Revised rule to alter the debt recalculation equation for Thrift Savings Plan loans

New VA Office of the National Veterans' Advocate to Be Established

The United States is set to establish a new Office of the National Veterans' Advocate, separate from the Veterans Health Administration. This move is in line with the National Veterans Advocate Act, which was re-introduced by Rep. Rudy Yakym on April 17, 2023.

The new office aims to make significant improvements to veterans' health care and benefits. It will be carved out from the Veterans Health Administration's Office of Patient Advocacy and will have the power to report directly to Congress on improvements for veterans' health care and benefits.

Meanwhile, the Federal Retirement Thrift Investment Board has proposed a change regarding Thrift Savings Plan (TSP)-based loan repayment under reamortization terms. Under the proposed rule, the TSP record keeper would combine accrued interest and the principal of the loan when reamortizing it.

This change aims to align TSP procedures with the procedures used for processing reamortized loan repayments in private sector plans. It's important to note that employees can only reamortize a loan under specific circumstances, such as shifting payroll systems or returning from non-pay status. Before reamortization, any accrued interest on the loan must be paid, initiating a recalculation of the loan principal.

All interest and principal are repaid directly to the participant's account. The public comment period for this proposed rule change is open until May 19, and comments can be submitted online or mailed to the Federal Retirement Thrift Investment Board.

The Financial Accounting Standards Board (FASB) submitted a rule proposal on April 18, 2023, for TSP-based loan repayments under the interest conditions in a revaluation of new assets. Currently, active TSP participants repay loans with interest within 60 days of disbursement, which can be deducted from their paycheck.

The proposed change involves combining accrued interest with the outstanding principal when reamortizing a TSP loan. Comments on this proposed TSP loan repayment change can also be submitted during the open public comment period, which ends on May 19.

The National Veterans Advocate Act was first introduced by Rep. Yakym last fall, but it did not get out of committee in its previous introduction. With the re-introduction of the bill, there is renewed hope for the establishment of the Office of the National Veterans' Advocate and the improvements it promises for veterans' health care and benefits.

Revised rule to alter the debt recalculation equation for Thrift Savings Plan loans