5 U.S.C. § 8433 — Benefits and election of benefits
submitted 40 years ago by Pub. L. 99-335 to r/title-5-GOVERNMENT-ORGANIZATION-AND-EMPLOYEES · 1,108 words · no verdicts yet
When someone leaves government, they're entitled to their Thrift Savings Fund balance, minus anything forfeited. They can take it as an annuity, a single payment, several payments, or a combination. Before leaving, they may also borrow against their own contributions or withdraw money early in some cases.
(a) The right to the balance. An employee* or Member* who separates from government* employment is entitled to the balance in their account*, except for any part forfeited under section 8432(g), following the rules in this section.
(b) How to take it. Subject to section 8435, a separating employee or Member can elect to withdraw their account balance as: (1) an annuity; (2) a single lump-sum payment; (3) two or more roughly equal payments made at least once a year; or (4) some combination of those, as the Executive Director* allows by regulation.
(c) Additional withdrawals and rollovers.
(1) Besides the full withdrawal in (b), a separated employee or Member can also make one or more partial withdrawals, handled the same way as a single payment under (b)(2).
(2) They can ask that a (b)(2)-style withdrawal be transferred directly to another eligible retirement plan.
(3) The Executive Director* must send each elected transfer directly to the eligible retirement plan(s) the person identifies (as defined in tax-code section 402(c)(8)).
(4) A transfer can't happen until the Executive Director gets the specific information needed to identify which plan(s) to send it to.
(5) These withdrawals are subject to whatever other limits or conditions the Executive Director sets by regulation.
(d) Changing your election.
(1) An employee or Member can generally change a prior benefit election, except once an annuity contract has actually been purchased for them, they can no longer change an annuity election.
(2) A payment already made can't be returned.
(e) What happens on death.
(1) If someone dies without ever making a benefit election, or after electing an annuity but before making a beneficiary election under section 8434, their account balance (as of death) is paid out consistent with section 8424(d), subject to any court* order or agreement described in section 8435(c)(2).
(2) If the person named their spouse as sole or partial beneficiary, or died with no named beneficiary but left a surviving spouse, the spouse may instead keep their share of the account open, with these limits: (A) the spouse gets the same withdrawal choices under (b) as the employee would have had; (B) the spouse cannot make the special early or hardship withdrawals under (g) or (h); (C) the spouse cannot add new contributions or transfers to the account; and (D) the account must be paid out when the surviving spouse dies, and a further beneficiary of that spouse cannot keep it open again.
(3) The Executive Director must issue regulations to carry this out.
(f) Small balances. If someone separates and their nonforfeitable balance is below an amount the Executive Director sets by regulation, the Executive Director must pay it out automatically in a single lump sum, unless the person elected under section 8432b(h)(2) to treat their earlier military-related separation as if it never happened.
(g) Loans.
(1) Before separating, an employee or Member can ask the Board* for a loan from their own account, up to the value of their own contributions (not the agency's). Before issuing the loan, the Executive Director must explain in writing the loan's cost compared to other financing, its lifetime cost, the difference in interest rates among the Fund's investment options, and any other effects on the person's final balance.
(2) Loans must be offered to all employees and Members on a fair, equal basis, under conditions the Board sets by regulation. The usual conflict-of-interest restriction in section 8477(c)(1) doesn't apply to these loans.
(3) A loan can't be made if it would count as a taxable distribution under tax-code section 72(p).
(4) A loan can't be made unless the spousal-consent requirements in section 8435(e) are satisfied.
(h) Early and hardship withdrawals.
(1) Before separating, an employee or Member can ask the Board for permission to withdraw money based on either (A) having turned 59 1/2, or (B) financial hardship.
(2) A hardship withdrawal under (1)(B) can't exceed the value of the person's own contributions (not the agency's).
(3) These withdrawals are subject to whatever other limits the Executive Director sets by regulation.
(4) A withdrawal can't be made unless the spousal-consent requirements in section 8435(e) are satisfied.
An employee* or Member* who separates from Government* employment is entitled to the amount of the balance in the employee’s or Member’s account* (except for the portion of such amount forfeited under section 8432(g) of this title, if any) as provided in this section.
Subject to section 8435 of this title, any employee or Member who separates from Government employment is entitled and may elect to withdraw from the Thrift Savings Fund* the balance of the employee’s or Member’s account as—
an annuity;
a single payment;
2 or more substantially equal payments to be made not less frequently than annually; or
any combination of payments as provided under paragraphs (1) through (3) as the Executive Director* may prescribe by regulation.
In addition to the right provided under subsection (b) to withdraw the balance of the account, an employee or Member who separates from Government service* may make one or more withdrawals of any amount in the same manner as a single payment is made in accordance with subsection (b)(2) from the employee’s or Member’s account.
An employee or Member may request that the amount withdrawn from the Thrift Savings Fund in accordance with subsection (b)(2) be transferred to an eligible retirement plan.
The Executive Director* shall make each transfer elected under paragraph (2) directly to an eligible retirement plan or plans (as defined in section 402(c)(8) of the Internal Revenue Code of 1986) identified by the employee, Member, former employee, or former Member for whom the transfer is made.
A transfer may not be made for an employee, Member, former employee, or former Member under paragraph (2) until the Executive Director receives from that individual the information required by the Executive Director specifically to identify the eligible retirement plan or plans to which the transfer is to be made.
Withdrawals under this subsection shall be subject to such other limitations or conditions as the Executive Director may prescribe by regulation.
Subject to paragraph (2) and subsections (a) and (c) of section 8435 of this title, an employee or Member may change an election previously made under this subchapter, except that in the case of an election to receive an annuity, a former employee or Member may not change an election under this section on or after the date on which an annuity contract is purchased to provide for the annuity elected by the former employee or Member.
