[Title 31 CFR 29]
[Code of Federal Regulations (annual edition) - July 1, 2002 Edition]
[Title 31 - MONEY AND FINANCE: TREASURY]
[Part 29 - FEDERAL BENEFIT PAYMENTS UNDER CERTAIN DISTRICT OF COLUMBIA RETIREMENT PROGRAMS]
[From the U.S. Government Printing Office]


31MONEY AND FINANCE: TREASURY12002-07-012002-07-01falseFEDERAL BENEFIT PAYMENTS UNDER CERTAIN DISTRICT OF COLUMBIA RETIREMENT PROGRAMS29PART 29MONEY AND FINANCE: TREASURY
PART 29--FEDERAL BENEFIT PAYMENTS UNDER CERTAIN DISTRICT OF COLUMBIA RETIREMENT PROGRAMS--Table of Contents




                      Subpart A--General Provisions

Sec.
29.101  Purpose and scope.
29.102  Related regulations.
29.103  Definitions.
29.104  Schedule for Federal Benefit Payments.
29.105  Computation of time.
29.106  Representative payees.

          Subpart B--Coordination With the District Government

29.201  Purpose and scope.
29.202  Definitions. [Reserved]
29.203  Service of Process.

Appendix A to Subpart B of Part 29--Addresses for Service of Process 
          Under Sec. 29.203

                        Subpart C--Split Benefits

29.301  Purpose and scope.
29.302  Definitions.

 General Principles for Determining Service Credit To Calculate Federal 
                            Benefit Payments

29.311  Credit only for service performed on or before June 30, 1997.
29.312  All requirements for credit must be satisfied by June 30, 1997.
29.313  Federal Benefit Payments are computed based on retirement 
          eligibility as of the separation date and service creditable 
          as of June 30, 1997.

                  Service Performed After June 30, 1997

29.321  General principle.
29.322  Disability benefits.

     All Requirements for Credit Must be Satisfied by June 30, 1997

29.331  General principle.
29.332  Unused sick leave.
29.333  Military service.
29.334  Deposit service.
29.335  Refunded service.

          Calculation of the Amount of Federal Benefit Payments

29.341  General principle.
29.342  Computed annuity exceeds the statutory maximum.
29.343  Disability benefits.

[[Page 286]]

29.344  Survivor benefits.
29.345  Cost-of-living adjustments.
29.346  Reduction for survivor benefits.

Appendix A to Subpart C of Part 29--Examples

                Subpart D--Claims and Appeals Procedures

Sec.
29.401  Purpose.
29.402  Definitions.
29.403  Applications filed with the Benefits Administrator.
29.404  Initial benefit determinations and reconsideration by the 
          Benefits Administrator.
29.405  Appeals to the Department.
29.406  Judicial review.
29.407  Competing claimants.

          Subpart E--Debt Collection and Waivers of Collection

Sec.
29.501   Purpose; incorporation by reference; scope.
29.502   Definitions.
29.503   Prohibition against collection of debts.
29.504   Status of debts.
29.505   Compromise of claims; termination and suspension of collection 
          actions.
29.506   Recovery of other debts owed to the United States.

                       Collection of Overpayments

29.511  Demand letters.
29.512  Reconsideration by the Benefits Administrator.
29.513  Appeals to the Department.
29.514  Requests for waiver and/or compromise.
29.515   Judicial review.
29.516   Collection of overpayments.
29.517   Collection by offset.
29.518   Reporting delinquent debts to credit bureaus.
29.519   Referral to a collection agency.
29.520   Referral for litigation.

                  Standards for Waiver of Overpayments

29.521  Conditions for waiver and other adjustments.
29.522   Fault.
29.523   Equity and good conscience.
29.524   Financial hardship.
29.525   Ordinary and necessary living expenses.
29.526   Waiver precluded.

    Authority: Sections 11083 and 11251(a) of Public Law 105-33, 111 
Stat. 730 and 756, as amended by Public Law 105-277, 112 Stat. 2681-530 
through 538, and as further amended by Public Law 106-554, 114 Stat. 
2763; subpart D also issued under section 11022 of Public Law 105-33, 
111 Stat. 730 and 756, as amended by Public Law 105-277, 112 Stat. 2681-
530 through 538, and as further amended by Public Law 106-554, 114 Stat. 
2763.

    Source: 65 FR 77501, Dec. 12, 2000, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 29.101  Purpose and scope.

    (a) This part contains the Department's regulations implementing 
Title XI of the Balanced Budget Act of 1997, Public Law 105-33, 111 
Stat. 251, enacted August 5, 1997, as amended.
    (b) This subpart contains general information to assist in the use 
of this part including--
    (1) Information about related regulations (Sec. 29.102),
    (2) Definitions of terms used in more than one subpart of this part 
(Sec. 29.103), and
    (3) The Department's general rules and procedures, applicable to the 
retirement plans for District of Columbia teachers, police and fire 
fighters, and judges that concern the administration of Federal Benefit 
Payments (Secs. 29.104-29.106).
    (c) This part applies to all Federal Benefit Payments made on or 
after October 1, 1997.
    (d) This part does not apply to the program of annuities, other 
retirement benefits, or medical benefits for members and officers, 
retired members and officers, and survivors thereof, of the United 
States Park Police force, the United States Secret Service, or the 
United States Secret Service Uniformed Division.



Sec. 29.102  Related regulations.

    (a) This part contains the following subparts:
    (1) General Provisions (Subpart A);
    (2) Coordination with the District Government (Subpart B);
    (3) Split Benefits (Subpart C); \1\
---------------------------------------------------------------------------

    \1\ The effective date for section 29.102(a)(3) and Subpart C, 
originally scheduled for March 31, 2001, has been postponed 
indefinitely.
---------------------------------------------------------------------------

    (4) Claims and Appeals Procedures (Subpart D); and
    (5) Debt Collection and Waivers of Collection (Subpart E).

[[Page 287]]

    (b) Part 581 of Title 5, Code of Federal Regulations, contains 
information about garnishment of certain Federal payments to enforce 
awards of alimony or child support.
    (c) Part 831 of Title 5, Code of Federal Regulations, contains 
information about benefits under the Civil Service Retirement System.
    (d) Part 870 of Title 5, Code of Federal Regulations, contains 
information about benefits under the Federal Employees Group Life 
Insurance Program.
    (e) Part 890 of Title 5, Code of Federal Regulations, contains 
information about benefits under the Federal Employees Health Benefits 
Program.
    (f) Parts 835 and 845 and subparts M, N, and R of part 831 of title 
5, Code of Federal Regulations, contain information about debt 
collection and waiver of collection under the Civil Service Retirement 
System and the Federal Employees Retirement System.

[65 FR 77501, Dec. 12, 2000, as amended at 65 FR 80753, Dec. 22, 2000; 
66 FR 36705, July 13, 2001]



Sec. 29.103  Definitions.

    (a) In this part--
    Act means the Balanced Budget Act of 1997, Public Law 105-33, 111 
Stat. 251, 712-731, 756-759, enacted August 5, 1997, as amended by the 
Omnibus Consolidated and Emergency Supplemental Appropriations Act for 
Fiscal Year 1999, Public Law 105-277, 112 Stat. 2681, 2681-530 through 
538, 2681-552, and by the Consolidated Appropriations Act of 2001, 
Public Law 106-554, 114 Stat. 2763.
    Benefits Administrator means:
    (1) During the interim administration period under section 11041(a) 
of the Act, the District of Columbia government; or
    (2) After the end of the interim administration period,
    (i) The Trustee selected by the Department under section 11035(a) of 
the Act;
    (ii) The Department if a determination is made under section 
11035(d) of the Act that, in the interest of economy and efficiency, the 
Trustee's functions shall be performed by the Department rather than the 
Trustee; or
    (iii) Any other agent of the Department designated to make initial 
benefit determinations and to recover or recoup or waive recovery or 
recoupment of overpayments of Federal Benefit Payments, or to recover or 
recoup debts owed to the Federal Government by annuitants.
    District government means the government of the District of 
Columbia.
    Department means the United States Department of the Treasury.
    Federal Benefit Payment means a payment for which the Department is 
responsible under Title XI of the Balanced Budget Act of 1997 (Public 
Law 105-33, 111 Stat. 251), as amended, to which an individual is 
entitled under the Judges Plan, the Police and Firefighters Plan, or the 
Teachers Plan, in such amount and under such terms and conditions as may 
apply under such plans.
    Freeze date means June 30, 1997.
    Judges Plan means the retirement program (under subchapter III of 
chapter 15 of title 11 of the D.C. Code) for judges of the District of 
Columbia Court of Appeals or Superior Court or with judicial service 
with the former Juvenile Court of the District of Columbia, District of 
Columbia Tax Court, police court, municipal court, Municipal Court of 
Appeals, or District of Columbia Court of General Sessions.
    OPM means the United States Office of Personnel Management.
    Police and Firefighters Plan means any of the retirement programs 
(under chapter 6 of title 4 of the D.C. Code) for members of the 
Metropolitan Police Force and Fire Department in effect on June 29, 
1997.
    Reconsideration means the process of reexamining an individual's 
entitlement to benefits or liability for a debt to determine whether--
    (1) The law and regulations were properly applied; and/or
    (2) The mathematical computation of the benefit or liability is 
correct.
    Retirement Funds means the District of Columbia Federal Pension 
Liability Trust Fund established under section 11031 of the Act 
(codified at D.C. Code Ann. 1-764.1), the Federal Supplemental District 
of Columbia Pension Fund established under section 11051 of the Act 
(codified at D.C. Code Ann. 1-766.1), and the District of Columbia 
Judicial Retirement and Survivors Annuity Fund

[[Page 288]]

established under section 11252 of the Act (codified at D.C. Code Ann. 
1-714).
    Secretary means the Secretary of the United States Department of the 
Treasury or his or her designee.
    Teachers Plan means any of the retirement programs for teachers 
(under chapter 12 of title 31 of the D.C. Code) in effect on June 29, 
1997.
    (b) In this subpart--
    Legal process means--
    (1) Any document that qualifies as legal process as defined in 
Sec. 581.103 of Title 5, Code of Federal Regulations; or
    (2) Any court order that Federal or District of Columbia law permits 
to cause all or any portion of a payment under the Judges Plan, the 
Police and Firefighters Plan, or the Teachers Plan to be made to a 
former spouse under chapter 30 of title 1 of the D.C. Code (1997).
    Representative payee means a fiduciary to whom a payment under the 
Judges Plan, the Police and Firefighters Plan, or the Teachers Plan is 
made for the benefit of a plan participant or a survivor.

