The Federal Retirement Thrift Investment Board issued a final rule Sept. 10 that allows the IRS to tap into Thrift Savings Plan accounts to recover delinquent federal taxes.
The accounts are generally protected by statute from garnishment, except for certain exceptions such as child support, alimony and criminal restitution. In January 2013, the president signed legislation through which Congress clarified that certain federal tax levies also come under those exceptions.
In June of this year, FRTIB published a proposal to amend its regulations to explain procedures for responding to orders to dock TSP accounts for back taxes or criminal restitution.
The agency received only one comment, which expressed opposition to IRS levies on TSP accounts, FRTIB said. But since the plan now is required by law to honor those levies and criminal restitution orders, FRTIB finalized the proposed without modification.
The new rule published in the Federal Register spells out the legal process for enforcing the orders, including requirements for notifying account holders.