[Senate Report 106-343]
[From the U.S. Government Publishing Office]
106th Congress
2d Session SENATE Report
106-343
_______________________________________________________________________
Calendar No. 682
A BILL TO AMEND THE THRIFT SAVINGS PLAN
__________
R E P O R T
of the
COMMITTEE ON GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
to accompany
H.R. 208
TO AMEND TITLE 5, UNITED STATES CODE, TO ALLOW FOR THE CONTRIBUTION OF
CERTAIN ROLLOVER DISTRIBUTIONS TO ACCOUNTS IN THE THRIFT SAVINGS PLAN,
TO ELIMINATE CERTAIN WAITING-PERIOD REQUIREMENTS FOR PARTICIPATING IN
THE THRIFT SAVINGS PLAN, AND FOR OTHER PURPOSES
July 13, 2000.--Ordered to be printed
COMMITTEE ON GOVERNMENTAL AFFAIRS
FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii
GEORGE VOINOVICH, Ohio RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
Hannah S. Sistare, Staff Director and Counsel
Dan G. Blair, Senior Counsel
Michael L. Loesch, Counsel,
International Security, Proliferation, and Federal Services
Subcommittee
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Lawrence B. Novey, Minority Counsel
Nanci E. Langley, Minority Deputy Staff Director,
International Security, Proliferation, and Federal Services
Subcommittee
Darla D. Cassell, Chief Clerk
C O N T E N T S
----------
Page
I. Purpose..........................................................1
II. Background.......................................................1
III. Legislative History..............................................4
IV. Section-by-Section Analysis......................................4
V. Regulatory Impact Statement......................................5
VI. Congressional Budget Office Cost Estimate........................5
VII. Executive Communications.........................................8
VIII.Changes in Existing Law..........................................9
Calendar No. 682
106th Congress Report
SENATE
2d Session 106-343
======================================================================
TO AMEND THE THRIFT SAVINGS PLAN
_______
July 13, 2000.--Ordered to be printed
_______
Mr. Thompson, from the Committee on Governmental Affairs, submitted the
following
R E P O R T
[To accompany H.R. 208]
The Committee on Governmental Affairs, to which was
referred the bill (H.R. 208) to amend title 5, United States
Code, to allow for the contribution of certain rollover
distributions to accounts in the Thrift Savings Plan, to
eliminate certain waiting-period requirements for participating
in the Thrift Savings Plan, and for other purposes, having
considered the same, reports favorably thereon with amendments
and recommends that the bill as amended do pass.
I. Purpose
H.R. 208, as reported by the Committee on Governmental
Affairs, amends title 5, United States Code, to allow for the
contribution of certain rollover distributions from qualified
retirement accounts, including private sector 401(k) plans, to
accounts in the Thrift Savings Plan, and eliminates the waiting
period for participating in the Thrift Savings Plan.
II. Background and Summary of Legislation
A. Background on the Thrift Savings Plan
The Thrift Savings Plan (TSP) is a retirement savings and
investment plan for Federal employees. Congress created the TSP
when it enacted the Federal Employees' Retirement System Act of
1986. The TSP is the public sector counterpart to private
sector ``401(k)'' retirement plans whereby employees are
eligible to contribute a portion of their pre-tax income to
their accounts. Employees covered by the Federal Employees'
Retirement System (FERS) and the Civil Service Retirement
System (CSRS) can contribute to the TSP although the rules
governing the participation of each group differ depending in
which retirement plan the employee participates.
The TSP is a defined contribution plan. The retirement
income an employee receives from this account depends on how
much the employee has contributed during his or her working
years and the amount of earnings on these contributions. The
contributions an employee makes to his or her account are
voluntary and are separate from the contributions required to
be made for the FERS Basic Annuity or the CSRS annuity.
