.11 by revising paragraphs (a) and (c) and by adding
paragraph (d) to read as follows:
Sec. 1650.11 Withdrawal elections.
(a) Subject to the restrictions in this subpart, participants may
elect to withdraw all or a portion of their TSP accounts in a single
payment, a series of installment payments, a life annuity, or any
combination of these options.
* * * * *
(c) Provided that the participant has not submitted a post-
employment withdrawal election prior to the date the automatic payment
is processed, if a participant's vested account balance is less than
$200 when he or she separates from Government service, the TSP will
automatically pay the balance in a single payment to the participant at
his or her TSP address of record. The participant will not be eligible
for any other payment option or be allowed to remain in the TSP.
(d) Only one post-employment withdrawal election per account will
be processed in any 30-calendar-day period.
0
5. Revise Sec. 1650.12 to read as follows:
Sec. 1650.12 Single payment.
Provided that, in the case of a partial withdrawal, the amount
elected is not less than $1,000, a participant can elect to withdraw
all or a portion of his or her account balance in a single payment.
0
6. Revise Sec. 1650.13 to read as follows:
Sec. 1650.13 Installment payments.
(a) A participant can elect to withdraw all or a portion of the
account balance in a series of substantially equal installment
payments, to be paid on a monthly, quarterly, or annual basis in one of
the following manners:
(1) A specific dollar amount. The amount elected must be at least
$25 per installment; if the amount elected is less than $25 per
installment, the request will be rejected. Payments will be made in the
amount requested each installment period.
(2) An installment payment amount calculated based on life
expectancy. Payments based on life expectancy are
[[Page 26772]]
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 each January 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.
(b) A participant receiving installment payments calculated based
upon life expectancy can make one election, at any time, to change to a
fixed dollar installment payment. A participant can change the amount
of his or her fixed payments at any time as described in Sec.
1650.17(c). A participant who is receiving installment payments based
on a fixed dollar amount, however, cannot elect to change to an amount
calculated based on life expectancy.
(c) If a participant elects to receive installments pro rata from
his or her traditional and Roth balances, installment payments will be
made until the participant's entire account balance is expended, unless
the participant elects to change or stop installment payments as
described in in Sec. 1650.17(c). If a participant elects to receive
installment payments from his or her traditional balance only or Roth
balance only, installment payments will automatically continue from the
non-elected balance once the elected balance has been expended, unless
the participant elects to change or stop installment payments as
described in Sec. 1650.17(c).
(d) A participant receiving installment payments, regardless of the
calculation method, can elect at any time to receive the remainder or
part of his or her account balance in a single payment.
(e) A participant may only have one installment payment series in
place at a time.
(f) A participant receiving installment payments may change the
investment of his or her account balance among the TSP investment funds
as provided in 5 CFR part 1601.
(g) Upon receiving information from an employing agency that a
participant receiving installment payments is no longer separated, the
TSP will cancel all pending and future installment payments.
0
7. Amend Sec. 1650.14 by revising paragraphs (a) and (b), removing
paragraph (c), re-designating paragraphs (d) through (l) as paragraphs
(c) through (k), and revising newly re-designated paragraphs (c), (d),
and (h) to read as follows:
Sec. 1650.14 Annuities.
(a) A participant electing a post-employment withdrawal can use all
or a portion of his or her total account balance, traditional balance
only, or Roth balance only to purchase a life annuity.
(b) If a participant has a traditional balance and a Roth balance
and elects to use all or a portion of his or her total account balance
to purchase a life annuity, the TSP must purchase two separate annuity
contracts for the participant: One from the portion of the withdrawal
distributed from his or her traditional balance and one from the
portion of the withdrawal distributed from his or her Roth balance.
(c) A participant cannot elect to purchase an annuity contract with
less than $3,500.
(d) Unless an amount must be paid directly to the participant to
satisfy any applicable minimum distribution requirement of the Internal
Revenue Code, the TSP will purchase the annuity contract(s) from the
TSP's annuity vendor using the participant's entire account balance or
the portion specified. In the event that a minimum distribution is
required by section 401(a)(9) of the Internal Revenue Code before the
date of the first annuity payment, the TSP will compute that amount
prior to purchasing the annuity contract(s), and pay it directly to the
participant.
