[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: 5CFR1655.15]

[Page 292-293]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
         CHAPTER VI--FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
 
PART 1655--LOAN PROGRAM--Table of Contents
 
Sec. 1655.15  Incorrect payments.

    (a) If correct payments are not processed by the recordkeeper for a 
period in excess of 90 calendar days from the applicable one of the 
following dates:
    (1) The date of the last correct payment;
    (2) The date of the first incorrect payment, if there have been no 
prior correct payments; or
    (3) The date the first payment was due (as calculated under 
Sec. 1655.14(b)), if there have been no payments;

the procedures stated in paragraph (b) of this section will apply.
    (b)(1) Interest from the beginning of the 90-day period described in 
paragraph (a) of this section will be added to the outstanding loan 
principal and the participant will be required to reamortize the loan. 
Generally, a reamortization schedule will be calculated to maintain the 
remaining number of payments scheduled for the loan. The recordkeeper 
will prepare and send a Rider to the Loan Agreement/Promissory Note and 
a new payroll allotment form to the participant. The recordkeeper must 
receive from the participant a signed Rider to the Loan Agreement/
Promissory Note and

[[Page 293]]

a newly signed payroll allotment form within 45 calendar days of the 
date the Rider is prepared. If the 45th day falls on a Saturday, Sunday, 
or a Federal holiday, the deadline will be the next business day.
    (2) If the remaining number of payments would cause the loan term to 
extend beyond 18 years less 120 days from the loan issue date for a loan 
for the purchase of a primary residence, or five years less 120 days 
from the loan issue date for any other loan, the recordkeeper will 
reamortize the loan to enable the entire amount of principal and 
interest to be repaid within those limits. The recordkeeper will prepare 
and send to the participant a Rider to the Loan Agreement/Promissory 
Note and a new payroll allotment form. The recordkeeper must receive 
from the participant, within 45 calendar days of the date the Rider is 
prepared, the signed Rider to the Loan Agreement/Promissory Note and a 
newly signed payroll allotment form. If the 45th day falls on a 
Saturday, Sunday, or a Federal holiday, the deadline will be the next 
business day.
    (3) If no reamortized payments can be calculated under this section 
to allow the loan to be repaid within the time limit described in 
paragraph (b)(2) of this section, and the participant does not prepay 
the loan in full, a taxable distribution will be declared.
    (4) If the reamortized loan principal would exceed the maximum loan 
amount as calculated under Sec. 1655.6(b), the loan will not be 
reamortized. The participant must prepay the loan in full or a taxable 
distribution will be declared.
    (5) If a participant does not sign and return the Rider to the Loan 
Agreement/Promissory Note, and the participant does not prepay the loan 
in full, a taxable distribution will be declared.
    (6) A reamortization will be calculated based on the assumption that 
the reamortization will be completed 50 days after the Rider to the Loan 
Agreement/Promissory Note is prepared.
    (c) If a period of incorrect payments does not exceed the 90-day 
period described in paragraph (a) of this section, no reamortization is 
required under paragraph (b) of this section. Any unpaid principal will 
be paid by additional payments in the same amount as the existing 
payments added to the term of the loan. Any overpaid principal will 
cause the loan repayment period to be shortened. If the additional 
payments would extend the term of the loan beyond five years from the 
loan issue date (or 18 years from the loan issue date in the case of a 
loan for the purchase of a primary residence), the participant must 
either reamortize the loan so as to establish scheduled payments that 
will repay the loan within those time periods or prepay in full the 
remaining unpaid amounts. If the participant does neither, a taxable 
distribution will be declared.
    (d) For purposes of this section, incorrect payments include 
insufficient, excessive, and missing payments.

[55 FR 979, Jan. 10, 1990, as amended at 61 FR 58756, Nov. 18, 1996]