The TSP adds an important element of portability to federal
retirement benefits. All TSP participants are immediately
vested in their contributions to the plan and any growth in the
value of their investment from interest, dividends, and capital
gains. FERS participants are immediately vested in the federal
matching contributions as well as those earnings on those
contributions. Workers who leave the federal government for
jobs in other sectors of the economy can leave their money in
the TSP--where it will continue to accrue interest, dividends,
and capital gains according to the performance of the funds in
which they have chosen to invest--or they can ``roll over''
their TSP funds on a tax-deferred basis into another tax-
qualified retirement savings account such as an IRA or 401(k)
plan.
Further, the TSP is particularly important for those
employees covered by the FERS, since those employees receive
smaller defined benefits and need to invest greater amounts in
the TSP in order to enhance their retirement income. According
to the Congressional Research Service, workers in the middle
and upper ranges of the federal pay scale are unlikely to
achieve adequate retirement income from just Social Security
and the FERS basic annuity. CRS reports that even at a modest
annual rate of return of 6 percent, the TSP can replace 32
percent of final pay for a worker who contributes 10 percent of
pay over 30 years of federal service.
As of March 2000, there were 2.5 million participants in
the TSP, including 2.1 million active employees for the federal
government and the U.S. Postal Service. Of this number, almost
1.9 million employees were actively contributing some portion
of their pay to the TSP. Among active employees who were
covered by FERS, 86.2 percent of those who were eligible to
participate made contributions to the TSP, compared to 86.1
percent a year earlier. Among employees enrolled in the CSRS,
64.5 percent participated in the TSP, compared to 61.4 percent
a year earlier. The combined value of the 2.5 million TSP
accounts is $98.2 billion. The G Fund, which consists
exclusively of investments in short-term nonmarketable U.S.
Treasury securities, held $31.4 billion. The F Fund, which is
invested in an index fund tied to fixed income securities, held
$3.9 billion. The C Fund, which is invested in a commingled
stock index fund that tracks the Standard & Poor's 500, held
$62.9 billion.
B. Summary of H.R. 208, as Reported by the Committee
H.R. 208 establishes new incentives for employees to
participate in the TSP, thus encouraging savings for
retirement. First, the bill will permit newly hired Federal
employees to begin making tax-advantaged contributions toward
their own retirement earlier than allowed under existing law.
Current law requires new hires to wait until the second TSP
open season after they begin working for the government, which
for many new employees may be as long as a year. By reducing
the waiting period for participation, H.R. 208 encourages
employees to begin their retirement savings immediately.
Second, employees are allowed to contribute ``rollover''
distributions from qualified trusts, such as 401(k) plans and
IRAs to the TSP. These rollover contributions are not permitted
under current law. By permitting these roll-overs, the
legislation allows employees to consolidate their retirement
savings in one account for greater ease of administration.
Since new employees will be participating in the TSP sooner
than they otherwise could under current law, tax revenues will
be affected. During consideration of H.R. 208 by the House
Government Reform Committee, the House Committee adopted an
amendment to provide for an offset of these lost revenues. This
offset provision required that federal agencies contribute to
the Civil Service Retirement and Disability Trust Fund (Fund)
for employees covered by FERS by 1/100 of a percentage point.
The Administration objected to the funding mechanism as
adopted by the House. The Administration said the mandated
agency contributions were unrelated to either the benefits
derived from the TSP or the retirement programs that are
financed through the Fund. Further, the Administration
expressed concern that requiring nonprogrammatic deposits into
the Fund would set a bad precedent that could lead to the
future use of the Fund as a source of payments unrelated to the
retirement programs it supports.
In order to respond to Administration concerns while still
providing an offset to compensate for the loss of revenues, the
Committee on Governmental Affairs adopted an amendment, offered
by Senator Akaka and supported by the Administration, which
would allow the Office of Personnel Management to recognize
court orders prohibiting a federal employee who is going
through a divorce proceeding from withdrawing his or her
retirement contributions to the Civil Service Retirement and
Disability Trust Fund. Senator Akaka offered the amendment and
the Committee adopted the provision based on cost estimates
provided by the Office of Personnel Management. OPM estimated
the provision would provide an offset of $32.4 million.
However, the Congressional Budget Office later estimated the
amendment to provide an offset of $11 million.
