News Column

Federal Retirement Thrift Investment Board Amends Aged Beneficiary Designation Forms Regulation

July 10, 2014



Targeted News Service

WASHINGTON, July 10 -- The U.S. Federal Retirement Thrift Investment Board published the following rule in the Federal Register:

Aged Beneficiary Designation Forms

A Rule by the Federal Retirement Thrift Investment Board on 07/09/2014

Publication Date: Wednesday, July 09, 2014

Agency: Federal Retirement Thrift Investment Board

Dates: This rule is effective on July 14, 2014.

Effective Date: 07/14/2014

Entry Type: Rule

Action: Final rule.

Document Citation: 79 FR 38747

Page: 38747 -38748 (2 pages)

CFR: 5 CFR 1651

Document Number: 2014-16043

Shorter URL: https://federalregister.gov/a/2014-16043

Action

Final Rule.

Summary

The Federal Retirement Thrift Investment Board (Agency) amends its regulations to provide that a beneficiary designation form is valid only if it is received by the TSP record-keeper not more than one year after the date of the participant's signature.

DATES:

This rule is effective on July 14, 2014.

FOR FURTHER INFORMATION CONTACT:

Laurissa Stokes at 202-942-1645.

SUPPLEMENTARY INFORMATION:

The Agency administers the Thrift Savings Plan (TSP), which was established by the Federal Employees' Retirement System Act of 1986 (FERSA), 99, 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)).

Background

Prior to 1995, active Federal employees submitted TSP beneficiary designation forms to the personnel office at their employing agency. Upon a participant's death or separation from service, the employing agency would forward the participant's beneficiary designation form to the TSP record-keeper.

Beginning on January 1, 1995, the Agency required all TSP participants to mail or fax beneficiary designation forms directly to the TSP record-keeper. In addition to requiring all participants to submit beneficiary designation forms directly to the TSP record-keeper, the new policy of direct receipt by the TSP record-keeper required employing agencies to search their personnel records and forward all beneficiary designation forms then in their possession to the TSP record-keeper immediately. The TSP communicated the new policy in two bulletins sent to agency representatives and in three separate mailings sent directly to participants.

The TSP codified the policy of direct receipt by the TSP record-keeper in regulations on June 13, 1997 (62 FR 32426). All beneficiary designation forms in an employing agency's possession should have been forwarded to the TSP record-keeper before June 13, 1997. Nevertheless, employing agencies continue to forward to the TSP record-keeper beneficiary designation forms that are sometimes decades old.

These aged forms often do not reflect the participant's current intent. Under the current regulations, the Agency must honor these aged forms if they are otherwise valid. When the Agency processes these forms, participants often become confused and believe their accounts have been accessed fraudulently. Further, if a participant passes away after the Agency has received an aged beneficiary designation form but prior to clarifying his/her current intent, the Agency must honor the old form even though it may not reflect the participant's current intent.

On September 20, 2013, the Agency published a proposal to amend its regulations to provide that a beneficiary designation form is valid only if it is received by the TSP record-keeper not more than 365 calendar days after the date of the participant's signature on the form. 78 FR 57807 (September 20, 2013). The Agency received no comments. Therefore, the Agency is publishing the proposed rule as final without change except for a minor clarification. The Agency is clarifying that, in the event that a beneficiary designation form contains multiple participant signatures with different dates, the TSP will rely on the most recently dated signature to determine whether 365 days have passed since the participant signed the form.

[*Federal RegisterVJ 2014-07-09]

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