A new rule proposed on April 18 could change how Thrift Savings Plan-based loans are repaid under reamortization terms.
The Federal Retirement Thrift Investment Board, which governs the federal government’s 401(k)-style retirement plan, detailed its plan to amend a loan reamorization rule in the Federal Register. The board proposed a combination of accrued interest with the outstanding principal when reamortizing a loan made out of the TSP.
Currently, any active TSP participant that takes a loan out of their retirement plan account must start repayments with interest within 60 days of the loan’s disbursement. Those repayments can be deducted from their paycheck.
If the employee decides to reamortize the loan, that would allow them to pay back a lump sum of the principal of the loan in return for lower payments. But they must first pay any accrued interest on the loan before the payments can be applied to the principal or current interest.
Under the proposed rule, the TSP record keeper overseeing the loan payments would combine accrued interest and the principal of the loan when reamortizing it. That would set in motion a recalculation of the loan principal.
In its proposal, the Federal Retirement Thrift Investment Board says the amended change would align TSP procedures “with the procedures that the TSP record keeper uses for processing reamortized loan repayments of individuals who participate in the private sector plans that the TSP record keeper also services.”
The proposed rule change is open for public comment until on or before May 19.
Comments may be submitted online through the Federal eRulemaking Portal on regulations.gov or mailed to the Office of General Counsel, Attn: Dharmesh Vashee, Federal Retirement Thrift Investment Board, 77 K St. N.E., Suite 1000, Washington, D.C. 20002.
House bill proposes independent spinoff of VA advocacy office
Rep. Rudy Yakym, R-Ind., re-introduced legislation on April 17 that seeks to improve veteran advocacy for Veteran Affairs Department benefits and services by creating an independent office to offer recommendations on how it can better operate.
The National Veterans Advocate Act (H.R. 2970) would stand up a new VA Office of the National Veterans’ Advocate, which would be carved out from the Veterans Health Administration’s Office of Patient Advocacy. The new office would have the power to report directly to Congress its assessments of where the quality of veterans’ health care and benefits could be made better.
“We owe our veterans a debt that can never truly be repaid,” Yakym said in a statement. “At the very least, we must do everything in our power to ensure they can access every available resource when they return home. This bill is a meaningful step toward providing the immediate, improved care our heroes deserve.”
Yakym first introduced the legislation last fall, but it never got out of committee.