Under current law, a withdrawal of retirement contributions
from the Fund terminates an employee's rights, and those of the
spouse, to a retirement annuity. Furthermore, until a divorce
is final and the property settlement complete, a court is
unable to prevent an individual from withdrawing his or her
contribution.
This situation can create two problems. First, the court
has no means of delaying payment of the refund while it
considers whether to award the prospective former spouse an
annuity. Second, State courts often do not realize that merely
awarding a survivor annuity or a portion of an employee's
annuity, without also issuing a specific order barring payment
of a refund, will not prevent payment of a refund that will
terminate those annuity rights.
The amendment grants OPM the authority to recognize a court
order barring payment of a refund of an employee's
contributions during the pendency of a divorce. Recognition of
these orders preserves the court's ability to award retirement
or survivor benefits to the former spouse since payment of a
refund would extinguish the spouse's or former spouse's
entitlement to such benefits. The amendment gives courts the
ability to issue orders that prevent OPM from refunding an
employee's contribution until the court has reviewed the
issues, finalized the divorce, and issued a property
settlement.
The amendment is intended to provide a partial offset to
the loss of revenues by retaining money in the Fund that would
otherwise be paid out to employees.
III. Legislative History
H.R. 208 was introduced in the House of Representatives on
January 6, 1999, by Representative Connie Morella, and the bill
was referred subsequently to the Committee on Government Reform
Subcommittee on Civil Service. On February 25, 1999, the
Subcommittee considered the bill and forwarded the bill to the
Committee on Government Reform by voice vote. The Committee on
Government Reform considered the bill on March 17, 1999, and
H.R. 208 was ordered reported to the full House by voice vote.
On April 20, 1999, the House of Representatives approved the
bill under suspension of the rules by voice vote.
H.R. 208 was received by the Senate on April 21 and
referred to the Committee on Governmental Affairs. The
legislation was referred to the Subcommittee on International
Security, Proliferation and Federal Services on May 13, 1999.
On March 3, 2000, the Subcommittee reported H.R. 208 to the
full Committee on Governmental Affairs by polling letter. No
hearings were held on the bill.
On June 14, the full Committee considered H.R. 208. Sen.
Akaka offered an amendment to strike section 3 of the bill and
insert an alternative financing mechanism to offset the lost
tax revenues incurred as a result of immediate new employee
participation in the TSP. Section 3 of the House-passed bill
required agencies to increase their FERS contributions to the
Civil Service Retirement Trust Fund by 0.01% to offset the
costs of the bill. The Committee amendment replaced this
financing mechanism. This provision generates savings by
allowing OPM to recognize court orders to retain funds in the
Civil Service Retirement Trust, which otherwise might be
withdrawn or paid out in an annuity, during the pendency of a
divorce or until a court resolves the divorce and property
settlement issues before it. The amendment was adopted by voice
vote and H.R. 208, as amended, was ordered to be reported by
the full Committee by voice vote. Committee members present
were Senators Stevens, Collins, Voinovich, Cochran, Lieberman,
Akaka, Torricelli, Cleland and Thompson.
IV. Section-by-Section Analysis
Section 1. Eligible rollover distributions
As approved by the Committee, this section amends 5 U.S.C.
8432 to allow the Thrift Savings Plan (TSP) to accept the same
roll-over distributions that a (private sector) qualified trust
may accept under the Internal Revenue Code (I.R.C.) of 1986.
Currently, qualified trusts, as defined by section 402(c)(8) of
the I.R.C., may accept rollovers from other qualified trusts,
403(a) qualified annuity plans, and conduit individual
retirement accounts (IRAs) that consist solely of assets rolled
over from a qualified trust or a 403(a) qualified annuity plan.
The language approved by the Committee would automatically
allow the TSP to accept rollovers from additional sources if
the rollover authority of a qualified trust is expanded by
pending or future legislative changes to the I.R.C. This
section takes effect at the earliest practicable date after
September 30, 2000, as determined by the Executive Director of
the Federal Retirement Thrift Investment Board.