[65 FR 77501, Dec. 12, 2000, as amended at 66 FR 36705, July 13, 2001



Sec. 29.104  Schedule for Federal Benefit Payments.

    Federal Benefit Payments are payable on the first business day of 
the month following the month in which the benefit accrues. (See 
Sec. 29.105(b).)



Sec. 29.105  Computation of time.

    (a) For filing documents. In computing the number of days allowed 
for filing a document, the first day counted is the day after the action 
or event from which the period begins to run. If the date that 
ordinarily would be the last day for filing falls on a Saturday, a 
Sunday, a Federal holiday, or a District holiday, the period runs until 
the end of the next day that is not a Saturday, a Sunday, or a Federal 
or a District holiday.
    (b) For benefit accrual. (1) Annuity accrues on a daily basis; one-
thirtieth of the monthly rate constitutes the daily rate.
    (2) Annuity does not accrue on the 31st day of any month except that 
annuity accrues on the 31st day of the initial month if the employee's 
annuity commences on the 31st day of a 31-day month.
    (3) For accrual purposes the last day of a 28-day month counts as 3 
days and the last day of a 29-day month counts as 2 days.
    (c) For counting unused sick leave. (1) For annuity computation 
purposes--
    (i) The service of a participant under the Police and Firefighters 
Plan who retires on an immediate annuity is increased by the number of 
days of unused sick leave to the participant's credit under a formal 
leave system; and
    (ii) The service of a participant under the Teachers Plan who 
retires on an immediate annuity or dies leaving a survivor entitled to 
an annuity is increased by the number of days of unused sick leave to 
the participant's credit under a formal leave system.
    (2) In general, 8 hours of unused sick leave increases total service 
by 1 day. In cases where more or less than 8 hours of sick leave would 
be charged for a day's absence, total service is increased by the number 
of days in the period between the date of separation and the date that 
the unused sick leave would have expired had the employee used it 
(except that holidays falling within the period are treated as work 
days, and no additional leave credit is earned for that period).
    (3) If an employee's tour of duty changes from part time to full 
time or full time to part time within 180 days before retirement, the 
credit for unused sick leave is computed as though no change had 
occurred.
    (d) For counting leave without pay (LWOP) that is creditable 
service. (1) Under the Police and Firefighters Plan, credit is allowed 
for no more than 6 months of LWOP in each calendar year.
    (2)(i) Under the Teachers Plan, credit is allowed for no more than 6 
months of LWOP in each fiscal year.
    (ii)(A) For years prior to fiscal year 1976, each fiscal year 
started on July 1 and ended on the following June 30.
    (B) Fiscal year 1976 started on July 1, 1975, and ended on September 
30, 1976.
    (C) For years starting in fiscal year 1977, each fiscal year starts 
on October 1 and ends on the following September 30.

[[Page 289]]



Sec. 29.106  Representative payees.

    For Federal Benefit Payments, representative payees will be 
authorized to the same extent and under the same circumstances as each 
plan permits for non-Federal Benefit Payments under the plan. (See e.g., 
section 4-629(b) of the D.C. Code (1997) (applicable to the Police and 
Firefighters Plan).)



          Subpart B--Coordination With the District Government



Sec. 29.201  Purpose and scope.

    This subpart contains information concerning the relationship 
between the Department and the District government in the administration 
of Title XI of the Balanced Budget Act of 1997, as amended, and the 
functions of each in the administration of that Act.



Sec. 29.202  Definitions. [Reserved]



Sec. 29.203  Service of Process.

    To affect Federal Benefit Payments--
    (a) Service must be made upon the Department at the address provided 
in appendix A to this subpart for--
    (1) Legal process under section 659 of title 42, United States Code, 
and part 581 of Title 5, Code of Federal Regulations, or
    (2) Any request for or notice of appointment of a custodian, 
guardian, or other fiduciary to receive Federal Benefit Payments as 
representative payees under Sec. 29.106;
    (b) All other process regarding Federal Benefit Payments (including 
requests for judicial review under Sec. 29.406) must be served upon the 
United States in accordance with applicable law.
    (c) All other process regarding Federal Benefit Payments must be 
served upon the United States in accordance with applicable law.

    Appendix A to Subpart B of Part 29--Addresses for Service Under 
                               Sec. 29.203

    1. The mailing address for delivery of documents described in 
Sec. 29.203(a) by the United States Postal Service is: Office of DC 
Pensions, Department of the Treasury, Metropolitan Square Building, Room 
6250, 1500 Pennsylvania Avenue, NW., Washington, DC 20220.
    2. The address for delivery of documents described in Sec. 29.203(a) 
by process servers, express carriers, or other forms of handcarried 
delivery is: Office of DC Pensions, Department of the Treasury, 
Metropolitan Square Building, Room 6250, 655 15th Street (F Street 
side), NW., Washington, DC.

[65 FR 77501, Dec. 12, 2000, as amended at 65 FR 80753, Dec. 22, 2000]



                        Subpart C--Split Benefits

    Source: 65 FR 77501, Dec. 12, 2001, unless otherwise noted.



Sec. 29.301  Purpose and scope.

    (a) The purpose of this subpart is to addresses the legal and policy 
issues that affect the calculation of the Federal and District of 
Columbia portions of benefits under subtitle A of Title XI of the 
Balanced Budget Act of 1977, Public Law 105-33, 111 Stat. 251, 712-731, 
enacted August 5, 1997, as amended.
    (1) This subpart states general principles for the calculation of 
Federal Benefit Payments in cases in which the Department and the 
District government are both responsible for paying a portion of an 
employee's total retirement benefits under the Police and Firefighters 
Plan or the Teachers Plan.
    (2) This subpart provides illustrative examples of sample 
computations to show the application of the general principles to 
specific problems.
    (b)(1) This subpart applies only to benefits under the Police and 
Firefighters Plan or the Teachers Plan for individuals who have 
performed service creditable under these programs on or before June 30, 
1997.
    (2) This subpart addresses only those issues that affect the split 
of fiscal responsibility for retirement benefits (that is, the 
calculation of Federal Benefit Payments).
    (3) Issues relating to determination and review of eligibility and 
payments, and financial management, are beyond the scope of this 
subpart.
    (c) This subpart does not apply to benefit calculations under the 
Judges Plan.



Sec. 29.302  Definitions.

    In this subpart (including appendix A of this subpart)--
    Deferred retirement means retirement under section 4-623 of the D.C. 
Code

[[Page 290]]

(1997) (under the Police and Firefighters Plan) or section 31-1231(a) of 
the D.C. Code (1997) (under the Teachers Plan).
    Deferred retirement age means the age at which a deferred annuity 
begins to accrue, that is, age 55 under the Police and Firefighters Plan 
and age 62 under the Teachers Plan.
    Department service or departmental service means any period of 
employment in a position covered by the Police and Firefighters Plan or 
Teachers Plan. Department service or departmental service may include 
certain periods of military service that interrupt a period of 
employment under the Police and Firefighters Plan or the Teachers Plan.
    Disability retirement means retirement under section 4-615 or 
section 4-616 of the D.C. Code (1997) (under the Police and Firefighters 
Plan) or section 31-1225 of the D.C. Code (1997) (under the Teachers 
Plan), regardless of whether the disability was incurred in the line of 
duty.
    Enter on duty means commencement of employment in a position covered 
by the Police and Firefighters Plan or the Teachers Plan.
    Excess leave without pay or excess LWOP means a period of time in a 
non-pay status that in any year is greater than the amount creditable as 
service under Sec. 29.105(d).
    Hire date means the date the employee entered on duty.
    Military service means--
    (1) For the Police and Firefighters Plan, military service as 
defined in section 4-607 of the D.C. Code (1997) that is creditable as 
other service under section 4-602 or section 4-610 of the D.C. Code 
(1997); and
    (2) For the Teachers Plan, military service as described in section 
31-1230(a)(4) of the D.C. Code (1997).
    Optional retirement means regular longevity retirement under section 
4-618 of the D.C. Code (1997) (under the Police and Firefighters Plan) 
or section 31-1224(a) of the D.C. Code (1997) (under the Teachers Plan).
    Other service means any period of creditable service other than 
departmental service or unused sick leave. Other service includes 
service that becomes creditable upon payment of a deposit, such as 
service in another school system under the Teachers Plan (under section 
31-1208 of the D.C. Code (1997)); and service that is creditable without 
payment of a deposit, such as military service occurring prior to 
employment under the Police and Firefighters Plan.
    Pre-80 hire means an individual whose annuity is computed using the 
formula under the Police and Firefighters Plan applicable to individuals 
hired before February 15, 1980.
    Pre-96 hire means an individual whose annuity is computed using the 
formula under the Teachers Plan applicable to individuals hired before 
November 10, 1996.
    Sick leave means unused sick leave, which is creditable in a 
retirement computation, as calculated under Sec. 29.105(c).