* * * * *
(h) For each withdrawal election in which the participant elects to
purchase an annuity with some or all of the amount withdrawn, if the
TSP must purchase two annuity contracts, the type of annuity, the
annuity features, and the joint annuitant (if applicable) selected by
the participant will apply to both annuities purchased. For each
withdrawal election, a participant cannot elect more than one type of
annuity by which to receive a withdrawal, or portion thereof, from any
one account.
Sec. 1650.15 [Removed]
0
8. Remove Sec. 1650.15.
0
9. Revise Sec. 1650.16 to read as follows:
Sec. 1650.16 Required minimum distributions.
(a) A separated participant must receive required minimum
distributions from his or her account commencing no later than the
required beginning date and, for each year thereafter, no later than
December 31.
(b) A separated participant may elect to withdraw from his or her
account or to begin receiving payments before the required beginning
date, but is not required to do so.
(c) In the event that a separated participant does not withdraw
from his or her account an amount sufficient to satisfy his or her
required minimum distribution for the year, the TSP will automatically
distribute the necessary amount on or before the applicable date
described in paragraph (a) of this section.
(d) The TSP will disburse required minimum distributions described
in paragraph (c) of this section pro rata from the participant's
traditional balance and the participant's Roth balance.
(e) The rules set forth in paragraphs (a) through (d) of this
section shall apply to a separated participant who reclaims an account
balance that was declared abandoned.
0
10. Amend Sec. 1650.17 by revising paragraphs (a) and (c) to read as
follows:
Sec. 1650.17 Changes and cancellation of a withdrawal request.
(a) Before processing. A pending withdrawal request can be
cancelled if the cancellation is received and can be processed before
the TSP processes the withdrawal request. However, the TSP processes
withdrawal requests each business day and those that are entered into
the record keeping system by 12:00 noon eastern time will ordinarily be
processed that night; those entered after 12:00 noon eastern time will
be processed the next business day. Consequently, a cancellation
request must be received and entered into the system before the cut-off
for the day the withdrawal request is submitted for processing in order
to be effective to cancel the withdrawal.
* * * * *
(c) Change in installment payments. If a participant is receiving a
series of installment payments, with appropriate supporting
documentation as required by the TSP record keeper, the participant can
change at any time: The payment amount or frequency (including stopping
installment payments), the address to which the payments are mailed,
the amount of federal tax withholding, whether or not a payment will be
transferred (if permitted) and the portion to be
[[Page 26773]]
transferred, the method by which direct payments to the participant are
being sent (EFT or check), the identity of the financial institution to
which payments are transferred or sent by EFT, or the identity of the
EFT account.
0
11. Revise Sec. 1650.21 to read as follows:
Sec. 1650.21 Information provided by employing agency or service.
When a TSP participant separates from Government service, his or
her employing agency or service must report the separation and the date
of separation to the TSP record keeper. Until the TSP record keeper
receives this information from the employing agency or service, it will
not pay a post-employment withdrawal.
0
12. Revise Sec. 1650.23 to read as follows:
Sec. 1650.23 Accounts of less than $200.
Upon receiving information from the employing agency that a
participant has been separated for more than 31 days and that any
outstanding loans have been closed, provided the participant has not
made a withdrawal election before the distribution is processed, if the
account balance is $5.00 or more but less than $200, the TSP record
keeper will automatically distribute the entire amount of his or her
account balance. The TSP will not pay this amount by EFT. The
participant may not elect to leave this amount in the TSP, nor will the
TSP transfer any automatically distributed amount to an eligible
employer plan, traditional IRA, or Roth IRA. However, the participant
may elect to roll over this payment into an eligible employer plan,
traditional IRA, or Roth IRA to the extent the roll over is permitted
by the Internal Revenue Code.
0
13. Revise Sec. 1650.24 to read as follows:
Sec. 1650.24 How to obtain a post-employment withdrawal.
To request a post-employment withdrawal, a participant must use the
TSP website to initiate a request or submit to the TSP record keeper a
properly completed paper TSP post-employment withdrawal request form.
0
14. Amend Sec. 1650.25 by revising paragraph (a) to read as follows:
Sec. 1650.25 Transfers from the TSP.
