Garamendi Leads Letter Calling on Federal Agencies to Modernize Retirement Rollovers and Combat Mail Theft
Garamendi Leads Letter Calling on Federal Agencies to Modernize Retirement Rollovers and Combat Mail Theft
May 29, 2024
WASHINGTON, DC—Today, Representative John Garamendi (D-CA-08) led ten other Democratic members in calling on the Federal Retirement Thrift Investment Board and the Bureau of the Fiscal Service to allow for the electronic transmission of Thrift Savings Plan rollovers to financial institutions to combat mail theft and fraud. Current agency policies only allow for the issuance of TSP rollovers through a U.S. Treasury check to the financial institution where the participant has their destination plan or individual retirement arrangements (IRA).
This issue was brought to Representative Garamendi’s attention when one constituent had their $700,000 TSP rollover check stolen en route to their banking institution. Though fraud investigators were able to stop the payment before it went through, the constituent was told it would take up to 120 days for the case to be investigated and for their rollover to finally be disbursed again as another check in the mail.
“Similar stories from other constituents have echoed the dangers of transmitting federal employees’ retirement savings through the antiquated process of physical checks,” the members wrote.
“We understand that the FRTIB and BFS are working toward a solution to this problem. We encourage your agencies to expeditiously reach an agreement allowing for the electronic transmission of TSP rollovers to avoid mail fraud,” the members continued. “We believe this is a common-sense reform that would modernize government processes, reduce administrative burdens, and prevent unnecessary hardship for current or former federal employees.”
A full copy of the letter is below. Click here for an electronic version.
In addition to Representative Garamendi, the letter was cosigned by Congressmembers Eleanor Holmes Norton, Gerald E. Connolly, Rashida Tlaib, Stephen F. Lynch, Katie Porter, Jan Schakowsky, Joe Neguse, Ro Khanna, Jill Tokuda, and Zoe Lofgren.
This letter is endorsed by NARFE, NFFE, AFGE, NTEU, IAFF, IFPTE, International Plate Printers, Patent Office Professional Association, National Weather Service Employees Organization, NATCA, and AFT.
Full Text of Letter:
Dear Chair Gerber and Commissioner Gribben:
We write to express our concern regarding the current process for the transmission of Thrift Savings Plan rollovers to financial institutions when a current or former federal employee, including military service members and veterans, chooses.
Presently, Thrift Savings Plan (TSP) rollovers are only issued through a U.S. Treasury check to the financial institution where the participant has their destination plan or individual retirement arrangements (IRA). These payments require special handling per the current agreement between the Federal Retirement Thrift Investment Board (FRTIB) and the Bureau of Fiscal Service (BFS). There is currently no option for the electronic transmission of TSP rollovers to nonbanking financial institutions such as investment firms, which creates an unnecessary risk of mail fraud and theft of retirement savings.
The BFS already uses the Fedwire Funds Service to make several types of payments to nonbanking financial institutions. As we understand, the BFS could use the already established Fedwire Funds Service to process the electronic transmission of TSP rollovers pending an agreement with FRTIB to do so.
Allowing electronic transmission instead of special handling for TSP rollovers would reduce the administrative burden on both your agencies to process payments. This long overdue reform would ensure more timely and secure transmission of federal employees’ retirement savings. It would also eliminate the risk of theft and fraud posed by sending physical checks through the mail. According to the U.S. Postal Inspection Service, mail theft continues to be a pervasive problem nationwide, increasing year over year.
One constituent recently shared with us their experience in which their $700,000 TSP rollover check was stolen en route to their banking institution. Although fraud investigators were, fortunately, able to stop the payment before going through, they have been told it will take up to 120 days for the case to be investigated and their rollover to finally be disbursed again as yet another check in the mail for such a large sum. Similar stories from other constituents have echoed the dangers of transmitting federal employees’ retirement savings through the antiquated process of physical checks.
We understand that the FRTIB and BFS are working toward a solution to this problem. We encourage your agencies to expeditiously reach an agreement allowing for the electronic transmission of TSP rollovers to avoid mail fraud. Furthermore, we ask that you respond with an explanation of any current authorities prohibiting your agencies from pursuing the electronic transmission of TSP rollovers or any such authorities that would be required to do so. We believe this is a common-sense reform that would modernize government processes, reduce administrative burdens, and prevent unnecessary hardship for current or former federal employees.
