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TSP board buys $1.5M program to stop improper payments
Monday - 1/31/2011, 4:15pm EST
Now the Federal Retirement Thrift Investment Board is trying to fix the problem by purchasing a $1.5 million program to conduct full-scale tests of new systems. The board had voted earlier in the budget process to delay the purchase. But the glitch was a lesson learned to buy the program.
"We don't want to take any chances this point on," said Tom Trabucco, director of External Affairs at the FRTIB, in an interview with the DorobekINSIDER.
The improper payments resulted from the addition of new coding to include spousal beneficiary accounts.
"But it was improperly coded," Trabucco said.
Before sending out the automatic payments, the board did not have the capacity to do a full test on all 4.4 million TSP accounts to see how the addition of the new accounts would affect others, Trabucco said.
If separated from federal service, TSP participants must begin receiving distribution by age 70 1/2. The improper payments went to participants who were this age but had not yet separated from service, Trabucco said.
The payments came from the participants' own accounts. They were encouraged to return the funds or have to pay taxes on the payment received, Trabucco said.
As a result of the glitch, FRTIB is formalizing the automatic disbursement process down to a "granular level," he said.
Also, the board will try to leave time for emergency corrections at the end of the year. The end-of-year process is already "very complex," Trabucco said.
The board will also "expedite efforts" to collect and maintain an email database. Currently, participants can receive messages through the My Account link on the TSP website. However, "it's not like being able to communicate people with their email," Trabucco said.
$58M payment error spurs TSP to buy systems-testing tool (Federal Times)