(a) The TSP will, at the participant's election, transfer all or
any portion of an eligible rollover distribution (as defined by section
402(c)(4) of the Internal Revenue Code) directly to an eligible
employer plan or an IRA.
* * * * *
0
15. Amend Sec. 1650.31 by removing paragraph (d) and revising
paragraphs (a) and (c) to read as follows:
Sec. 1650.31 Age-based withdrawals.
(a) A participant who has reached age 59\1/2\ and who has not
separated from Government service is eligible to withdraw all or a
portion of his or her vested TSP account balance in a single payment.
Unless the withdrawal request is for the entire vested account balance,
the entire vested traditional balance, or the entire vested Roth
balance, the amount of an age-based withdrawal request must be at least
$1,000.
* * * * *
(c) A participant is permitted four age-based withdrawals per
calendar year for an account. Only one age-based withdrawal election
per account will be processed in any 30-calendar-day-period.
0
16. Revise Sec. 1650.33 to read as follows:
Sec. 1650.33 Contributing to the TSP after an in-service withdrawal.
(a) Age-Based In-Service Withdrawals. A participant's TSP
contribution election will not be affected by an age-based in-service
withdrawal; therefore, his or her TSP contributions will continue
without interruption.
(b) Financial Hardship In-Service Withdrawals. (1) A participant
who obtains a financial hardship in-service withdrawal prior to
September 15, 2019, may not contribute to the TSP until the earlier of:
(i) The end of the six-month period after the withdrawal is
processed, or
(ii) September 15, 2019.
(2) Therefore, the participant's employing agency will discontinue
his or her contributions (and any applicable Agency Matching
Contributions) for the applicable period after the agency is notified
by the TSP; in the case of a FERS or BRS participant, Agency Automatic
(1%) Contributions will continue. A participant whose TSP contributions
are discontinued by his or her agency after a financial hardship
withdrawal can resume contributions any time after expiration of the
applicable period by submitting a new TSP contribution election.
Contributions will not resume automatically.
(3) A participant's TSP contribution election will not be affected
by a financial hardship in-service withdrawal obtained on or after
September 15, 2019; therefore, his or her TSP contributions will
continue without interruption.
0
17. Revise Sec. 1650.41 to read as follows:
Sec. 1650.41 How to obtain an age-based withdrawal.
To request an age-based withdrawal, a participant must use the TSP
website to initiate a request or submit to the TSP record keeper a
properly completed paper TSP age-based withdrawal request form.
0
18. Amend Sec. 1650.42 by revising paragraph (a) to read as follows:
Sec. 1650.42 How to obtain a hardship withdrawal.
(a) To request a financial hardship withdrawal, a participant must
use the TSP website to initiate a request or submit to the TSP record
keeper a properly completed paper TSP hardship withdrawal request form.
* * * * *
0
19. Revise Sec. 1650.61 to read in its entirety as follows:
Sec. 1650.61 Spousal rights applicable to post-employment withdrawals
(a) The spousal rights described in this section apply to total
post-employment withdrawals when the married participant's vested TSP
account balance exceeds $3,500, to partial post-employment withdrawals
without regard to the amount of the participant's account balance, and
to any change in the amount or frequency of an existing installment
payment series, including a change from payments calculated based on
life expectancy to payments based on a fixed dollar amount.
(b) Unless the participant was granted an exception under this
subpart to the spousal notification requirement within 90 days of the
date the withdrawal request is processed by the TSP, the spouse of a
CSRS participant is entitled to notice when the participant applies for
a post-employment withdrawal or makes a change to the amount or
frequency of an existing installment payment series. The participant
must provide the TSP record keeper with the spouse's correct address.
The TSP record keeper will send the required notice by first class mail
to the spouse at the most recent address provided by the participant.
(c) The spouse of a FERS or uniformed services participant has a
right to a joint and survivor annuity with a 50 percent survivor
benefit, level payments, and no cash refund based on the participant's
entire account balance when the participant elects a total post-
employment withdrawal.
(1) The participant may make a different total withdrawal election
only if his or her spouse consents to that election and waives the
right to this annuity.