Section 2. Immediate participation in the Thrift Savings Plan
This section amends 5 U.S.C. 8432(b) to eliminate
statutorily required waiting periods before employees and
Members may contribute to the TSP. Under this section, such
individuals will be eligible to make employee contributions
from their basic pay beginning with their first day of service
or, if that is not administratively feasible, on the earliest
date thereafter that the Executive Director determines to be
feasible. This amendment does not affect employer contributions
(i.e., Agency Automatic (1%) and Agency Matching
Contributions), which remain subject to the mandatory waiting
periods. This section takes effect at the earliest practicable
date after September 30, 2000, as determined by the Executive
Director of the Federal Retirement Thrift Investment Board.
Section 3. Court orders affecting refunds
This section amends chapters 83 and 84 of title 5, U.S.C.
to allow the Office of Personnel Management the authority to
bar payment of refunds of an employee's retirement
contributions if it has received a court order barring such
payment in order to preserve the court's ability to award a
survivor or former spouse's annuity, or if payment of the
refund would extinguish the entitlement of the spouse or former
spouse to retirement or survivor benefits during the pendency
of a divorce.
V. Regulatory Impact Statement
Paragraph 11(b)(1) of rule XXVI of Standing Rules of the
Senate requires that each report accompanying a bill evaluate
``the regulatory impact which would be incurred in carrying out
this bill.''
H.R. 208 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would have little or no impact on the budgets of state, local,
or tribal governments.
VI. Cost Estimate Provided by the Congressional Budget Office
U.S. Congress,
Congressional Budget Office,
Washington, DC, June 29, 2000.
Hon. Fred Thompson,
Chairman, Committee on Governmental Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 208, a bill
amending the Thrift Savings Plan for federal employees.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Eric Rollins.
Sincerely,
Steven Lieberman
(For Dan L. Crippen, Director).
Enclosure.
congressional budget office cost estimate
H.R. 208--An act to amend title 5, United States Code, to allow for the
contribution of certain rollover distributions to accounts in
the Thrift Savings Plan, to eliminate certain waiting-period
requirements for participating in the Thrift Savings Plan, and
for other purposes.
Summary: H.R. 208 would make a number of changes to the
federal government's civilian retirement programs. The act
would let newly hired federal employees make contributions to
the Thrift Savings Plan (TSP) sooner than allowed under current
law and let federal employees transfer balances from other tax-
deferred savings plans to their TSP accounts. The act would
also authorize courts to prevent former federal employees from
withdrawing their retirement contributions until divorce
proceedings are finalized.
CBO estimates that enacting H.R. 208 would decrease
revenues by $45 million over the 2001-2005 period. That revenue
loss would be partially offset by a reduction of $11 million in
direct spending for refunds of retirement contributions.
Because this act would affect direct spending and receipts,
pay-as-you-go procedures would apply.
H.R. 208 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would have little or no impact on the budgets of state, local,
or tribal governments.
Estimated cost to the Federal Government: The estimated
budgetary impact on H.R. 208 is shown in the following table.
For the purposes of this estimate, CBO assumed that H.R. 208
would be enacted by October 2000.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars
-----------------------------------------------------------
2000 2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
Estimated budget authority.......................... 0 -3 -2 -2 -2 -2
Estimated outlays................................... 0 -3 -2 -2 -2 -2
CHANGES IN REVENUES
Estimated revenues.................................. 0 -6 -9 -9 -10 -11
----------------------------------------------------------------------------------------------------------------
Note: The Joint Committee on Taxation prepared the estimates of the changes in revenues.
The effects of this legislation on direct spending fall
within budget function 600 (income security).
basis of estimate
Direct spending
Restrict Payments of Refunds of Retirement Contributions.--
Federal employees covered by the Civil Service Retirement
System (CSRS) or the Federal Employee Retirement System (FERS)
contribute a portion of their salaries to the Civil Service
Retirement and Disability Fund. Individuals may have their
retirement contributions refunded to them after leaving
government service, but periods of service covered by refunds
are not counted in calculating the amount of retirement
benefits. (FERS employees also may not count refunded service
in determining retirement eligibility.)
