[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: 5CFR1606.7]

[Page 202-203]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
         CHAPTER VI--FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
 
PART 1606--LOST EARNINGS ATTRIBUTABLE TO EMPLOYING AGENCY ERRORS--Table of Contents
 
     Subpart B--Lost Earnings Attributable to Delayed or Erroneous 
                              Contributions
 
Sec. 1606.7  Contributions to incorrect investment fund.

    (a) Where, as the result of an employing agency error, money was 
deposited to a participant's TSP account in an incorrect investment 
fund(s), the erroneous contribution shall be subject to lost earnings. 
In such cases:
    (1) The employing agency must submit a lost earnings record 
indicating the amount of the contributions submitted to the incorrect 
investment fund(s), the pay date for which it was submitted, the 
investment fund(s) to which it would have been deposited had the 
employing agency error not occurred, and the investment fund(s) to which 
it was actually deposited. If the employing agency has, prior to January 
1, 1991 or in contravention of paragraph (b) of this section, removed 
the contribution from the incorrect investment fund(s) using a negative 
adjustment record and redeposited the money to the investment fund(s) in 
which it would have been invested had the error not occurred, the 
employing agency must also indicate on the lost earnings record when 
these actions were taken.
    (2) The TSP recordkeeper shall compute the amount of lost earnings 
associated with each lost earnings record submitted by the employing 
agency pursuant to paragraph (a)(1) of this section, and shall also 
determine the investment fund or funds in which erroneously invested 
contributions and associated earnings would currently be invested had 
the error not occurred. In computing lost earnings and determining the 
appropriate investment fund or funds, the TSP recordkeeper shall take 
into consideration any interfund transfers that were made effective on 
or subsequent to the date erroneous contribution was made, and that were 
made effective prior to the end of the month preceding the month during 
which the lost earnings record is processed. With respect to the period 
prior to December 31, 1990, the TSP recordkeeper shall also take into 
account the investment restrictions that were effective under 5 U.S.C. 
8438 prior to the effective date of section 3 of the TSPTAA;
    (3) Where the lost earnings computed in accordance with paragraph 
(a)(2) of this section are positive, the TSP recordkeeper shall charge 
the amount of lost earnings computed to the appropriate employing agency 
and shall credit that amount to the account of the participant involved. 
If the lost earnings computed are negative, the amount computed shall be 
removed from the participant's account and used to offset TSP 
administrative expenses;
    (4) The TSP recordkeeper shall adjust the participant's account to 
reflect the investment funds in which the erroneous contributions and 
associated earnings would currently be invested had the error not 
occurred, as determined in accordance with paragraph (a)(2) of this 
section.
    (b) The provisions of part 1605 notwithstanding, effective January 
1, 1991, where employing agency error had caused money to be deposited 
to a TSP account in an incorrect investment fund, the employing agency 
may not remove the erroneously invested

[[Page 203]]

money from the incorrect investment fund(s) using a negative adjustment 
record and redeposit the money in the investment fund(s) in which it 
would have been invested had the error not occurred. Rather, the 
correction must be accomplished solely through the procedures described 
in paragraph (a) of this section.