 General Principles for Determining Service Credit to Calculate Federal 
                            Benefit Payments



Sec. 29.311  Credit only for service performed on or before June 30, 1997.

    Only service performed on or before June 30, 1997, is credited 
toward Federal Benefit Payments.



Sec. 29.312  All requirements for credit must be satisfied by June 30, 1997.

    Service is counted toward Federal Benefit Payments only if all 
requirements for the service to be creditable are satisfied as of June 
30, 1997.



Sec. 29.313  Federal Benefit Payments are computed based on retirement eligibility as of the separation date and service creditable as of June 30, 1997.

    Except as otherwise provided in this subpart, the amount of Federal 
Benefit Payments is computed based on retirement eligibility as of the 
separation date and service creditable as of June 30, 1997.

                  Service Performed After June 30, 1997



Sec. 29.321  General principle.

    Any service performed after June 30, 1997, may never be credited 
toward Federal Benefit Payments.

[[Page 291]]



Sec. 29.322  Disability benefits.

    If an employee separates for disability retirement after June 30, 
1997, and, on the date of separation, the employee--
    (a) Satisfies the age and service requirements for optional 
retirement, the Federal Benefit Payment commences immediately, that is, 
the Federal Benefit Payment is calculated as though the employee retired 
under optional retirement rules using only service through June 30, 1997 
(See examples 7A and 7B of appendix A of this subpart); or
    (b) Does not satisfy the age and service requirements for optional 
retirement, the Federal Benefit Payment begins when the disability 
retiree reaches deferred retirement age. (See Sec. 29.343.)

     All Requirements for Credit Must Be Satisfied by June 30, 1997



Sec. 29.331  General principle.

    To determine whether service is creditable for the computation of 
Federal Benefit Payments under this subpart, the controlling factor is 
whether all requirements for the service to be creditable under the 
Police and Firefighters Plan or the Teachers Plan were satisfied as of 
June 30, 1997.



Sec. 29.332  Unused sick leave.

    (a) For employees separated for retirement as of June 30, 1997, 
Federal Benefit Payments include credit for any unused sick leave that 
is creditable under the applicable plan.
    (b) For employees separated for retirement after June 30, 1997, no 
unused sick leave is creditable toward Federal Benefit Payments.



Sec. 29.333  Military service.

    (a) For employees who entered on duty on or before June 30, 1997, 
and whose military service was performed prior to that date, credit for 
military service is included in Federal Benefit Payments under the terms 
and conditions applicable to each plan.
    (b) For employees who enter on duty after June 30, 1997, military 
service is not creditable toward Federal Benefit Payments, even if 
performed as of June 30, 1997.
    (c) For employees who entered on duty on or before June 30, 1997, 
but who perform military service after that date, the credit for 
military service is not included in Federal Benefit Payments.



Sec. 29.334  Deposit service.

    (a) Teachers Plan. (1) Periods of civilian service that were not 
subject to retirement deductions at the time they were performed are 
creditable for Federal Benefit Payments under the Teachers Plan if the 
deposit for the service was paid in full to the Teachers Plan as of June 
30, 1997.
    (2) No credit is allowed for Federal Benefit Payments under the 
Teachers Plan for any period of civilian service that was not subject to 
retirement deductions at the time it was performed if the deposit for 
the service was not paid in full as of June 30, 1997.
    (b) Police and Firefighters Plan. No credit is allowed for Federal 
Benefit Payments under the Police and Firefighters Plan for any period 
of civilian service that was not subject to retirement deductions at the 
time that the service was performed. (See definition of ``governmental 
service'' at D.C. Code section 4-607(15) (1997).)



Sec. 29.335  Refunded service.

    (a) Periods of civilian service that were subject to retirement 
deductions but for which the deductions were refunded to the employee 
are creditable for Federal Benefit Payments if the redeposit for the 
service was paid in full to the District government as of June 30, 1997.
    (b) No credit is allowed for Federal Benefit Payments for any period 
of civilian service that was subject to retirement deductions but for 
which the deductions were refunded to the employee if the redeposit for 
the service was not paid in full to the District government as of June 
30, 1997.

          Calculation of the Amount of Federal Benefit Payments



Sec. 29.341  General principle.

    Except for disability retirements after June 30, 1997, and certain 
death benefits based on deaths after June 30, 1997, in which the 
calculation is not

[[Page 292]]

based upon length of service (see Sec. 29.344); for cases in which some 
service is creditable on or before June 30, 1997, and some service is 
creditable after June 30, 1997, Federal Benefit Payments are computed 
under the rules of the applicable plan as though--
    (a) The employee were eligible to retire effective July 1, 1997, 
under the same conditions as the actual retirement (that is, using the 
annuity computation formula that applies under the plan in effect on 
June 29, 1997, and the actual retirement age, including any applicable 
age reduction, based on the age at actual retirement);
    (b) The service that became creditable after June 30, 1997, did not 
exist; and
    (c) The average salary is the average salary at separation.

    Note to Sec. 29.341: See examples 7B, 9, and 13 of appendix A of 
this subpart.



Sec. 29.342  Computed annuity exceeds the statutory maximum.

    (a) In cases in which the total computed annuity exceeds the 
statutory maximum:
    (1) Federal Benefit Payments may equal total benefits even if the 
employee had service after June 30, 1997.
    (2) If the employee had sufficient service as of June 30, 1997, to 
qualify for the maximum annuity under the plan, the Federal Benefit 
Payment is the maximum annuity under the plan. This will be the entire 
benefit except for any amount in excess of the normal maximum due to 
unused sick leave, which is the responsibility of the District. (See 
example 3, of appendix A of this subpart.)
    (b) If the employee did not perform sufficient service as of June 
30, 1997, to reach the statutory maximum benefit, but has sufficient 
service at actual retirement to exceed the statutory maximum, the 
Federal Benefit Payment is the amount earned through June 30, 1997. The 
non-Federal-Benefit-Payment portion of the total benefit consists of 
only the amount by which the total benefit payable exceeds the Federal 
Benefit Payment.



Sec. 29.343  Disability benefits.

    (a) The general rule that Federal Benefit Payments are calculated 
under the applicable retirement plan as though the employee were 
eligible for optional retirement and separated on June 30, 1997, does 
not apply to disability benefits prior to optional retirement age.
    (b) In cases involving disability benefits prior to optional 
retirement age, no Federal Benefit Payment is payable until the retiree 
reaches the age of eligibility to receive a deferred annuity (age 55 
under the Police and Firefighters Plan and age 62 under the Teachers 
Plan). When the age for deferred annuity is reached, the Federal Benefit 
Payment is paid using creditable service accrued as of June 30, 1997, 
and average salary (computed under the rules for the applicable plan) as 
of the date of separation. (See examples 6 and 7 of appendix A of this 
subpart.)



Sec. 29.344  Survivor benefits.

    (a) The general rule that Federal Benefit Payments are calculated 
under the applicable retirement plan as though the employee were 
eligible for optional retirement and separated on June 30, 1997, does 
not apply to death benefits that are not determined by length of 
service.
    (b) In cases in which the amount of death benefits is not determined 
by length of service, the amount of Federal Benefit Payments is 
calculated by multiplying the amount of the total benefit payable by the 
number of full months of service through June 30, 1997, and then 
dividing by the number of months of total service at retirement (for 
elected survivor benefits) or death (for guaranteed-minimum death-in-
service survivor benefits). (See example 13 of appendix A of this 
subpart.)



Sec. 29.345  Cost-of-living adjustments.

    Cost-of-living increases are applied directly to Federal Benefit 
Payments, rather than computed on the total benefit and then prorated. 
(See example 14 of appendix A of this subpart.)



Sec. 29.346  Reduction for survivor benefits.

    (a) If a retiree designates a base for a survivor annuity that is 
greater than

[[Page 293]]

or equal to the unreduced Federal Benefit Payment, the applicable plan's 
annuity reduction formula is applied to the unreduced Federal Benefit 
Payment to determine the reduced Federal Benefit Payment. (See example 
10 of appendix A of this subpart.)
    (b) If a retiree designates a base for a survivor annuity that is 
less than the amount of the Federal Benefit Payment, the entire survivor 
reduction applies to the Federal Benefit Payment to determine the 
reduced Federal Benefit Payment.

              Appendix A to Subpart C of Part 29--Examples

    This appendix contains sample calculations of Federal Benefit 
Payments in a variety of situations.

                      Optional Retirement Examples

                     Example 1: No Unused Sick Leave

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires in October 1997. At 
retirement, he is age 51 with 20 years and 3 days of departmental 
service plus 3 years, 4 months, and 21 days of military service that 
preceded the departmental service. The Federal Benefit Payment begins at 
retirement. It is based on the 19 years, 8 months, and 22 days of 
departmental service and 3 years, 4 months, and 21 days of military 
service performed as of June 30, 1997. Thus, the Federal Benefit Payment 
is based on 23 years and 1 month of service, all at the 2.5 percent 
accrual rate. The total annuity is based on 23 years and 4 months of 
service, all at the 2.5 percent accrual rate.