For this reason, in order to preserve a former spouse's
entitlement to a portion of an employee's annuity or a survivor
benefit, divorce settlements may prohibit a former employee
from taking a refund. Under current law, however, courts can
only bar refund payments as part of a final divorce settlement.
H.R. 208 would allow courts to bar payments of refunds while
divorce proceedings are still in progress.
Based on information from the Office of Personnel
Management, CBO estimates that about 27,000 former employees
would receive refunds annually under current law. Using data on
marriage and divorce rates from the National Center for Health
Statistics, CBO anticipates that 600 of those employees would
be going through divorce proceedings. CBO estimates that the
bill would prevent 400 employees per year from receiving
refunds, and delay payment for another 100 employees by six
months. Overall, CBO estimates that H.R. 208 would lower refund
payments by $11 million over the 2000-2005 period. Annual
savings would decline in later years because an increasing
number of refunds would be paid to employees covered by FERS,
which pays much smaller refunds than CSRS. (The average refund
affected by this act would be about $6,700 in 2001, and would
decline to about $5,300 in 2005.) In the long run, spending on
federal retirement benefits would increase since more employees
would be eligible for retirement benefits.
Revenues
Allow New Hires to Participate in TSP Sooner.--Newly hired
federal employees must now wait two open seasons (6 to 12
months) before they can begin making contributions to the TSP.
H.R. 208 would allow new hires to begin making TSP
contributions immediately, although government contributions
would still not begin until the second open season. The portion
of an employee's salary that is contributed to the TSP is not
taxed until it is withdrawn from the plan.
The Joint Committee on Taxation (JCT) estimates that the
federal government would forgo tax revenues of $45 million over
the 2000-2005 period as a result of this provision. Based on
recent experience, JCT assumed that between 90,000 and 95,000
eligible employees would be hired each year, and that most of
those new hires would participate in the TSP. Under the act,
employees would contribute more money to their TSP accounts
than under current law, and thus taxes would be deferred on
more of their income.
Allow Rollovers from Other Tax-Deferred Savings Plans.--
H.R. 208 would allow employees to transfer funds from certain
tax-deferred savings plans, such as a 401(k) plan from a
previous job, to their TSP accounts. JCT estimates that this
provision would not have a significant budgetary impact.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays and governmental receipts that are subject
to pay-as-you-go procedures are shown in the following table.
For the purposes of enforcing pay-as-you-go procedures, only
the affects in the current year, the budget year, and the
succeeding four years are counted.
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars
---------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays.............................................. 0 -3 -2 -2 -2 -2 -2 -2 -2 -2 -2
Changes in receipts............................................. 0 -6 -9 -9 -10 -11 -11 -12 -13 -13 -14
--------------------------------------------------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: H.R. 208
contains no intergovernmental or private-sector mandates as
defined in the Unfunded Mandates Reform Act and would have
little or no impact on the budgets of state, local, or tribal
governments.
Previous CBO estimate: On March 26, 1999, CBO estimated
that H.R. 208, as ordered reported by the House Committee on
Government Reform on March 17, 1999, would increase
discretionary spending by $35 million and have no net effect on
direct spending over the 2000-2004 period. The two major
differences between the two versions of H.R. 208 is that the
House version does not have a provision affecting refund
payments, and the Senate version would not change agency
retirement contributions. In addition, CBO has extended its
estimate to include the budgetary effects in 2005.
Estimate prepared by: Federal Costs: Eric Rollins; impact
on State, Local, and Tribal Governments: Leo Lex; and impact on
the Private Sector: John Harris.
Estimate approved by: Robert A. Sunshine, Assistant
Director for Budget Analysis.
VII. Executive Communications
Federal Retirement
Thrift Investment Board,
Washington, DC, June 22, 2000.
