(2) An election may be made under paragraph (1) only during a period provided under section 8432(b) for individuals subject to this chapter.

(b)(1) Except as otherwise provided in this subsection, the provisions of this subchapter and subchapter VII shall apply with respect to Claims Court judges who make contributions to the Thrift Savings Fund under subsection (a) of this section.

(2) The amount contributed by a Claims Court judge for any pay period shall not exceed 5 percent of basic pay for such pay period. (3) No contributions shall be made under section 8432(c) of this title for the benefit of a Claims Court judge making contributions under subsection (a) of this section.

(4)(A) Section 8433(b) of this title applies to a Claims Court judge who elects to make contributions to the Thrift Savings Fund under subsection (a) of this section and who retires entitled to an annuity under section 178 of title 28 (including a disability annuity under subsection (c) of such section).

(B) Section [8433(d)] 8433(b) of this title applies to any Claims Court judge who elects to make contributions to the Thrift Savings Fund under subsection (a) of this section and who retires before becoming entitled to an annuity under section 178 of title 28.

(5) With respect to Claims Court judges to whom this section applies, [retirement under section 178 of title 28 is] any of the actions described in paragraph 4(A) or (B) shall be considered a separation from service for purposes of this subchapter and subchapter VII.

(6) For purposes of this section, the terms "retirement" and "retire" include removal from office under section 178(c) of title 28 on the sole ground of mental or physical disability.

(7) In the case of a Claims Court judge who receives a distribution from the Thrift Savings Plan and who later receives an annuity under section 178 of title 28, such annuity shall be offset by an amount equal to the amount which represents the Governments contribution to that person's Thrift Savings Account, without regard to earning attributable to that amount. Where such an offset would exceed 50 percent of the annuity to be received in the first year, the offset may be divided equally over the first 2 years in which that person receives the annuity.

[(8) Notwithstanding paragraph (4)(B), if any Claims Court judge who elects to make contributions to the Thrift Savings Fund under subsection (a) retires before becoming entitled to an annuity under section 178 of title 28, and such judge's nonforfeitable account balance is $3,500 or less, the Executive Director shall pay the nonforfeitable account balance to the participant in a single payment unless the judge elects, at such time and otherwise in such manner as the Executive Director prescribes, to have the nonforfeitable account balance transferred to an eligible retirement plan as provided in section 8433(e).]

(8) Notwithstanding paragraph (4), if any Claims Court judge retires under circumstances making such judge eligible to make an election under section 8433(b), and such judge's nonforfeitable account balance is $3,500 or less, the Executive Director shall pay the nonforfeitable account balance to the participant in a single payment unless the judge elects, at such time and otherwise in

such manner as the Executive Director prescribes, one of the options available under section 8433(b).

§8440d. Judges of the United States Court of Veterans Ap

peals

(a)(1) A judge of the United States Court of Veterans Appeals may elect to contribute to the Thrift Savings Fund.

(2) An election may be made under paragraph (1) only during a period provided under section 8432(b) of this title for individuals subject to chapter 84 of this title.

(bX1) Except as otherwise provided in this subsection, the provisions of this subchapter and subchapter VII of this chapter shall apply with respect to a judge making contributions of the Thrift Savings Fund.

(2) The amount contributed by a judge may not exceed 5 percent of the amount of the judge's basic pay. Basic pay does not include any retired pay paid pursuant to section 7296 of title 38.

(3) No contributions may be made for the benefit of a judge under section 8432(c) of this title.

(4) Section 8433(b) of this title applies with respect to a judge who elects to make contributions to the Thrift Savings Fund and retires under section 7296(b) of title 38.

(5) [A transfer shall be made as provided in section 8433(d) of this title] Section 8433(b) of this title applies in the case of a judge who elects to make contributions to the Thrift Savings Fund and thereafter ceases to serve as a judge of the United States Court of Veterans Appeals but does not retire under section 7296(b) of title

38.

(6) The provisions of section 8351(b)(7) of this title shall apply with respect to a judge who has elected to contribute to the Thrift Savings Fund under this section.

INTERIM PROVISION

(As provided in Section 8, Subsections (j) and (k) of S. 1535)

TITLE 5, UNITED STATES CODE

CHAPTER 84-FEDERAL EMPLOYEES' RETIREMENT

SYSTEM

Subchapter III-Thrift Savings Plan

§ 8433. Benefits and election of benefits

(a) An employee or Member who separates from Government employment is entitled to the amount of the balance in the employee's or Member's account (except for the portion of such amount for

(ii) whose employment (as described in section 8347(0)) is also employment for purposes of title II of the Social Security Act and chapter 21 of the Internal Revenue Code of 1986; and

(B) the term "Federal wages", as applied with respect to any individual to whom this subsection applies as a result of subparagraph (A), means basic pay for any employment referred to in subparagraph (A)(ii).

") In addition to any other payments required by this subchapter, an agency shall remit to the Office for deposit in the Treasury of the United States to the credit of the Fund an amount equal to 9 percent of the final rate of basic pay of each employee of the agency who retires under section 8336(d).”.

(b) EFFECTIVE DATE.-The amendment made by this section shall apply with respect to retirements occurring on or after the date of the enactment of this Act.

*

§ 8351. Participation in the Thrift Savings Plan

(a)(1) An employee or Member may elect to contribute to the Thrift Savings Fund established by section 8437 of this title.

(2) An election may be made under paragraph (1) only during a period provided under section 8432(b) for individuals who are subject to chapter 84 of this title.