                       Example 1A--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/46
Hire date: 10/09/77
Separation date: 10/11/97
Department service: 20/00/03
Other service: 03/04/21
Sick leave:
.025 service: 23.333333
.03 service:
Average salary: $45,680.80
Total: $26,647.12
Total/month: $2,221.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 9/10/46
Hire date: 10/09/77
Freeze date: 06/30/97
Department service: 19/08/22
Other service: 03/04/21
Sick leave:
.025 service: 23.083333
.03 service:
Average salary: $45,680.80
Total: $26,361.61
Total/month: $2,197.00
------------------------------------------------------------------------

    B. In this example, the individual covered by the Police and 
Firefighters Plan was hired earlier than in example 1A and thus 
performed more service as of both June 30, 1997, and retirement in 
October 1997. At retirement, he is age 51 with 21 years, 11 months and 
29 days of departmental service plus 3 years, 4 months, and 21 days of 
military service that preceded the departmental service. The Federal 
Benefit Payment begins at retirement. It is based on the 21 years, 8 
months, and 18 days of departmental service and 3 years, 4 months, and 
21 days of military service performed as of June 30, 1997. Thus, the 
Federal Benefit Payment is based on 25 years and 1 month of service, 1 
year and 8 months at the 3.0 percent accrual rate and 23 years and 5 
months at the 2.5 percent accrual rate (including 1 month consisting of 
18 days of departmental service and 21 days of other service). The total 
annuity is based on 25 years and 4 months of service, 1 year and 11 
months at the 3.0 percent accrual rate and 23 years and 5 months at the 
2.5 percent accrual rate (including 1 month consisting of 29 days of 
departmental service and 21 days of other service).

                       Example 1B--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/46
Hire date: 10/13/75
Separation date: 10/11/97
Department service: 21/11/29
Other service: 03/04/21
Sick leave:
.025 service: 23.416667
.03 service: 1.916667
Average salary: $45,680.80
Total: $29,368.96
Total/month $2,447.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/46
Hire date: 10/13/75
Freeze date: 06/30/97
Department service: 21/08/18
Other service: 03/04/21
Sick leave:
.025 service: 23.416667
.03 service: 1.666667
Average salary: $45,680.80

[[Page 294]]

 
Total: $29,026.36
Total/month: $2,419.00
------------------------------------------------------------------------

                   Example 2: Unused Sick Leave Credit

    In this example, an individual covered by the Police and 
Firefighters Plan and hired before 1980 retires in March 1998. At 
retirement, she is age 48 with 24 years, 8 months, and 6 days of 
departmental service plus 6 months and 4 days of other service (deposit 
paid before June 30, 1997) and 11 months and 11 days of unused sick 
leave. For a police officer (or a non-firefighting division firefighter) 
such an amount of sick leave would be 1968 hours (246 days, based on a 
260-day year, times 8 hours per day). For a firefighting division 
firefighter, such an amount would be 2069 hours (341 days divided by 360 
days per year times 2184 hours per year). The Federal Benefit Payment 
begins at retirement. It is based on the 23 years, 11 months, and 23 
days of departmental service performed as of June 30, 1997, and 6 months 
and 4 days of other service. Thus, the Federal Benefit Payment is based 
on 20 years departmental and 6 months of other service at the 2.5 
percent accrual rate and 3 years and 11 months of service at the 3.0 
percent accrual rate. The total annuity is based on 20 years and 6 
months of service at the 2.5 percent accrual rate and 5 years and 7 
months of service at the 3 percent accrual rate.

                       Example 2--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 05/01/49
Hire date: 07/08/73
Separation date: 03/13/98
Department service: 24/08/06
Other service: 00/06/04
Sick leave: 00/11/11
.025 service: 20.5
.03 service: 5.583333
Average salary: $61,264.24
Total: $41,659.68
Total/month: $3,472.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 05/01/49
Hire date: 07/08/73
Freeze date: 06/30/97
Department service: 23/11/23
Other service: 00/06/04
Sick leave:
.025 service: 20.5
.03 service: 3.916667
Average salary: $61,264.24
Total: $38,596.47
Total/month: $3,216.00
------------------------------------------------------------------------

         Example 3: Calculated Benefit Exceeds Statutory Maximum

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires in March 1998. At 
retirement, he is age 55 with 32 years and 17 days of departmental 
service. The Federal Benefit Payment begins at retirement. It is based 
on the 31 years, 3 months, and 17 days of departmental service performed 
as of June 30, 1997. Thus, the Federal Benefit Payment is based on 20 
years of service at the 2.5 percent accrual rate and 11 years and 3 
months of service at the 3.0 percent accrual rate. However, the annuity 
is limited to 80 percent of the basic salary at time of retirement. 
(This limitation does not apply to the unused sick leave credit.) The 
annuity computed as of June 30, 1997, equals the full benefit payable; 
therefore, the Federal Benefit Payment is the total benefit.

                       Example 3A--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Separation date: 03/30/98
Department service: 32/00/17
Other service:
Sick leave:
.025 service: 20
.03 service: 12
Average salary: $75,328.30
Final salary: $77,180.00
Total: $64,782.34
Total/month: $5,399.00
Maximum: $61,744.00
  $5,145.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Freeze date: 03/30/97
Department service: 31/03/17
Other service:
Sick leave:
.025 service: 20
.03 service: 11.25
Average salary: $75,328.30
Final salary: $77,180.00
Total: $63,087.45
Total/month: $5,257.00
Maximum: $61,744.00
  $5,145.00
------------------------------------------------------------------------

    B. In this example, the individual in example 3A also has 6 months 
of unused sick leave at retirement. The sick leave credit is not subject 
to the 80% limitation and does not become creditable service until the 
date of separation. For a police officer (or a non-firefighting division 
firefighter) such an amount of sick leave would be 1040 hours (130 days, 
based on a 260-day year, times 8 hours

[[Page 295]]

per day). For a firefighting division firefighter, such an amount would 
be 1092 hours (180 days divided by 360 days per year times 2184 hours 
per year). Six months of unused sick leave increases the annual total 
benefit by 1.5 percent of the average salary, or in the example by $94 
per month. The District is responsible for the portion of the annuity 
attributable to the unused sick leave because it became creditable at 
retirement, that is, after June 30, 1997.

                       Example 3B--Police Optional
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Separation date: 03/30/98
Department service: 32/00/17
Other service:
Sick leave:
.025 service: 20
.03 service: 12
Average salary: $75,328.30
Final salary: $77,180.00
Total wo/sl credit: $64,782.34
Total/month: $5,399.00
Max wo/sl credit: $61,744.00
Max w/sl credit: $62,873.92
Monthly benefit: $5,239.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 06/12/42
Hire date: 03/14/66
Freeze date: 06/30/97
Department service: 31/03/17
Other service:
Sick leave: none
.025 service: 20
.03 service: 11.25
Average salary: $75,328.30
Final salary: $77,180.00
Total: $63,087.45
Total/month: $5,257.00
Maximum: $61,744.00
Monthly benefit: $5,145.00
------------------------------------------------------------------------

                   Example 4: Excess Leave Without Pay

    In this example, an individual covered by the Teachers Plan hired 
before 1996 retires in February 1998. At retirement, she is age 64 with 
27 years of departmental service and 6 years, 7 months, and 28 days of 
other service (creditable before June 30, 1997). However, only 6 months 
of leave in a fiscal year without pay may be credited toward retirement 
under the Teachers Plan. She had 3 months and 18 days of excess leave 
without pay as of June 30, 1997. Since the excess leave without pay 
occurred before June 30, 1997, the time attributable to the excess leave 
without pay is subtracted from the service used in both the Federal 
Benefit Payment and the total benefit computations. The Federal Benefit 
Payment begins at retirement. It is based on the 32 years and 8 months 
of service (32 years, 11 months, and 28 days minus 3 months and 18 days 
and the partial month dropped); 5 years of service at the 1.5 percent 
accrual rate, 5 years of service at the 1.75 percent accrual rate, and 
22 years and 8 months of service at the 2 percent accrual rate. The 
total annuity is based on 33 years and 4 months of service (33 years, 7 
months and 28 days minus 3 months and 18 days and the partial month 
dropped) 5 years of service at the 1.5 percent accrual rate, 5 years of 
service at the 1.75 percent accrual rate and 23 years and 4 months of 
service at the 2 percent accrual rate.

    Note: For the Teachers Plan, section 1230(a) of title 31 of the DC 
Code (1997) allows for 6 months leave without pay in any fiscal year. 
For the Police and Firefighters Plan, section 610(d) of title 4 of the 
DC Code (1997) allows for 6 months leave without pay in any calendar 
year.

