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TSP bulletin
for Agency TSP Representatives

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TSP Forfeitures and Forfeiture Restoration Procedures

The purpose of this bulletin is to provide agency Thrift Savings Plan (TSP) representatives with detailed instructions for requesting a forfeiture restoration, and to provide a revised version of the Form TSP-5-R, Request to Restore Forfeiture.

Background

Forfeitures of a participant’s Agency Automatic (1%) and/or Agency Matching Contributions, along with associated earnings, occasionally occurs when an agency payroll office submits to the TSP an Employee Data (06) Record (also referred to as an “EDR, or “06-record”) with erroneous information about individual participants. If a forfeiture occurs because of agency error, the affected participant is entitled to have those forfeited funds restored to his or her TSP account.

In addition, TSP participants who separate to perform military service before meeting their vesting requirement will forfeit their Agency Automatic (1%) Contributions to the TSP. If those participants are later reemployed, they are entitled under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) to have the forfeited funds restored.

  1. Statutory Forfeitures

    A statutory forfeiture of a participant’s Agency Automatic (1%) Contributions and associated earnings occurs when a TSP participant separates from government service before satisfying the TSP vesting requirement. (See TSP Bulletin 15-1, Thrift Savings Plan Vesting Requirements and the TSP Service Computation Date.)</div>

    1. Forfeitures due to incorrect employee data upon separation

      If the forfeiture occurred because of erroneous employee data submitted upon separation (e.g., TSP vesting code, TSP Service Computation Date, TSP employment code, or TSP employment code date), the participant is entitled to have the forfeited funds restored. The agency from which the participant last separated must take the following actions to restore the forfeiture:

      1. Correct the erroneous employee data that caused the forfeiture by submitting an EDR with the corrected data to the TSP.

      2. After verifying that the corrected data has been posted to the TSP account, submit a completed Form TSP-5-R to request that the forfeited funds be restored to the participant’s account.

    2. Forfeitures due to transfers submitted as separations

      Occasionally, when a participant transfers to another government agency or changes payroll offices, the losing agency submits a TSP employment code of “S-Separated” instead of “T-Transferred.” If the participant is not vested when the erroneous TSP code is submitted, the Agency Automatic (1%) Contributions and associated earnings are forfeited. (See [TSP Bulletin 15-1](/bulletins/05-8.pdf), Thrift Savings Plan Data Employee Code for additional information regarding the submission of TSP employment codes.) To correct the error, the losing agency or payroll office must take the following actions:
      1. Submit an EDR with the correct TSP employment code of “T-Transferred.”
      2. After verifying that the corrected data has been posted to the TSP account, submit a completed Form TSP-5-R to request that the forfeited funds be restored to the participant’s account.

    3. Forfeitures due to separations of less than 31 days

      Generally, a break in service of more than three days is considered a separation from government service. For TSP purposes, however, a participant is not deemed to have been separated unless there is a break in service of 31 or more full calendar days. This means that, if a participant separates from one government agency and is reemployed by the same or another government agency within 30 days, he or she is not considered to have been separated for TSP purposes, and the reemploying agency must restart the employee’s contributions as if there had been no break in service.

      If a losing agency submits a TSP employment code “S” for a non-vested participant, and the reemploying agency does not automatically restart contributions within 30 days, the participant’s Agency Automatic (1%) Contributions and associated earnings are automatically forfeited. To correct the account, the reemploying agency must take the following actions:

      1. Submit a current EDR indicating that the participant has been reemployed.
      2. Resume the participant’s TSP contributions as though the participant had transferred to the agency with no break in service.
      3. After verifying that the corrected data has been posted to the TSP account, submit a completed Form TSP-5-R to request that the forfeited funds be restored.