Hon. Fred Thompson,
Chairman, Committee on Governmental Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: I am writing to you in my capacity as
the chief executive and managing fiduciary of the Federal
Retirement Thrift Investment Board, the agency that manages the
Thrift Savings Plan (TSP) for Federal employees. I am pleased
to address for the record an issue raised by Senator Ted
Stevens and conveyed to the Board by Senator Daniel Akaka
concerning H.R. 208, legislation recently considered by your
committee.
As you know, the TSP offers Federal civilian employees the
same type of retirement savings and tax benefits that many
private corporations offer their employees under so-called
``401(k)'' plans. H.R. 208, as amended by Senator Akaka, will
permit the TSP to accept rollover contributions from the same
full range of sources as is now allowed to similar private
sector plans.
Participants would benefit from this provision because
their portable retirement savings could be consolidated in the
TSP, and the special tax status accorded to such savings would
be preserved. I expect this additional benefit would be
welcomed by participants, and we would be pleased to make it
available.
The question has arisen whether participants who roll over
substantial tax-deferred savings to the TSP from other plans
might in some way be subsidized by other TSP participants with
smaller accounts. This would not occur because each
participant's share of TSP administrative expenses is
progressive, i.e., it is based on the size of his or her
account balance. Thus, the larger the account balance, the
larger the dollar amount charged for administrative expenses,
and vice versa.
Nevertheless, because of its very low administrative
expense ratios overall, participants who choose to take
advantage of the rollover provision of H.R. 208, just like
those who simply contribute during their Federal service, will
find the TSP to be very economical. In 1999, TSP expenses
charged to participants totaled .05 percent for investments in
the Government Securities Investment (G) Fund, .06 percent for
investments in the Common Stock Index Investment (C) Fund, and
.07 percent for investments in the Fixed Income Index
Investment (F) Fund. In dollar terms, this means that 1999 G
Fund earnings were reduced approximately $.50 for every $1,000
in a G Fund account balance. Similarly, C and F Fund earnings
were reduced approximately $.60 and $.70, respectively, for
every $1,000 in C and F Fund account balances.
Based on the above costs, a G Fund investor with a $5,000
account balance would have paid only $2.50 (.05 percent) in TSP
expenses in 1999. In return, he or she had the right, without
further charges, to start or stop contributions, change how
those contributions were invested, borrow and repay, make
withdrawals, execute monthly interfund transfers, and receive
two account statements (and, if applicable, four loan
statements) each year. Since a $2.50 charge would not cover the
strictly allocable costs associated with all of those
activities, the small account holder is subsidized by other
Plan participants. As his or her account balance grows,
however, it will cover its own notional costs and eventually
cover some of the costs associated with new, smaller accounts.
Rollover contributions would be subject to the same
balance-based charges. Thus, if rollover funds of $100,000 were
invested in the G Fund in 1999, the participant would have paid
.05 percent, or $50, for the same rights, more than enough to
cover the TSP costs associated with that account, but still a
very small charge when compared to private-sector alternatives.
I hope this clarifies the benefit and cost allocation
associated with the rollover provision of H.R. 208 as amended.
Sincerely,
Roger W. Mehle,
Executive Director.
VIII. Changes in Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TITLE 5, UNITED STATES CODE
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
Subpart G--Insurance and Annuities
* * * * * * *
CHAPTER 83--RETIREMENT
* * * * * * *
Subchapter III-Civil Service Retirement
* * * * * * *
Sec. 8342. Lump-sum benefits; designation of beneficiary; order of
precedence
(a) * * *
* * * * * * *
[(j)(1) Payment of the lump-sum credit under subsection (a)
of this section--
(A) may be made only if any current spouse and any
former spouse of the employee or Member are notified of
the employee or Member's application; and
(B) shall be subject to the terms of a court decree
of divorce, annulment, or legal separation or any court
order or court approved property settlement agreement
incident to such decree if--
(i) the decree, order, or agreement expressly
relates to any portion of the lump-sum credit
involved; and
(ii) payment of the lump-sum credit would
extinguish entitlement of the employee's or
Member's spouse or former spouse to a survivor
annuity under section 8341(h) of this title or
to any portion of an annuity under section
8345(j) of this title.]