                      Example 4--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/04/33
Hire date: 03/01/71
Separation date: 02/28/98
Department service: 27/00/00
Other service: 06/07/28
Excess LWOP: 00/03/18
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $53,121.00
Total: $33,421.98
Total/month: $2,785.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/04/33
Hire date: 03/01/71
Freeze date: 06/30/97
Department service: 26/04/00
Other service: 06/07/28
Excess LWOP: 00/03/18
.015 service: 5
.0175 service: 5
.02 service: 22.666667
Average salary: $53,121.00
Total: $32,713.66
Total/month: $2,726.00
------------------------------------------------------------------------

                   Example 5: Service Credit Deposits

    A. An individual covered by the Teachers Plan hired before 1996 
retires in October 1997. At retirement, he is age 61 with 30 years and 3 
days of departmental service plus 3 years, 4 months, and 21 days of 
other service that preceded the departmental service for which the 
deposit was fully paid on or before June 30, 1997. The Federal Benefit 
Payment begins at retirement. It is based on the 29 years, 8 months, and 
22 days of departmental service and 3 years, 4 months, and 21 days of 
service

[[Page 296]]

performed as of June 30, 1997. Thus, the Federal Benefit Payment is 
based on 33 years and 1 month of service; 5 years of service at the 1.5 
percent accrual rate, 5 years of service at the 1.75 percent accrual 
rate, and 23 years and 1 month of service at the 2 percent accrual rate. 
The total annuity is based on 33 years and 4 months of service; 5 years 
of service at the 1.5 percent accrual rate, 5 years of service at the 
1.75 percent accrual rate and 23 years and 4 months of service at the 2 
percent accrual rate.

                      Example 5A--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
Department Service: 30/00/03
Other service: 03/04/21
Deposit paid before freeze date:
Other service credit allowed:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $45,680.80
Total: $28,740.85
Total/month: $2,395.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Freeze date: 06/30/97
Department service: 29/08/22
Other service: 03/04/21
Deposit paid before freeze date:
Other service credit allowed:
Sick Leave:
.015 service: 5
.0175 service: 5
.02 service: 23.08333; 13 days dropped
Average salary: $45,680.80
Total: $28,512.45
Total/month: $2,376.00
------------------------------------------------------------------------

    B. In this example, the employee in example 5A did not pay any of 
the deposit to obtain credit for the 3 years, 4 months, and 21 days of 
other service as of June 30, 1997. Thus, none of the other service is 
used in the computation of the Federal Benefit Payment. An individual 
covered by the Teachers Plan hired before 1996 retires in October 1997. 
At retirement, he is age 61 with 30 years and 3 days of departmental 
service plus 3 years, 4 months, and 21 days of other service that 
preceded the departmental service for which the deposit was paid in full 
in October 1997 (at retirement). The Federal Benefit Payment begins at 
retirement. It is based on only the 29 years, 8 months, and 22 days of 
departmental service performed as of June 30, 1997; 5 years of service 
at the 1.5 percent accrual rate, 5 years of service at the 1.75 percent 
accrual rate, and 19 years and 8 months of service at the 2 percent 
accrual rate. The total annuity is based on 33 years and 4 months of 
service; 5 years of service at the 1.5 percent accrual rate, 5 years of 
service at the 1.75 percent accrual rate and 23 years and 4 months of 
service at the 2 percent accrual rate.

                      Example 5B--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
   $0.00
Department service: 30/00/03
Other service: 03/04/21
Total deposit paid after 6/30/97
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $45,680.80
Total: $28,740.85
Total/month: $2,395.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Freeze date: 06/30/97
Department service: 29/08/22
Other service: none
Total deposit paid after 6/30/97:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 19.666667; 22 days dropped
Average salary: $45,680.80
Total: $25,390.90
Total/month: $2,116.00
------------------------------------------------------------------------

    C. In this example, the employee in examples 5A and B began 
installment payments on the deposit to obtain credit for the 3 years, 4 
months, and 21 days of other service as of June 30, 1997, but did not 
complete the deposit until October 1997 (at retirement). The other 
service is not used in the computation of the Federal Benefit Payment 
because the payment was not completed as of June 30, 1997. Thus, the 
result is the same as in example 5B.

                      Example 5C--Teachers Optional
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Separation date: 10/11/97
Department service: 30/00/03
Other service: 03/04/21
Partial deposit paid as of 6/30/97:
Deposit completed after 6/30/97:

[[Page 297]]

 
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 23.333333
Average salary: $45,680.80
Total: $28,740.85
Total/month: $2,395.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/10/36
Hire date: 10/09/67
Freeze date: 06/30/97
Department service: 29/08/22
Other service: none
Partial deposit paid as of 6/30/97:
Deposit completed after 6/30/97:
Sick leave:
.015 service: 5
.0175 service: 5
.02 service: 19.666667; 22 days dropped
Average salary: $45,680.80
Total: $25,390.90
Total/month: $2,116.00
------------------------------------------------------------------------

                     Disability Retirement Examples

 Example 6: Disability Occurs Before Eligibility for Optional Retirement

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires based on a disability in the 
line of duty in October 1997. At retirement, he is age 45 with 18 years, 
5 months, and 11 days of departmental service. Since he had performed 
less than 20 years of service and had not reached the age of eligibility 
for an optional retirement, the Federal Benefit Payment does not begin 
at retirement. When the disability annuitant reaches age 55, he 
satisfies the age and service requirements for deferred retirement. At 
that time (August 20, 2007), the Federal Benefit Payment begins. It is 
based on the 18 years, 1 month, and 17 days of departmental service 
performed as of June 30, 1997, all at the 2.5 percent accrual rate.

          Example 6A--Police Disability in Line of Duty, Age 45
                              [Pre-80 hire]
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 08/20/52
Hire date: 05/14/79
Separation date: 10/24/97
Department service: 18/05/11
Other service:
Sick leave:
.025 service: 18.416667
.03 service:
Average salary: $47,788.64
Final salary: $50,938.00
Total: $22,002.70
Total/month: $1,834.00
\2/3\ of average pay: $31,859.11
Monthly: $2,655.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 08/20/52
Hire date: 05/14/79
Freeze date: 06/30/97
Department service: 18/01/17
Other service:
Sick leave:
.025 service: 18.083333
.03 service:
Average salary: $47,788.64
Final salary: $50,938.00
Total: $21,604.43
Total/month: $1,800.00; deferred
------------------------------------------------------------------------

    B. In this example, an individual covered by the Teachers Plan hired 
before 1996 retires based on a disability in December 1997. At 
retirement, she is age 49 with 27 years and 4 months of departmental 
service which includes 3 years, 3 months and 14 days of excess leave 
without pay (prior to June 30, 1997). Since she does not qualify for 
optional retirement at separation, the Federal Benefit Payment does not 
begin at separation. When the disability annuitant reaches age 62, she 
will satisfy the age and service requirements for deferred retirement. 
At that time (March 9, 2010), the Federal Benefit Payment begins. The 
time attributable to the excess leave without pay is subtracted from the 
service used to compute the Federal Benefit Payment. Since the excess 
leave without pay occurred before June 30, 1997, the deferred Federal 
Benefit Payment is based on the 23 years and 6 months of service; 5 
years of service at the 1.5 percent accrual rate, 5 years of service at 
the 1.75 percent accrual rate, and 13 and 6 months of service at the 2 
percent accrual rate.

                 Example 6B--Teachers Disability Age 49
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 03/09/48
Hire date: 09/01/70
Separation date: 12/31/97
Department service: 27/04/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 14
Average salary: $53,121.00
Total: $23,506.04
Total/month: $1,959.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 03/09/48

[[Page 298]]

 
Hire date: 09/01/70
Freeze date: 06/30/97
Department service: 26/10/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 13.5
Average salary: $53,121.00
Total: $22,974.83
Total/month: $1,915.00; deferred
------------------------------------------------------------------------

 Example 7: Disability Occurs After Eligibility for Optional Retirement

    A. In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 retires based on a disability in the 
line of duty in October 1997. At retirement, she is age 55 with 24 
years, 5 months, and 11 days of departmental service. Since she was also 
eligible for optional retirement at the time of separation, the Federal 
Benefit Payment commences at retirement. It is based on the 24 years, 1 
month, and 17 days of departmental service performed as of June 30, 
1997. Thus, the Federal Benefit Payment is based on 20 years of service 
at the 2.5 percent accrual rate and 4 years and 1 month of service at 
the 3 percent accrual rate. The total annuity is based on the disability 
formula and is equal to two-thirds of average pay because that amount is 
higher than the 63.25 percent payable based on total service.

          Example 7A--Police Disability in Line of Duty Age 55
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 10.01/42
Hire date: 05/14/73
Separation date: 10/24/97
Department service: 24/05/11
Other service:
Sick leave:
.025 service: 20
.03 service: 4.416667
Average salary: $47,788.64
Final salary: $50,938.00
Total: $30,226.31
Total/month: $2,519.00
2/3 of average pay: $31,859.11
Monthly: $2,655.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 10/01/42
Hire date: 05/14/73
Freeze date: 06/30/97
Department service: 24/01/17
Other service:
Sick leave:
.025 service: 20
.03 service: 4.083333
Average salary: $47,788.64
Final salary: $50,938.00
Total: $29,748.43
Total/month: $2,479.00
------------------------------------------------------------------------

    B. In this example, an individual covered by the Teachers Plan hired 
before 1996 retires based on a disability in December 1997. At 
retirement, he is age 60 with 27 years and 4 months of departmental 
service which includes 3 years, 3 months and 14 days of excess leave 
without pay (prior to June 30, 1997). Since he qualifies for optional 
retirement at separation, the Federal Benefit Payment begins at 
retirement. Since the excess leave without pay occurred before June 30, 
1997, and the total annuity is based on actual service (that is, exceeds 
the guaranteed disability minimum), the time attributable to the excess 
leave without pay is subtracted from the service used to compute the 
Federal Benefit Payment and total benefit. The Federal Benefit Payment 
is based on 23 years and 6 months of service; 5 years of service at the 
1.5 percent accrual rate, 5 years of service at the 1.75 percent accrual 
rate, and 13 years and 6 months of service at the 2 percent accrual 
rate. The total annuity payable is based on 24 years of service; 5 years 
of service at the 1.5 percent accrual rate, 5 years of service at the 
1.75 percent accrual rate, and 14 years of service at the 2 percent 
accrual rate.