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  2. CSRS Forfeitures
    A Civil Service Retirement System (CSRS) forfeiture can occur when participants are misclassified as covered by the Federal Employees Retirement System (FERS) and are subsequently corrected to CSRS. When a participant’s retirement coverage is corrected to CSRS, any Agency Automatic (1%) Contributions and/or Agency Matching Contributions in their TSP account are deemed to be erroneous and must be removed, along with associated earnings. A report is available upon request from the TSP listing each participant who is coded as CSRS and whose account includes agency contributions and associated earnings. If the agency contributions have been in the affected participant’s TSP account for less than one year, the agency payroll office may submit the appropriate negative adjustment record to the TSP recordkeeper to have those contributions removed and returned to the participant’s current agency. Any earnings associated with the agency contributions will be forfeited to the TSP. If the investment performance of the agency contributions results in a loss, the agency will receive the reduced amount. If the agency contributions have been in the affected participant’s TSP account for one year or more, the agency must submit in writing to the TSP a request to forfeit the erroneous agency contributions.

    If such a forfeiture is done in error—that is, the participant was correctly classified as FERS and incorrectly reclassified as CSRS, the participant is entitled to have the forfeited funds restored. The participant’s current agency must take the following actions:

    1. Change the CSRS retirement code back to the appropriate FERS retirement code by submitting an EDR with the correct TSP retirement code.
    2. After verifying that the corrected data has been posted to the TSP account, submit a completed Form TSP-5-R to request that the forfeited funds be restored.
    Retirement coverage corrections can impact a participant’s TSP account in a variety of ways and may require other actions in addition to the restoration of forfeitures. See the TSP error correction regulations in 5 CFR Part 1605 and the guidance on corrections of retirement coverage errors under the Federal Erroneous Retirement Coverage Corrections Act (FERCCA) in 5 CFR Part 839.
  3. Statutory Forfeitures Resulting from Military Activation
    Statutory forfeitures can occur for FERS participants who separate to perform military service before satisfying their vesting requirements. If these participants are subsequently reemployed, they are eligible under the provisions of USERRA to have the forfeited amounts restored to their TSP accounts. The participant’s reemploying agency must take the following actions:
    1. Submit a current EDR showing that the participant is now reemployed and, if necessary, showing a corrected TSP-SCD that includes the period of military service.
    2. After verifying that the corrected data has been posted to the TSP account, submit a completed Form TSP-5-R to request that the forfeited funds be restored.
    Additional information on employing agencies’ responsibilities for implementing the TSP provisions of USERRA is available. (See TSP Bulletin 02-7, TSP Participation of Individuals Who Return to Civilian Service or Pay Status Following Military Service)
  4. Form TSP-5-R, Request to Restore Forfeiture
    Form TSP-5-R (included in this bulletin) is required to request agency contributions be restored for each type of forfeiture described above. The form must be signed by an authorized certifying official of the agency and submitted only after corrected employee data has been submitted to the TSP recordkeeper. The TSP will not accept a form signed or submitted by a participant. The form has five sections as follows:

    Section I. Participant Information. This section contains the identifying information of the participant for whom the restoration is being requested. Included are the participant’s name and Social Security number.

    Section II. Verification of Corrections Made to Participant’s TSP Account. In this section, verify that the corrected Employee Data Record was submitted to the TSP recordkeeper by providing the Journal Voucher (JV) report number and date. The incorrect employee data that caused the forfeiture must be corrected before the TSP recordkeeper will restore the forfeited funds.

    Section III. Agency Identifying Data. This section contains the identifying information of the submitting agency. It includes the agency’s name, the payroll office number, the name of the agency contact person, and the telephone number of the agency contact person.

    Section IV. Certification and Request to Restore Funds. This section certifies that the above information for the requested participant is correct for the TSP recordkeeper to restore the forfeited funds. This section must be signed by an authorized certifying official for the agency. Generally, this is the payroll certifying officer (or other agency official) who is knowledgeable about the agency’s payroll submissions. Form TSP-5-R cannot be signed or submitted by the participant.

    Note: Form TSP-5-R will not be processed if sections I – IV are not completed by the agency.

    Section V. Data Entry (For TSP Use Only). This section is used by the TSP recordkeeper. Employing agencies do not complete this section.

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