Breakage on Late Contributions, Makeup Contributions, and Loan Payments
Summary
This Federal Retirement Thrift Investment Board regulation addresses how investment gains or losses are handled when people make late retirement savings contributions, catch-up contributions, or loan repayments to their Thrift Savings Plan accounts. The rule ensures that participants receive fair treatment by adjusting their accounts based on actual investment performance during the time their money was delayed.
Key Points
- 1The rule clarifies how investment earnings (or losses) are calculated and credited when employees contribute money late to their federal retirement savings accounts
- 2It applies to three types of delayed payments: regular late contributions, catch-up contributions for people trying to save more as they get older, and loan repayment amounts that arrive after the scheduled date
- 3Participants will have their account balances adjusted to reflect what their money would have earned (or lost) if it had been invested on the original date, ensuring they're not unfairly penalized or rewarded by timing delays
- 4This affects federal employees and retirees who participate in the Thrift Savings Plan (TSP), one of the largest retirement savings programs in the country
- 5The regulation was published in April 2025 and establishes standardized procedures so that all TSP participants are treated consistently when contribution timing issues occur
Impact Assessment
If you are a Federal Employee, this means your Thrift Savings Plan account will be adjusted to reflect actual investment performance during any delays in processing your late contributions, catch-up contributions, or loan repayments, ensuring you receive fair treatment based on market conditions.
National
Minimal
Key Dates
April 16, 2025
Regulatory Connections
Roth In-Plan Conversion; Correction
Roth In-Plan Conversions
Correction of Administrative Errors; CFR Correction
Procedures for Applying Payments to Principal and Interest upon Loan Reamortization
This summary is for informational purposes only. It may not capture all nuances of the regulation. Always refer to the official text for authoritative information.