                 Example 7B--Teachers Disability Age 60
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        TotaL Annuity Computation
------------------------------------------------------------------------
Birth date: 03/09/37
Hire date: 09/01/70
Separation date: 12/31/97
Department service: 27/04/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5
.0175 service: 5
.02 service: 14
Average salary: $53,121.00
Total: $23,506.04
Total/month: $1,959.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 03/09/37
Hire date: 09/01/70
Freeze date: 06/30/97
Department service: 26/10/00
Other service:
Excess LWOP: 03/03/14
.015 service: 5

[[Page 299]]

 
.0175 service: 5
.02 service: 13.5
Average salary: $53,121.00
Total: $22,974.83
Total/month: $1,915.00
------------------------------------------------------------------------

                      Deferred Retirement Examples

               Example 8: All Service Before June 30, 1997

    In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 separated in March 1986 with title 
to a deferred annuity. In November 1997, he reaches age 55 and becomes 
eligible for the deferred annuity based on his 15 years, 9 months, and 8 
days of departmental service, all at the 2.5 percent accrual rate. The 
total annuity is based on the same 15 years, 9 months, and 8 days of 
service all at the 2.5 percent accrual rate. Since all the service is 
creditable as of June 30, 1997, the Federal Benefit Payment equals the 
total annuity.

                       Example 8--Police Deferred
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/20/42
Hire date: 06/01/70
Separation date: 03/08/86
Department service: 15/09/08
Other service:
Sick leave:
.025 service: 15.75
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $11,980.69
Total/month: $998.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/20/42
Hire date: 06/01/70
Freeze date: 03/08/86
Department service: 15/09/08
Other service:
Sick leave:
.025 service: 15.75
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $11,980.69
Total/month: $998.00
------------------------------------------------------------------------

               Example 9: Service Straddles June 30, 1997

    In this example, an individual covered by the Police and 
Firefighters Plan hired before 1980 separated in December 1997 with 
title to a deferred annuity. In November 2007, he will reach age 55 and 
becomes eligible to receive a deferred annuity. At that time, the 
Federal Benefit Payment begins. It is based on the 18 years and 1 month 
of departmental service performed as of June 30, 1997, all at the 2.5 
percent accrual rate. The total annuity begins at the same time, based 
on his 18 years, 6 months, and 8 days of departmental service, all at 
the 2.5 percent accrual rate.

                       Example 9--Police Deferred
                              [Pre-80 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/20/52
Hire date: 06/01/79
Separation date: 12/08/97
Department service: 18/06/08
Other service:
Sick leave:
.025 service: 18.5
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $14,072.55
Total/month: $1,173.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/20/52
Hire date: 06/01/79
Freeze date: 06/30/97
Department service: 18/01/00
Other service:
Sick leave:
.025 service: 18.083333
.03 service: 0
Average salary: $30,427.14
Final salary: $45,415.00
Total: $13,755.60
Total/month: $1,146.00; deferred
------------------------------------------------------------------------

            Reduction To Provide a Survivor Annuity Examples

               Example 10: Survivor Reduction Calculations

    Both of the following examples involve a former teacher who elected 
a reduced annuity to provide a survivor benefit:
    A. In this example, the employee elected full survivor benefits. The 
Federal Benefit Payment is reduced by 2\1/2\ percent of the first $3600 
and 10 percent of the balance. The total annuity is also reduced by 2\1/
2\ percent of the first $3600 and 10 percent of the balance.

           Example 10A--Teachers Optional W/Survivor Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68

[[Page 300]]

 
Separation date: 12/31/97
Department service: 29/02/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.666667
Average salary: $66,785.00
Total unreduced: $42,464.13
Reduction: $3,976.41
Total reduced: $38,487.72
Total/month: $3,207.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Freeze date: 06/30/97
Department service: 28/08/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.166667
Average salary: $66,785.00
Total unreducted: $41,796.28
Reduction: $3,909.63
Total reduced: $37,886.65
Total/month: $3,157.00
------------------------------------------------------------------------

    B. In this example, the employee elects to provide a partial 
survivor annuity based on $3600 per year. The Federal Benefit Payment is 
reduced by $90 per year. The total benefit is reduced by $90 per year.

           Example 10B--Teachers Optional W/Survivor Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 11/01/68
Separation date: 12/31/97
Department service: 29/02/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.666667
Average salary: $66,785.00
Total unreduced: $42,464.13
Reduction: $90.00
Total reduced: $42,374.13
Total/month: $3,531.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire Date: 11/01/68
Freeze date: 06/30/97
Department service: 28/08/00
Other service: 03/09/18
Military: 00/09/11
.015 service: 5
.0175 service: 5
.02 service: 23.166667
Average salary: $66,785.00
Total unreduced: $41,796.28
Reduction: $90.00
Total reduced: $41,706.28
Total/month: $3,476.00
------------------------------------------------------------------------

            Early Optional or Involuntary Retirement Examples

              Example 11: Early Optional With Age Reduction

    In this example, an individual covered by the Teachers Plan hired 
before 1996 retires voluntarily in February 1998, under a special 
program that allows early retirement with at least 20 years of service 
at age 50 older, or at least 25 years of service at any age. At 
retirement, she is 6 full months short of age 55. She has 25 years and 5 
months of departmental service; 6 years, 2 months, and 19 days of other 
service (creditable before June 30, 1997); and 2 months and 9 days of 
unused sick leave. Since she is not eligible for optional retirement and 
she is eligible to retire voluntarily only because of the District-
approved special program, the Federal Benefit Payment is calculated 
similar to a disability retirement. It does not begin until she becomes 
eligible for a deferred annuity at age 62. When it commences the Federal 
Benefit Payment will be based on the service creditable as of June 30, 
1997: 30 years and 11 months of service; 5 years of service at the 1.5 
percent accrual rate, 5 years of service at the 1.75 percent accrual 
rate, and 20 years and 11 months of service at the 2 percent accrual 
rate. The total annuity is based on 5 years of service at the 1.5 
percent accrual rate, 5 years of service at the 1.75 percent accrual 
rate and 21 years and 9 months of service at the 2 percent accrual rate 
(including the unused sick leave). Because the Federal Benefit Payment 
is based on the deferred annuity, rather than the early voluntary 
retirement, it is not reduced by the age reduction factor used to 
compute the total benefit.

             Example 11--Teachers Early Out W/Age Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Separation date: 02/28/98
Department service: 25/05/00

[[Page 301]]

 
Other service: 06/02/19
Sick leave: 00/02/09
.015 service: 5
.0175 service: 5
.02 service: 21.75
Average salary: $69,281.14
Total unreduced: $41,395.48
Age reduction factor: 0.990000
Total reduced: $40,981.53
Total/month: $3,415.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Freeze date: 06/30/97
Department service: 24/09/00
Other service: 06/02/19
.015 service: 5
.0175 service: 5
.02 service: 20.916667
Average salary: $69,281.14
Total unreduced: $40,240.80
Reduction factor: 1.000000 no reduction
Total reduced: $40,240.80
Total/month: $3,353.00 deferred
------------------------------------------------------------------------

               Example 12: Involuntary With Age Reduction

    In this example, an individual covered by the Teachers Plan hired 
before 1996 retires involuntarily in February 1998. At retirement, she 
is 6 full months short of age 55. She has 25 years and 5 months of 
departmental service; 6 years, 2 months, and 19 days of other service 
(creditable before June 30, 1997); and 2 months and 9 days of unused 
sick leave. The Federal Benefit Payment begins at retirement. It is 
based on the 30 years and 11 months of service; 5 years of service at 
the 1.5 percent accrual rate, 5 years of service at the 1.75 percent 
accrual rate, and 20 years and 11 months of service at the 2 percent 
accrual rate. The total annuity is based on 5 years of service at the 
1.5 percent accrual rate, 5 years of service at the 1.75 percent accrual 
rate and 21 years and 9 months of service at the 2 percent accrual rate 
(including the unused sick leave). Both the Federal Benefit Payment and 
the total benefit are reduced by the age reduction factor.

            Example 12--Teachers Involuntary W/Age Reduction
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Separation date: 02/28/98
Department service: 25/05/00
Other service: 06/02/19
Sick leave: 00/02/09
.015 service: 5
.0175 service: 5
.02 service: 21.75
Average salary: $69,281.14
Total unreduced: $41,395.48
Age reduction factor: 0.990000
Total reduced: $40,981.53
Total/month: $3,415.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 09/20/43
Hire date: 10/01/72
Freeze date: 06/30/97
Department service: 24/09/00
Other service: 06/02/19
.015 service: 5
.0175 service: 5
.02 service: 20.916667
Average salary: $69,281.14
Total unreduced: $40,240.80
Age reduction factor: 0.990000
Total reduced: $39,838.39
Total/month: $3,320.00
------------------------------------------------------------------------

                         Death Benefits Example

                 Example 13: Death Benefits Calculation

    Regardless of whether death occurs in service or after retirement, 
if the death benefit is not based on the length of service, the portion 
of a death benefit that is a Federal Benefit Payment is based on the 
ratio of the number of months of the deceased employee's service as of 
June 30, 1997, to the number of months of the deceased employee's total 
service. This proration will always apply to cases of death after 
retirement in which the survivor annuity is based on the reduction in 
the employee's annuity to provide the benefit. It also applies to lump-
sum benefits and benefits computed under a guaranteed-minimum or a 
percentage-of-disability-at-retirement formula.
    A. In this example, an individual covered by the Teachers Plan 
retires in April 1998 with 30 years of service and elects to provide a 
full survivor annuity. He dies in June 1998. The Federal Benefit Payment 
is 97\1/2\ percent (351 months/360 months) of the total survivor 
benefit.

