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A recent proposal announced on April 18 could significantly alter the repayment process for loans taken from the Thrift Savings Plan (TSP). This potential change comes from the Federal Retirement Thrift Investment Board, which oversees the federal government’s 401(k)-like retirement system, and was detailed in the Federal Register.
The board’s plan seeks to merge accrued interest with outstanding principal when recalculating TSP loan payments following a reamortization. Currently, TSP participants who borrow from their retirement accounts are required to start making interest payments within 60 days of receiving the loan. They can opt to have these repayments deducted from their paychecks.
If participants choose to reamortize their loans, they can pay off a lump sum of the principal in exchange for lower monthly payments. However, before these payments can be applied to the principal or any ongoing interest, participants must first settle any accrued interest on their loan.
The proposed rule would change this by allowing the TSP record keeper to combine accrued interest with the loan principal during the reamortization process, leading to a recalibration of the loan’s principal amount.
According to the Federal Retirement Thrift Investment Board, this adjustment aims to align TSP practices with those employed by the private sector plans serviced by the same record keeper.
Members of the public can weigh in on the proposed changes through comments submitted online at the Federal eRulemaking Portal on regulations.gov or via mail to the Office of General Counsel, Attn: Dharmesh Vashee, Federal Retirement Thrift Investment Board, 77 K St. N.E., Suite 1000, Washington, D.C. 20002. The comment period will remain open until May 19.
Legislation for Independent Veteran Advocacy Office
In another development, Rep. Rudy Yakym (R-Ind.) has reintroduced a bill aimed at enhancing advocacy for veterans seeking benefits and services from the Department of Veterans Affairs. This legislation, known as the National Veterans Advocate Act (H.R. 2970), proposes the establishment of a new office, the Office of the National Veterans’ Advocate, independent from the Veterans Health Administration’s Office of Patient Advocacy.
This new office would have the authority to report directly to Congress on its findings regarding the areas where veterans’ healthcare and benefits delivery could be improved.
Rep. Yakym emphasized the importance of the bill, stating, “We owe our veterans a debt that can never truly be repaid. At the very least, we must do everything in our power to ensure they can access every available resource when they return home. This bill is a meaningful step toward providing the immediate, improved care our heroes deserve.”
Although Yakym initially introduced this legislation last fall, it did not progress beyond committee consideration at that time.
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