(j)(1)(A) Payment of the lump-sum credit under subsection
(a) may be made only if the spouse, if any, and any former
spouse of the employee or Member are notified of the employee
or Member's application.
(B) The Office shall prescribe regulations under which the
lump-sum credit shall not be paid without the consent of a
spouse or former spouse of the employee or Member where the
Office has received such additional information and
documentation as the Office may require that--
(i) a court order bars payment of the lump-sum credit
in order to preserve the court's ability to award an
annuity under section 8341(h) or section 8345(j); or
(ii) payment of the lump-sum credit would extinguish
the entitlement of the spouse or former spouse, under a
court order on file with the Office, to a survivor
annuity under section 8341(h) or to any portion of an
annuity under section 8345(j).
* * * * * * *
CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
* * * * * * *
Subchapter II--Basic Annuity
* * * * * * *
Sec. 8424. Lump-sum benefits; designation of beneficiary; order of
precedence
(a) * * *
[(b)(1) Payment of the lump-sum credit under subsection
(a)--
(A) may be made only if any current spouse and any
former spouse of the employee or Member are notified of
the application by the employee or Member; and
(B) in any case in which there is a former spouse,
shall be subject to the terms of a court decree of
divorce, annulment, or legal separation issued with
respect to such former spouse if--
(i) the decree expressly relates to any
portion of the lump-sum credit involved; and
(ii) payment of the lump-sum credit would
affect any right or interest of the former
spouse with respect to a survivor annuity under
section 8445, or to any portion of an annuity
under section 8467.]
(b)(1)(A) Payment of the lump-sum credit under subsection
(a) may be made only if the spouse, if any, and any former
spouse of the employee or Member are notified of the employee
or Member's application.
(B) The Office shall prescribe regulations under which the
lump-sum credit shall not be paid without the consent of a
spouse or former spouse of the employee or Member where the
Office has received such additional information or
documentation as the Office may require that--
(i) a court order bars payment of the lump-sum credit
in order to preserve the court's ability to award an
annuity under section 8445 or 8467; or
(ii) payment of the lump-sum credit would extinguish
the entitlement of the spouse or former spouse, under a
court order on file with the Office, to a survivor
annuity under section 8445 or to any portion of an
annuity under section 8467.
* * * * * * *
Subchapter III--Thrift Savings Plan
* * * * * * *
Sec. 8432. Contributions
(a) An employee or Member may contribute to the Thrift
Savings Fund in any pay period, pursuant to an election under
subsection (b)[(1)], an amount not to exceed 10 percent of such
individual's basic pay for such period. [Contributions made
under this subsection during any 6-month period for which an
election period is provided under subsection (b)(1) shall be
made each pay period during such 6-month period pursuant to a
program of regular contributions provided in regulations
prescribed by the Executive Director.] Contributions under this
subsection pursuant to such an election shall, with respect to
each pay period for which such election remains in effect, be
made in accordance with a program of regular contributions
provided in regulations prescribed by the Executive Director.
(b)(1)(A) * * *
(B) The amount to be contributed pursuant to an election
under subparagraph (A) (or any election allowable by virtue of
paragraph (4)) shall be the percentage of basic pay or amount
designated by the employee or Member.
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(3) [Notwithstanding paragraph (2)(A), an] An employee or
Member who elects to become subject to this chapter under
section 301 of the Federal Employees' RetirementSystem Act of
1986 may make the first election for the purpose of subsection (a)
during the period prescribed for such purpose by the Executive
Director. The period prescribed by the Executive Director shall
commence on the date on which the employee or Member makes the election
to become subject to this chapter.
[(4)(A) Notwithstanding paragraph (2)(A), an employee or
Member who is an employee or Member on January 1, 1987, and
continues as an employee or Member without a break in service
through April 1, 1987, may make the first election for the
purpose of subsection (a) during the election period prescribed
for such purpose by the Executive Director. The Executive
Director shall prescribe an election period for such purpose
which shall commence on April 1, 1987. An election by such an
employee or Member during that election period shall be
effective on the first day of the employee's or Member's first
pay period which begins after the date on which the employee or
Member makes that election.