                  Example 13A--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 04/01/46
Hire date: 04/01/68
Separation date: 04/01/98

[[Page 302]]

 
Death date: 06/24/98
Department service: 30/00/00
Other service:
Sick leave:
Months: 360
Annual Benefit: $12,000.00
Monthly Benefit: $1,000.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 04/01/46
Hire date: 04/01/68
Freeze date: 06/30/97
Death date: 06/24/98
Department service: 29/03/00
Other service:
Months: 351
   $11,700.00
   $975.00
------------------------------------------------------------------------

    B. In this example, a teacher dies in service on June 30, 1998 after 
31 years of departmental service. Since the survivor annuity is based on 
actual service, the Federal Benefit Payment is based on the 30 years of 
service as of June 30, 1997. The total benefit is based on the 31 years 
of total service. No proration is appropriate.

                  Example 13B--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 07/01/39
Hire date: 07/01/67
Separation date: 06/30/98
Death date: 06/30/98
Department service: 31/00/00
Other service:
Sick leave:
Average salary: $38,787.88
Annual Benefit: $12,426.67
Monthly Benefit: $1,036.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 07/01/39
Hire date: 07/01/67
Freeze date: 06/30/97
Death date: 06/30/98
Department service: 30/00/00
Other service:
Average salary: $38,787.88
 $12,000.00
   $1,000.00
------------------------------------------------------------------------

    C. In this example, a teacher dies in service on April 1, 1998 after 
15 years of departmental service. Since the survivor annuity is based on 
the guaranteed minimum, the Federal Benefit Payment is a prorated 
portion of the total benefit. Since the teacher had 171 months of 
service as of the freeze date and 180 months of service at death, the 
Federal Benefit Payment equals 171/180ths of the total benefit.

                  Example 13C--Teachers Death Benefits
                              [pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 04/01/61
Hire date: 04/01/83
Separation date: 04/01/98
Death date: 04/01/98
Department service: 15/00/01
Average salary: $36,000.00
Months: 180
Annual Benefit: $7,920.00
Monthly Benefit: $660.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 04/01/61
Hire date: 04/01/83
Freeze date: 06/30/97
Death date: 04/01/98
Department Service: 14/03/00
Average salary: $36,000.00
Months: 171
Ratio (171/180): 0.950000
   $7,524.00
   $627.00
------------------------------------------------------------------------

    D. In this example, as in the prior example, a teacher dies in 
service on April 1, 1998 after 15 years of departmental service. 
However, in this example, the teacher was age 40 on the hire date. The 
amount of service used in the survivor annuity calculation equals the 
amount of service that the teacher would have had if the teacher 
continued covered employment until age 60. Since the survivor annuity is 
based on projected service, a form of the guaranteed minimum, the 
Federal Benefit Payment is a prorated portion of the total benefit. 
Since the teacher had 171 months of service as of the freeze date and 
180 months of service at death, the Federal Benefit Payment equals 171/
180ths of the total benefit.

                  Example 13D--Teachers Death Benefits
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 04/01/43
Hire date: 04/01/83
Separation date: 04/01/98
Death date: 04/01/98
Department service: 15/00/01
Departmental Service projected to age 60: 20/00/01
.015 service: 5
.0175 service: 5
.02 service: 10
Average salary: $36,000.00
Months: 180
Annual Benefit: $7,177.50
Monthly Benefit: $598.00
------------------------------------------------------------------------

[[Page 303]]

 
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 04/01/43
Hire date: 04/01/83
Freeze date: 06/30/97
Death date: 04/01/98
Department service: 14/03/00
Average salary: $36,000.00
Months: 171
Ratio (171/180): 0.950000
   $6,818.63
   $568.00
------------------------------------------------------------------------

                   Cost of Living Adjustment Examples

          Example 14: Application of Cost of Living Adjustments

    Cost of living adjustments are applied directly to the Federal 
Benefit Payment to determine the new rate of the Federal Benefit Payment 
after a cost of living adjustment.
    A. In this example, the cost of living adjustment is the same for 
the Federal Benefit Payment and the non-Federal Benefit Payment portion 
of the total benefit. Effectively, the total cost of living adjustment 
is proportionally split between the Federal Benefit Payment and the non-
Federal Benefit Payment.

             Example 14A--Teachers Cost of Living Adjustment
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                   Benefit Computation (at retirement)
------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
  Birth date: 11/04/48
  Hire date: 03/01/86
  Separation date: 02/28/2013
  Department service: 27/00/00
  Other service paid in 1995: 06/07/28
  Excess LWOP in 1990: 00/03/18
  .015 service: 5
  .0175 service: 5
  .02 service: 23.333333
  Average salary: $53,121.00
  Total: $33,421.98
  Total/month: $2,785.00
------------------------------------------------------------------------
                   Benefit Computation (at retirement)
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
  Birth date: 11/04/48
  Hire date: 03/01/86
  Freeze date: 06/30/1997
  Department service: 11/04/00
  Other service paid in 1995: 06/07/28
  Excess LWOP in 1990: 00/03/18
  .015 service: 5
  .0175 service: 5
  .02 service: 7.666667
  Average salary: $53,121.00
  Total: $16,777.38
  Total/month: $1,398.00
------------------------------------------------------------------------
                            COLA Computation
------------------------------------------------------------------------
DC COLA rate 4%
Total COLA: 111
New rate: 2896
Federal COLA rate 4%
  Federal COLA: 56
  New rate: 1454
------------------------------------------------------------------------

    B. In this example, a new District plan applies a different cost of 
living adjustment than is provided for the Federal Benefit Payment. The 
Federal Benefit Payment will be unaffected by the new District plan. In 
such a case, the total cost of living adjustment is no longer 
proportionally split between the Federal Benefit Payment and the non-
Federal Benefit Payment.

             Example 14B--Teachers Cost of Living Adjustment
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                   Benefit Computation (at retirement)
------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
  Birth date: 11/04/48
  Hire date: 03/01/86
  Separation date: 02/28/2013
  Department service: 27/00/00
  Other service paid in 1995: 06/07/28
  Excess LWOP in 1990: 00/03/18
  .015 service: 5
  .0175 service: 5
  .02 service: 23.333333
  Average salary: $53,121.00
  Total: $33,421.96
  Total/month: $2,785.00
------------------------------------------------------------------------
                   Benefit Computation (at retirement)
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
  Birth date: 11/04/48
  Hire date: 03/01/86
  Freeze date: 06/30/1997
  Department service: 11/04/00
  Other service paid in 1995: 06/07/28
  Excess LWOP in 1990: 00/03/18
  .015 service: 5
  .0175 service: 5
  .02 service: 7.666667
  Average salary: $53,121.00
  Total: $16,777.38
  Total/month: $1,398.00
------------------------------------------------------------------------
                       COLA Computation Variations
 
                               Variation 1
------------------------------------------------------------------------
DC COLA rate 5% of total benefit:

[[Page 304]]

 
Total COLA: $139.00
New rate: $2,924.00
Federal COLA rate 4% of Federal
Benefit Payment:
Federal COLA: $56.00
  New rate: $1,454.00
------------------------------------------------------------------------
                               Variation 2
------------------------------------------------------------------------
DC COLA rate 5% of DC Payment:
  Total COLA: $125.00
  New rate: $2,910.00
Federal COLA rate 4% of Federal
    Benefit Payment:
  Federal COLA: $56.00
  New rate: $1,454.00
------------------------------------------------------------------------

             Retroactive Payment of Accrued Annuity Example

             Example 15: Accrual of Federal Benefit Payment

    The Federal Benefit Payment begins to accrue on the annuity 
commencing date, regardless of whether the employee is added to the 
annuity roll in time for the regular payment cycle. If the employee is 
due a retroactive payment of accrued annuity, the portion of the 
retroactive payment that would have been Federal Benefit Payment (if it 
were made in the regular payment cycle) is still Federal Benefit 
Payment. In this example, a teacher retired effective September 11, 
1998. She was added to the retirement rolls on the pay date November 1, 
1998 (October 1 to October 31 accrual cycle). Her Federal Benefit 
Payment is $3000 per month and her total benefit payment is $3120 per 
month. Her initial check is $5200 because it includes a prorated payment 
for 20 days (September 11 to September 30). The Federal Benefit Payment 
is $5000 of the initial check ($3000 for the October cycle and $2000 for 
the September cycle).

                  Example 15--Teachers Accrued Benefit
                              [Pre-96 hire]
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
                        Total Annuity Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 09/01/66
Separation date: 09/10/98
Department service: 32/00/10
.015 service: 5
.0175 service: 5
.02 service: 22
Average salary: $62,150.00
Total: $37,445.38
Total/month: $3,120.00
Sept 11-30: $2,080.00
Oct 1-31: $3,120.00
Nov 1-30: $3,120.00
------------------------------------------------------------------------
                   Federal Benefit Payment Computation
------------------------------------------------------------------------
Birth date: 11/01/42
Hire date: 09/01/66
Freeze date: 06/30/97
Department service: 30/10/00
.15 service: 5
.0175 service: 5
.02 service: 20.833333
Average salary: $62,150.00
Total: $35,995.21
Total/month: $3,000.00
Sept 11-30: $2,000.00
Oct 1-31: $3,000.00
Nov 1-30: $3,000.00
------------------------------------------------------------------------



                Subpart D--Claims and Appeals Procedures

    Source: 65 FR 80753, Dec. 22, 2000, unless otherwise noted.