[[Page 26774]]
(2) A participant's spouse must consent to any partial withdrawal
election (other than an election to purchase this type of an annuity
with such amount) and waive his or her right to this annuity with
respect the amount withdrawn.
(3) A spouse must consent to any change in the amount or frequency
of an existing installment payment series and waive his or her right to
this annuity with respect to the applicable amount. Spousal consent is
not required to stop installment payments.
(4) Unless the TSP granted the participant an exception under this
subpart to the spousal notification requirement within 90 days of the
date the withdrawal form is processed by the TSP, to show that the
spouse has consented to a different total or partial withdrawal
election or installment payment change and waived the right to this
annuity with respect to the applicable amount, the participant must
submit to the TSP record keeper a properly completed withdrawal request
form, signed by his or her spouse in the presence of a notary. If the
TSP granted the participant an exception to the signature requirement,
the participant should enclose a copy of the TSP's approval letter with
the withdrawal form.
(5) The spouse's consent and waiver is irrevocable for the
applicable withdrawal or installment payment change once the TSP record
keeper has received it.
0
20. Amend Sec. 1650.62 by revising paragraphs (b) and (c) to read as
follows:
Sec. 1650.62 Spousal rights applicable to in-service withdrawals.
* * * * *
(b) Unless the participant was granted an exception under this
subpart to the spousal notification requirement within 90 days of the
date on which the withdrawal request is processed by the TSP, the
spouse of a CSRS participant is entitled to notice when the participant
applies for an in-service withdrawal. If the TSP granted the
participant an exception to the notice requirement, the participant
should enclose a copy of the TSP's approval letter with the withdrawal
form. The participant must provide the TSP record keeper with the
spouse's correct address. The TSP record keeper will send the required
notice by first class mail to the spouse at the most recent address
provided by the participant.
(c) Unless the participant was granted an exception under this
subpart to the signature requirement within 90 days of the date the
withdrawal form is processed by the TSP, before obtaining an in-service
withdrawal, a participant who is covered by FERS or who is a member of
the uniformed services must obtain the consent of his or her spouse and
waiver of the spouse's right to a joint and survivor annuity described
in Sec. 1650.61(c) with respect to the applicable amount. To show the
spouse's consent and waiver, a participant must submit to the TSP
record keeper a properly completed withdrawal request form, signed by
his or her spouse in the presence of a notary. Once a form containing
the spouse's consent and waiver has been submitted to the TSP record
keeper, the spouse's consent is irrevocable for that withdrawal.
PART 1651--DEATH BENEFITS
0
21. The authority citation 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
22. Amend paragraph (b) of Sec. 1651.1 by adding in alphabetical order
the definitions of ``Required Beginning Date'', and ``Required Minimum
Distribution'' to read as follows:
0
a. Required Beginning Date means
(1) The end of the calendar year immediately following the calendar
year in which the participant died, or
(2) The end of the calendar year in which the participant would
have attained age 70\1/2\, whichever is later.
0
b. Required Minimum Distribution means the amount required to be
distributed to a beneficiary participant beginning on the required
beginning date and every year thereafter pursuant to Internal Revenue
Code Section 401(a)(9) and the regulations promulgated thereunder, as
applicable.
0
23. Amend Sec. 1651.19 by revising paragraph (c) to read as follows:
Sec. 1651.19 Beneficiary participant accounts.
* * * * *
(c) Required minimum distributions. (1) A beneficiary participant
must receive required minimum distributions from his or her beneficiary
participant account commencing no later than the required beginning
date and, for each year thereafter, no later than December 31.
(2) A beneficiary participant may elect to withdraw from his or her
account or to begin receiving payments before the required beginning
date, but is not required to do so.
(3) In the event that a beneficiary participant does not withdraw
from his or her beneficiary participant account an amount sufficient to
satisfy his or her required minimum distribution for the year, the TSP
will automatically distribute the necessary amount on or before the
applicable date described in paragraph (1) of this section.
(4) The TSP will disburse required minimum distributions described
in paragraph (3) of this section pro rata from the beneficiary
participant's traditional balance and the beneficiary participant's
Roth balance.
* * * * *
[FR Doc. 2019-11789 Filed 6-7-19; 8:45 am]
BILLING CODE 6760-01-P
