[Code of Federal Regulations]
[Title 5, Volume 3]
[Revised as of January 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR1605.7]

[Page 195-196]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
         CHAPTER VI--FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
 
PART 1605--CORRECTION OF ADMINISTRATIVE ERRORS--Table of Contents
 
               Subpart C--Board or TSP Recordkeeper Errors
 
Sec. 1605.7  Plan-paid lost earnings and other corrections.


    (a) Plan-paid lost earnings. (1) Subject to paragraph (a)(2) of this 
section, if, because of an error committed by the Board or the TSP 
recordkeeper, a participant's account does not receive credit for 
earnings (which may be positive or negative) that it would have received 
had the error not occurred, the account will be credited with the 
difference between the earnings (if any) it actually received and the 
earnings it would have received had the error not occurred. The errors 
that warrant crediting of lost earnings under this paragraph (a) 
include, but are not limited to:
    (i) Board or TSP recordkeeper delay in crediting contributions or 
other monies to a participant's account;
    (ii) Improper issuance of a loan or withdrawal payment to a 
participant or beneficiary which requires the money to be restored to 
the participant's account; and
    (iii) Investment of all or part of a participant's account in the 
wrong TSP investment fund(s) (e.g., improper

[[Page 196]]

processing or failure to process an interfund transfer request).
    (2) A participant's TSP account will not be credited with earnings 
under paragraph (a)(1) of this section if, during the period the 
participant's account received credit for less earnings than it would 
have received but for the Board or recordkeeper error, the participant 
had the use of the money on which the earnings would have accrued.
    (3) In the case of an error described in paragraph (a)(1)(iii) of 
this section, the affected participant will, upon discovery of the 
error, be given a choice whether or not to have the error corrected. If 
the participant chooses correction, the account will be placed in the 
position it would have attained had the error not occurred, including 
crediting of earnings (positive or negative as the case may be) that 
would have accrued had the error not occurred and reallocation of the 
account balance among the investment funds in the proportions that would 
have existed had the error not occurred.
    (4) Where the participant continued to have a TSP account, or would 
have continued to have a TSP account but for the Board or TSP 
recordkeeper error, earnings under paragraph (a)(1) of this section will 
be computed for the relevant period based upon the investment funds in 
which the affected monies would have been invested had the error not 
occurred. If the period for which lost earnings are paid is a period for 
which the participant did not, and should not, have had an account in 
the TSP, then the earnings will be computed using the G Fund rate of 
return for the relevant period.
    (b) Reversal of loan distributions. If, because of Board or TSP 
recordkeeper error, a TSP loan is declared a taxable distribution under 
circumstances that make such declaration inconsistent with FERSA, 5 CFR 
Part 1655, with the provisions of the documents (including instructions) 
signed by or provided to the participant in connection with the 
application for or issuance of the loan, or with other procedures 
established by the Board or TSP recordkeeper in connection with the TSP 
loan program, the taxable distribution will be reversed. The participant 
will be provided an opportunity to reinstate or repay in full the 
outstanding balance on the loan.
    (c) Other corrections. The Executive Director may, in his discretion 
and consistent with the requirements of applicable law, correct any 
other errors not specifically addressed in this section or provide any 
other relief to a participant, including payment of lost earnings from 
the TSP, if the Executive Director determines that the correction or 
relief would serve the interests of justice, fairness, and equity among 
the participants of the TSP.