[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: 5CFR1620.45]

[Page 214-215]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
         CHAPTER VI--FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
 
PART 1620--EXPANDED AND CONTINUING ELIGIBILITY--Table of Contents
 
  Subpart E--Uniformed Services Employment and Reemployment Rights Act 
                   (USERRA)--Covered Military Service
 
Sec. 1620.45  Restoring post-employment withdrawals and reversing taxable distributions.

    (a) Post-employment withdrawals. Employees who received automatic 
cashouts because their account balances were $3,500 or less, or who were 
required to withdraw their TSP accounts before March 1995 because they 
were not eligible for retirement benefits when they separated, may elect 
to have the separation for military service treated as if it never 
occurred. These employees will be permitted to return amounts to the TSP 
that represent the full amount of the post-employment withdrawal.
    (b) Reversing taxable distributions. An employee who separated or 
who entered into nonpay status to perform military service, and whose 
TSP loan was therefore declared a taxable distribution, may be eligible 
to have that distribution reversed.
    (1) If the employee received a post-employment withdrawal when he or 
she separated to perform military service, he or she can have a taxable 
distribution reversed only if that withdrawal is returned under the 
procedures described in paragraph (a) of this section. If the employee 
is not eligible to or does not return the withdrawal, he or she cannot 
have the taxable distribution reversed.
    (2) The taxable distribution can be reversed either by reinstating 
the TSP loan or by repaying the loan in full. TSP loan repayments can be 
reinstated only if the loan can be repaid within five years of its 
disbursement for non-residential loans and 15 years for residential 
loans; and if the employee will have no more than two loans outstanding, 
one of which can be a residential loan.
    (c) Process. Eligible employees must notify the TSP record keeper of 
their intent to return the withdrawn funds and/or reverse a taxable 
distribution. This notification must be given within one year of 
reemployment and the employee must provide the TSP record

[[Page 215]]

keeper with a copy of the SF-50, Notification of Personnel Action, 
indicating reemployment or reinstatement was made pursuant to 38 U.S.C. 
chapter 43, or a letter from his or her agency indicating reemployment 
or restoration pursuant to 38 U.S.C. chapter 43. If the participant is 
eligible to return a withdrawal and/or reverse a distribution, the TSP 
record keeper will:
    (1) In the case of a request to return withdrawn funds, notify the 
employee of the amount of funds to be returned.
    (2) In the case of a request to reverse a taxable distribution, 
reinstate the loan if permitted, or if not, inform the employee of the 
repayment amount for the loan.
    (3) In the case of returned withdrawal and a repaid loan, inform the 
employee that both actions must be accomplished in the same transaction 
(i.e., one payment for both amounts).
    (4) In all cases inform the employee that he or she must provide the 
funds in a single payment to the TSP record keeper within 90 days after 
the record keeper sends the employee the notice advising of the amount 
and procedures for repaying the loan or withdrawal. Repayment must be 
submitted in the form of a certified or cashier's check, a certified or 
treasurer's draft from a credit union, or a money order.
    (d) Earnings. Employees will not receive retroactive earnings on any 
amounts returned to their accounts under this section.