(b)(1) Except as otherwise provided in this subsection, the provisions of subchapters III and VII of chapter 84 of this title`shall apply with respect to employees and Members making contributions to the Thrift Savings Fund under subsection (a) of this section.

(2) An employee or Member may contribute to the Thrift Savings Fund in any pay period any amount not exceeding 5 percent of the amount of the employee's or Member's basic pay for such period.

(3) No contributions may be made by an employing agency for the benefit of an employee or Member under section 8432(c) of this title.

(4) Section 8433(b) of this title applies to any employee or Member who elects to make contributions to the Thrift Savings Fund under subsection (a) of this section and separates from Government employment. [entitled to an immediate annuity under this subchapter (including a disability retirement annuity under section 8337 of this title), separates from Government employment pursuant to regulations under section 3502(a) of this title or procedures under section 3595(a) of this title in a reduction in force, or separates from Government employment entitled to benefits under subchapter I of chapter 81 of this title.]

[(5) Section 8433(c) of this title applies to any employee or Member who elects to make contributions to the Thrift Savings Fund under subsection (a) of this section and separates entitled to a deferred annuity under this subchapter.]

[(6) Section 8433(d) of this title applies to any employee or Member who elects to make contributions to the Thrift Savings Fund under subsection (a) of this section and separates from the service

before becoming entitled to an immediate or deferred annuity under this subchapter.]

(5)(A) The provisions of section 8435 of this title that require a waiver or consent by the spouse of an employee or Member (or former employee or Member) shall not apply with respect to sums in the Thrift Savings Fund contributed by the employee or Member (or former employee or Member) and earnings in the fund attributable to such sums.

(B) An election, change of election, or modification (relating to the commencement date of a deferred annuity) authority by subchapter III of chapter 84 of this title shall be effective in the case of a married employee or Member, and a loan may be approved under section 8433(i) of this title in such case, only after the Executive Director notifies the employee's or Member's spouse that the election, change of election, or modification has been made or that the Executive Director has received an application for such loan, as the case may be.

(C) Subparagraph (B) may be waived with respect to a spouse [or former spouse] if the employee or Member establishes to the satisfaction of the Executive Director of the Federal Retirement Thrift Investment Board that the whereabouts of such spouse [or former spouse] cannot be determined.

(D) Except with respect to the making of loans under section 8433(i), none of the provisions of this paragraph requiring notification to a spouse or former spouse or an employee, Member, former employee, or former Member shall apply in any case in which the nonforfeitable account balance of the employee, Member, former employee, or former Member is $3,500 or less.

[(8) Notwithstanding paragraph (6), if an employee or Member who elects to make contributions to the Thrift Savings Fund under subsection (a) separates from Government employment before becoming entitled to a deferred or immediate annuity under this subchapter, and such employee's or Member's nonforfeitable account balance if $3,500 or less, the Executive Director shall pay the nonforfeitable account balance to the participant in a single payment unless the employee or Member elects, at such time and otherwise in such manner as the Executive Director prescribes, to have the nonforfeitable account balance transfered to an eligible retirement plan as provided in section 8433(e).]

(6) Notwithstanding paragraph (4), [and (5),] if an employee or Member separates from Government employment [under circumstances making such employee or Member eligible to make an election under subsection (b) or (c) of section 8433,] and such employee's or Member's [nonforfeiture] nonforfeitable account balance is $3,500 or less, the Executive Director shall pay the [nonforfeiture] nonforfeitable account balance to the participant in a single payment unless the employee or Member elects, at such time and otherwise in such manner as the Executive Director prescribes, one of the options available under [such] subsection (b) [or (c), as applicable.]

(7) For the purpose of this section, the term ["nonforfeiture] nonforfeitable account balance" has the same meaning as under section 8401(32).

Subchapter IX-Severance Pay and Back Pay

§ 5597. Separation pay

(a) For the purpose of this section

(1) the term "Secretary" means the Secretary of Defense;

(2) the term "defense agency" means an agency of the Department of Defense, as further defined under regulations prescribed by the Secretary; and

(3) the term "employee" means an employee of a defense agency, serving under an appointment without time limitation, who has been currently employed for a continuous period of at least 12 months, except that such term does not include

(A) a reemployed annuitant under subchapter III of chapter 83, chapter 84 or another retirement system for employees of the Government; or

(B) an employee having a disability on the basis of which such employee is or would be eligible for disability retirement under any of the retirement systems referred to in subparagraph (A).

(b) In order to avoid or minimize the need for involuntary separations due to a reduction in force, base closure, reorganization, transfer of function, or other similar action affecting 1 or more defense agencies, the Secretary shall establish a program under which separation pay may be offered to encourage eligible employees to separate from service voluntarily (whether by retirement or resignation).

(c) Under the program, separation pay may be offered by a defense agency only

(1) with the prior consent, or on the authority, of the Secretary; and

(2) to employees within such occupational groups or geographic locations, or subject to such other similar limitations or conditions, as the Secretary may require.

(d) Such separation pay

(1) shall be paid in a lump sum;

(2) shall be equal to the lesser of—

(A) an amount equal to the amount the employee would be entitled to receive under section 5595(c) if the employee were entitled to payment under such section; or

(B) $25,000;

(3) shall not be a basis for payment, and shall not be included in the computation, of any other type of Government benefit; and

(4) shall not be taken into account for purposes of determining the amount of any severance pay to which an individual may be entitled under section 5595 based on any other separation.

(e) No amount shall be payable under this section based on any separation occurring after September 30, 1997.

(f) The Secretary shall prescribe such regulations as may be necessary to carry out this section.