Automatic Enrollment Program
| Published date | 18 February 2020 |
| Citation | 85 FR 8767 |
| Record Number | 2020-03102 |
| Section | Proposed rules |
| Court | Federal Retirement Thrift Investment Board |
Federal Register, Volume 85 Issue 32 (Tuesday, February 18, 2020)
[Federal Register Volume 85, Number 32 (Tuesday, February 18, 2020)]
[Proposed Rules]
[Pages 8767-8768]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03102]
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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. 85, No. 32 / Tuesday, February 18, 2020 /
Proposed Rules
[[Page 8767]]
FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
5 CFR Parts 1600 and 1650
Automatic Enrollment Program
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 increase the automatic enrollment
percentage from 3 percent to 5 percent of basic pay for all
participants who are automatically enrolled in the Thrift Savings Plan
(TSP) on or after October 1, 2020 and for Blended Retirement Service
(BRS) participants who are automatically re-enrolled in the TSP on or
after January 1, 2021. In addition, the FRTIB is proposing a non-
substantive clarification regarding installment payments calculated
based on life expectancy.
DATES: Comments must be received on or before April 20, 2020.
ADDRESSES: You may submit comments using one 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)).
Automatic Enrollment
The Thrift Savings Plan Enhancement Act of 2009 authorized the
FRTIB to add an automatic enrollment program for all Federal employees
eligible to participate in the TSP. The National Defense Authorization
Act for Fiscal Year 2016 extended the automatic enrollment program,
with an additional automatic re-enrollment feature, to certain members
of the uniformed services. Under the automatic enrollment program, the
Executive Director has the statutory authority to select a default
contribution rate for automatically enrolled participants that is no
less than 2 percent and no more than 5 percent of basic pay.
Currently, the following participants are automatically enrolled in
the TSP at the statutory default rate of 3 percent: (1) Federal
Employees Retirement System (FERS) participants hired or rehired after
July 31, 2010; (2) Civil Service Retirement System (CSRS) participants
rehired after July 31, 2010; (3) members of the uniformed services who
began serving on or after January 1, 2018 (BRS participants); and (4)
rehired BRS participants (whether automatically enrolled or opt-ins).
In addition, BRS participants subject to automatic enrollment who
terminate their TSP contributions at any point during the year and do
not elect to resume them by the last full pay period of the year are
automatically re-enrolled at a contribution rate of 3 percent as of
January 1st of the following year.
The FRTIB proposes to increase the automatic enrollment rate and
the automatic re-enrollment rate to 5 percent, effective October 1,
2020 and January 1, 2021, respectively. Participants who are
automatically enrolled in the TSP as of September 30, 2020 will not be
affected by the automatic enrollment rate increase. However, BRS
participants who are automatically enrolled in the TSP as of September
30, 2020 and subsequently terminate their TSP contributions will be
affected by the automatic re-enrollment rate increase unless they elect
to resume TSP contributions by the last full pay period of the year.
All participants may elect to change their contribution rates at any
time by contacting their respective agencies.
The TSP's goal is to help federal employees and members of the
uniformed services retire with dignity. As of December 31, 2018, 26
percent of TSP participants were contributing less than 5 percent to
their accounts, which means they were not receiving the full amount of
Agency/Service Matching Contributions they are entitled to.
Increasing the rate to 5 percent not only increases the amount that
a participant saves from his or her basic pay, but also ensures that
that participant receives the full amount of Agency/Service Matching
Contributions he or she is entitled to, both of which will allow the
participant, everything else being equal, to achieve significantly
greater retirement savings.
Installment Payments Calculated Based on Life Expectancy
The FRTIB is proposing to amend its rule regarding installment
payments calculated based on life expectancy to clarify that, for each
year following the year in which the installment payments begin, the
installment payment amount for the year will be calculated on the first
installment payment date of that year.
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.
[[Page 8768]]
List of Subjects
5 CFR Part 1600
Government employees, Pensions, Retirement.
5 CFR Part 1650
Alimony, 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 1600--EMPLOYEE CONTRIBUTION ELECTIONS, CONTRIBUTION
ALLOCATIONS, AND AUTOMATIC ENROLLMENT PROGRAM
0
1. The authority citation will continue 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), and 8440e.
Sec. 1600.34 [Amended]
0
2. In Sec. 1600.34, amend paragraphs (a), (b), and (c) by removing the
term ``3%'' and adding the term ``5%'' in its place.
Sec. 1600.37 [Amended]
0
3. In Sec. 1600.37, amend paragraph (a) by removing the term ``3
percent'' and adding the term ``5 percent'' in its place.
PART 1650--METHODS OF WITHDRAWING FUNDS FROM THE THRIFT SAVINGS
PLAN
0
4. 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
5. Amend Sec. 1650.13 by revising paragraph (a)(2) to read as follows:
Sec. 1650.13 Installment payments.
(a) * * *
(2) An installment payment amount calculated based on life
expectancy. Payments based on life expectancy are 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 on the
first installment payment date of the year 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.
* * * * *
[FR Doc. 2020-03102 Filed 2-14-20; 8:45 am]
BILLING CODE 6760-01-P