[(B) Notwithstanding subsection (a), the maximum amount
that an employee or Member may contribute during any pay period
which begins on or after April 1, 1987, and before October 1,
1987, pursuant to an election made during the election period
provided under subparagraph (A) is the amount equal to 15
percent of such individual's basic pay for such period.]
(4) The Executive Director shall prescribe such regulations
as may be necessary to carry out the following:
(A) Notwithstanding subparagraph (A) of paragraph
(2), an employee or Member described in such
subparagraph shall be afforded a reasonable opportunity
to first make an election under this subsection
beginning on the date of commencing service or, if that
is not administratively feasible, beginning on the
earliest date thereafter that such an election becomes
administratively feasible, as determined by the
Executive Director.
(B) An employee or Member described in subparagraph
(B) of paragraph (2) shall be afforded a reasonable
opportunity to first make an election under this
subsection (based on the appointment or election
described in such subparagraph) beginning on the date
of commencing service pursuant to such appointment or
election or, if that is not administratively feasible,
beginning on the earliest date thereafter that such an
election becomes administratively feasible, as
determined by the Executive Director.
(C) Notwithstanding the preceding provisions of this
paragraph, contributions under paragraphs (1) and (2)
of subsection (c) shall not be payable with respect to
any pay period before the earliest pay period for which
such contributions would otherwise be allowable under
this subsection if this paragraph had not been enacted.
(D) Sections 8351(a)(2), 8440a(a)(2), 8440b(a)(2),
8440c(a)(2), and 8440d(a)(2) shall be applied in a
manner consistent with the purposes of subparagraphs
(A) and (B), to the extent those subparagraphs can be
applied with respect thereto.
(E) Nothing in this paragraph shall affect paragraph
(3).
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(j)(1) For the purpose of this subsection--
(A) the term ``eligible rollover distribution'' has
the meaning given such term by section 402(c)(4) of the
Internal Revenue Code of 1986; and
(B) the term ``qualified trust'' has the meaning
given such term by section 402(c)(8) of the Internal
Revenue Code of 1986.
(2) An employee or Member may contribute to the Thrift
Savings Fund an eligible rollover distribution that a qualified
trust could accept under the Internal Revenue Code of 1986. A
contribution made under this subsection shall be made in the
form described in section 401(a)(31) of the Internal Revenue
Code of 1986. In the case of an eligible rollover distribution,
the maximum amount transferred to the Thrift Savings Fund shall
not exceed the amount which would otherwise have been included
in the employee's or Member's gross income for Federal income
tax purposes.
(3) The Executive Director shall prescribe regulations to
carry out this subsection.
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Sec. 8439. Accounting and information
(a)(1) The Executive Director shall establish and maintain
an account for each individual who makes contributions or for
whom contributions are made under [section 8432(c)(1)] section
8432 of this title or who makes contributions to the Thrift
Savings Fund under section 8351 of this title.
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(c)(1) * * *
(2) Information under this subsection shall be provided at
least 30 calendar days before the beginning of each election
period under section 8432(b)(1)(A) of this title, and in a
manner designed to facilitate informed decision making with
respect to elections under sections 8432 and 8438 of this
title. Nothing in this paragraph shall be considered to limit
the dissemination of information only to the times required
under the preceding sentence.
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Sec. 8440a. Justices and judges
(a)(1) * * *
(2) An election may be made under paragraph (1) only during
a period provided under section 8432(b) for individuals subject
to [chapter 84 of this title: Provided, however, That a justice
or judge may make the first such election within 60 days of the
effective date of this section.] this chapter.
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Sec. 8440d. Judges of the United States Court of Appeals for Veterans
Claims
(a)(1) * * *
(2) An election may be made under paragraph (1) only during
a period provided under section 8432(b) of this title for
individuals subject to [chapter 84 of this title.] this
chapter.