A former employee or Member may not return a payment that was made pursuant to an election under this section.
If an employee or Member (or former employee or Member) dies without having made an election under this section or after having elected an annuity under this section but before making an election under section 8434 of this title, an amount equal to the value of that individual’s account (as of death) shall, subject to any decree, order, or agreement referred to in section 8435(c)(2) of this title be paid in a manner consistent with section 8424(d) of this title.
Notwithstanding section 8424(d), if an employee, Member, former employee, or former Member dies and has designated as sole or partial beneficiary his or her spouse at the time of death, or, if an employee, Member, former employee, or former Member, dies with no designated beneficiary and is survived by a spouse, the spouse may maintain the portion of the employee’s or Member’s account to which the spouse is entitled in accordance with the following terms:
Subject to the limitations of subparagraph (B), the spouse shall have the same withdrawal options under subsection (b) as the employee or Member were the employee or Member living.
The spouse may not make withdrawals under subsection (g) or (h).
The spouse may not make contributions or transfers to the account.
The account shall be disbursed upon the death of the surviving spouse. A beneficiary or surviving spouse of a deceased spouse who has inherited an account is ineligible to maintain the inherited spousal account.
The Executive Director shall prescribe regulations to carry out this subsection.
Notwithstanding subsection (b), if an employee or Member separates from Government employment, and such employee’s or Member’s nonforfeitable account balance* is less than an amount that the Executive Director prescribes by regulation, the Executive Director shall pay the nonforfeitable account balance to the participant in a single payment, unless an election under section 8432b(h)(2) is made to treat such separation for purposes of this subsection as if it had never occurred.
At any time before separation, an employee or Member may apply to the Board* for permission to borrow from the employee’s or Member’s account an amount not exceeding the value of that portion of such account which is attributable to contributions made by the employee or Member. Before a loan is issued, the Executive Director shall provide in writing the employee or Member with appropriate information concerning the cost of the loan relative to other sources of financing, as well as the lifetime cost of the loan, including the difference in interest rates between the funds offered by the Thrift Savings Fund, and any other effect of such loan on the employee’s or Member’s final account balance.
Loans under this subsection shall be available to all employees and Members on a reasonably equivalent basis, and shall be subject to such other conditions as the Board may by regulation prescribe. The restrictions of section 8477(c)(1) of this title shall not apply to loans made under this subsection.
A loan may not be made under this subsection to the extent that the loan would be treated as a taxable distribution under section 72(p) of the Internal Revenue Code of 1986.
A loan may not be made under this subsection unless the requirements of section 8435(e) of this title are satisfied.
An employee or Member may apply, before separation, to the Board for permission to withdraw an amount from the employee’s or Member’s account based upon—
the employee or Member having attained age 59½; or
financial hardship.
A withdrawal under paragraph (1)(B) shall be available only for an amount not exceeding the value of that portion of such account which is attributable to contributions made by the employee or Member.
Withdrawals under paragraph (1) shall be subject to such other limitations or conditions as the Executive Director may prescribe by regulation.
A withdrawal may not be made under this subsection unless the requirements of section 8435(e) of this title are satisfied.
Source credit: (Added Pub. L. 99–335, title I, § 101(a), June 6, 1986, 100 Stat. 544; amended Pub. L. 100–238, title I, § 132, Jan. 8, 1988, 101 Stat. 1760; Pub. L. 101–335, §§ 5(a), 6(a)(2), July 17, 1990, 104 Stat. 321, 322; Pub. L. 102–484, div. D, title XLIV, § 4437(a), Oct. 23, 1992, 106 Stat. 2724; Pub. L. 103–226, § 9(b), (i)(3)–(7), Mar. 30, 1994, 108 Stat. 119, 121, 122; Pub. L. 103–353, §§ 4(b), 5(e)(4), Oct. 13, 1994, 108 Stat. 3172, 3174; Pub. L. 104–208, div. A, title I, § 101(f) [title VI, § 659 [title II, § 203(a)]], Sept. 30, 1996, 110 Stat. 3009–314, 3009–372, 3009–374; Pub. L. 106–65, div. A, title VI, § 661(a)(4), Oct. 5, 1999, 113 Stat. 672; Pub. L. 108–469, § 3(1), Dec. 21, 2004, 118 Stat. 3893; Pub. L. 111–31, div. B, title I, § 109, June 22, 2009, 123 Stat. 1856; Pub. L. 115–84, § 2(a)–(d), Nov. 17, 2017, 131 Stat. 1272, 1273.)
- 1986Enacted · Pub. L. 99-335 · 100 Stat. 544
- 1988Amended · Pub. L. 100-238 · 101 Stat. 1760
- 1990Amended · Pub. L. 101-335 · 104 Stat. 321, 322
- 1992Amended · Pub. L. 102-484 · 106 Stat. 2724
- 1994Amended · Pub. L. 103-226 · 108 Stat. 119, 121, 122
- 1994Amended · Pub. L. 103-353 · 108 Stat. 3172, 3174
- 1996Amended · Pub. L. 104-208 · 110 Stat. 3009
- 1999Amended · Pub. L. 106-65 · 113 Stat. 672
- 2004Amended · Pub. L. 108-469 · 118 Stat. 3893
- 2009Amended · Pub. L. 111-31 · 123 Stat. 1856
- 2017Amended · Pub. L. 115-84 · 131 Stat. 1272, 1273
A history note hasn’t been published yet. The record shows enactment by Pub. L. 99-335 on 1986-06-06.
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