Correction of Administrative Errors

Summary

The Executive Director of the Federal Retirement Thrift Investment Board (Board) is publishing an amendment to final rules on correction of administrative errors affecting Thrift Savings Plan (TSP) accounts. The effect of the amendment will be that earnings on contributions made to the TSP by a person who is ineligible to participate will be returned to that person and not used to offset TSP adminis trative expenses.

Full text

SUMMARY: The Executive Director of the Federal Retirement Thrift 
Investment Board (Board) is publishing an amendment to final rules on 
correction of administrative errors affecting Thrift Savings Plan (TSP) 
accounts. The effect of the amendment will be that earnings on 
contributions made to the TSP by a person who is ineligible to 
participate will be returned to that person and not used to offset TSP 
adminis trative expenses.

EFFECTIVE DATE: This amendment is effective December 27, 1996.

FOR FURTHER INFORMATION CONTACT: John J. O'Meara, (202) 942-1661.

SUPPLEMENTARY INFORMATION: A final rule governing the correction of 
administrative errors affecting Thrift Savings Plan accounts was 
published in the Federal Register on December 27, 1996 (61 FR 68464). 
That rule revised the final regulations that were published in the 
Federal Register on December 4, 1987 (52 FR 46314). In both sets of 
regulations the Board provided that when an individual who was not 
eligible to participate in the TSP nevertheless contributed funds to 
the TSP, the individual's contributions would be returned, but the 
earnings on those contributions would be forfeited and used to pay 
administrative expenses of the TSP. Upon review of this matter, the 
Board has decided that in promulgating this regulation insufficient 
emphasis was placed on the ineligible participant's equitable claim to 
these earnings.
    For this reason, Sec. 1605.9(a)(1) of the error correction 
regulations is being amended to provide that these earnings will be 
paid to the ineligible participant. Because the equity interest in 
these earnings by the ineligible participant is so substantial, this 
amendment is being given retroactive effect to the effective date 
(December 27, 1996) of the current error correction regulations.

Regulatory Flexibility Act

    I certify that this amendment will not have a significant economic 
impact on a substantial number of small entities. It will only affect 
Thrift Savings Plan participants.

Paperwork Reduction Act

    I certify that these regulations do not require additional 
reporting under the criteria of the Paperwork Reduction Act of 1980.

Unfunded Mandates Reform Act of 1995

    Pursuant to the Unfunded Mandates Reform Act of 1995, section 201, 
Public Law 104-4, 109 Stat. 48, 64, the effect of these regulations on 
State, local, and tribal governments, and on the private sector has 
been assessed. This regulation will not compel the expenditure in any 
one year of $100 million or more by any State, local, and tribal 
governments in the aggregate, or by the private sector. Therefore, a 
statement under section 202, 109 Stat. 48, 64-65, is not required.

Submission to Congress and the General Accounting Office

    Under 5 U.S.C. 801(a)(1)(A), the Board 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 the publication of this rule in today's Federal 
Register. This rule is not a major rule as defined in section 804(2).

List of Subjects in 5 CFR Part 1605

    Administrative practice and procedure, Employee benefit plans, 
Government employees, Pensions, Retirement.
Roger W. Mehle,
Executive Director, Federal Retirement Thrift Investment Board.

    For the reasons set forth in the preamble, part 1605 of chapter VI 
of title 5 of the Code of Federal Regulations is amended as follows:

PART 1605--CORRECTION OF ADMINISTRATIVE ERRORS

    1. The authority citation for Part 1605 continues to read as 
follows:

    Authority: 5 U.S.C. 8351 and 8474.

    2. Section 1605.9 is amended by revising the second sentence of 
paragraph (a)(1) to read as follows:


Sec. 1605.9  Miscellaneous provisions.

    (a)(1) * * * In that case, the earnings will be removed from the 
account and paid to the ineligible participant. * * *
* * * * *
[FR Doc. 97-24760 Filed 9-17-97; 8:45 am]
BILLING CODE 6760-01-U  

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