Sec. 29.401  Purpose.

    (a) This subpart explains--
    (1) The procedures that participants and beneficiaries in the Judges 
Plan, Police and Firefighters Plan, and the Teachers Plan must follow in 
applying for Federal Benefit Payments;
    (2) The procedures for determining an individual's eligibility for a 
Federal Benefit Payment and the amount and form of an individual's 
Federal Benefit Payment as required by section 11021 of the Act and 
section 11-1570 of the D.C. Code;
    (3) The appeal rights available under section 11022(a) of the Act to 
claimants whose claim for Federal Benefit Payments is denied in whole or 
in part; and
    (4) The special rules for processing competing claimant cases.
    (b) This subpart does not apply to processing collection of debts 
due to the United States.



Sec. 29.402  Definitions.

    In this subpart--
    Act means the Balanced Budget Act of 1997, Public Law 105-33, 111 
Stat. 251, 712-731, 756-759, enacted August 5, 1997, as amended by the 
Omnibus Consolidated and Emergency Supplemental Appropriations Act for 
Fiscal Year

[[Page 305]]

1999, Public Law 105-277, 112 Stat. 2681, 2681-530 through 538, 2681-
552.
    Beneficiary means an individual designated by a participant, or by 
the terms of the Judges Plan, Police and Firefighters Plan, or Teachers 
Plan, who is or may become entitled to a benefit under those plans.
    Benefits Administrator means:
    (1) During the interim administration period under section 11041 of 
the Act, the District of Columbia government, or
    (2) After the Secretary notifies the District that the Trustee has 
been directed to carry out the duties and responsibilities required 
under the contract or determines that the Department shall carry out 
those functions, the Department, the Trustee selected by the Department 
under section 11035 of the Act, or any other agent of the Department 
designated to make initial benefit determinations under the Act.
    Claimant means any person seeking a benefit for themselves or 
another under the Judges Plan, Police and Firefighters Plan, or Teachers 
Plan.
    Department means the Secretary of the Treasury or a designee 
authorized to exercise the Secretary's authority with respect to Federal 
Benefit Payments under the Act.
    Participant means an individual who is or may become eligible to 
receive a benefit under the Police and Firefighters Plan or the Teachers 
Plan based on credit for service accrued as of June 30, 1997, or under 
the Judges Plan, or whose beneficiaries may be eligible to receive any 
such benefit.



Sec. 29.403  Applications filed with the Benefits Administrator.

    All claimants for Federal Benefit Payments must file applications 
for benefits (including applications for retirement, refunds of 
contributions, and death benefits) with the Benefits Administrator.



Sec. 29.404  Initial benefit determinations and reconsideration by the Benefits Administrator.

    (a) Initial benefit determinations. The Benefits Administrator will 
process applications for Federal Benefit Payments and determine the 
eligibility for and the amount and form of Federal Benefit Payments. All 
initial benefit determination decisions which may reasonably be 
construed as a denial (in whole or part) of a claim for Federal Benefit 
Payments must be in writing, must advise claimants of their right to 
request reconsideration under paragraph (b), of this section and must 
state the time limits applicable to such a request.
    (b) Claimant's right to reconsideration of benefit denials. (1) 
Except as provided in paragraph (b)(2) of this section, claimants who 
disagree with the amount or form of a Federal Benefit Payment 
determination and wish to contest the determination must first request 
the Benefits Administrator to reconsider its determination.
    (2) A decision to collect a debt is not a denial of a benefit claim 
under this section.
    (c) Form and timing of requests for reconsideration. (1) A request 
for reconsideration must be in writing, must include the claimant's 
name, address, date of birth and claim number, if applicable, and must 
state the basis for the request.
    (2) A request for reconsideration must be received by the Benefits 
Administrator within 30 calendar days from the date of the written 
notice of the initial benefit determination.
    (d) Reconsideration decisions. A reconsideration decision by the 
Benefits Administrator denying (in whole or part) a claim for a Federal 
Benefit Payment must--
    (1) Be in writing;
    (2) Provide adequate notice of such denial, setting forth the 
specific reason for the denial in a manner calculated to be understood 
by the average participant; and
    (3) Provide notice of the right to appeal the Benefit 
Administrator's decision to the Department, the address to which such an 
appeal must be submitted, and the time limits applicable to such an 
appeal.
    (e) Appeal of reconsideration decisions. The Department will review 
an appeal of a reconsideration decision under Sec. 29.405.



Sec. 29.405  Appeals to the Department.

    (a) Who may file. Any claimant whose claim for a Federal Benefit 
Payment

[[Page 306]]

has been denied (in whole or part) by the Benefits Administrator in a 
reconsideration decision under Sec. 29.404(d) may appeal that decision 
to the Department.
    (b) Form of appeal. An appeal must be in writing, must include the 
claimant's name, address, date of birth and claim number, if applicable, 
and must state the basis for the appeal.
    (c) Time limits on Appeals. (1) An appeal must be received by the 
Department within 30 calendar days from the date of the reconsideration 
decision under Sec. 29.404(d).
    (2) The Department may extend the time limit for filing when the 
claimant shows that he or she was not notified of the time limit and was 
not otherwise aware of it, or that he or she was prevented by 
circumstances beyond his or her control from making the request within 
the time limit, or for other good and sufficient reason.
    (d) Final decision. After consideration of the appeal, the 
Department will issue a final decision. The Department's decision must 
be in writing, must fully set forth the Department's findings and 
conclusions on the appeal, and must contain notice of the right to 
judicial review provided in Sec. 29.406. Copies of the final decision 
must be sent to the claimant seeking appeal, to any competing claimants 
(see Sec. 29.407) and to the Benefits Administrator.



Sec. 29.406  Judicial review.

    An individual whose claim for a Federal Benefit Payment has been 
denied (in whole or part) in a final decision by the Department under 
Sec. 29.405 may, within 180 days of the date of the final decision, file 
a civil action in the United States District Court for the District of 
Columbia. Any such civil action must be filed in accordance with the 
rules of that court.



Sec. 29.407  Competing claimants.

    (a) Competing claimants are applicants for survivor benefits based 
on the service of a participant when--
    (1) A benefit is payable based on the service of the participant;
    (2) Two or more claimants have applied for benefits based on the 
service of the participant; and
    (3) A decision in favor of one claimant will adversely affect 
another claimant(s).
    (b)(1) When a competing claimant files a request for reconsideration 
under this section, the other competing claimants shall be notified of 
the request and given an opportunity to submit written substantiation of 
their claim.
    (2) When the Benefits Administrator receives an application from a 
competing claimant(s) before any payments are made based upon the 
service of the participant, and an initial determination of benefits in 
favor of one claimant adversely affects another claimant, all known 
claimants concerned will be notified in writing of that decision and 
those adversely affected will be given an opportunity to request 
reconsideration under the procedures and time limitations set forth in 
Sec. 29.404(c). The Benefits Administrator must not execute its decision 
until the time limit for filing a request for reconsideration has 
expired, or, if a reconsideration decision is made, until the time limit 
for filing an appeal to the Department has expired or the Department has 
issued a final decision on a timely appeal, whichever is later.
    (3) When the Benefits Administrator does not receive an application 
from a competing claimant(s) until after another person has begun to 
receive payments based upon the service of the participant, the payments 
will continue until the time limit for filing a request for 
reconsideration has expired, or, if a reconsideration decision is made, 
until the time limit for filing an appeal to the Department has expired 
or the Department has issued a final decision on a timely appeal, 
whichever is later.



          Subpart E--Debt Collection and Waivers of Collection

    Source: 66 FR 36705, July 13, 2001, unless otherwise noted.



Sec. 29.501  Purpose; incorporation by reference; scope.

    (a) This subpart regulates--
    (1) The recovery of overpayments of Federal Benefit Payments;

[[Page 307]]

    (2) The standards for waiver of recovery of overpayments of Federal 
Benefit Payments; and
    (3) The use of Federal Benefit Payments to recover certain other 
debts due the United States.
    (b) The regulations of this subpart incorporate by this reference 
all provisions of the Federal Claims Collection Standards (FCCS) (parts 
900-904 of Title 31, Code of Federal Regulations), and supplement those 
regulations by the prescription of procedures and directives necessary 
and appropriate for the operation and administration of the Retirement 
Funds. To the extent they are not inconsistent with the regulations 
contained in this subpart, the regulations in part 5 of title 31, Code 
of Federal Regulations, also apply to the collection of debts under this 
subpart.
    (c)(1) Debts based on fraud, misrepresentation, or the presentation 
of a false claim. This subpart does not apply to any overpayments of 
Federal Benefit Payments which arose, in whole or in part, due to fraud, 
misrepresentation, or the presentation of a false claim by the debtor or 
any party having an interest in the claim. Such debts should be referred 
by the Benefits Administrator immediately to the U.S. Justice Department 
for action pursuant to 31 CFR 900.3.
    (2) Tax debts. This subpart does not apply to tax debts.
    (d)(1) Sections 29.501 through 29.506 state the rules of general 
applicability to this subpart.
    (2) Sections 29.511 through 29.520 prescribe procedures to be 
followed by the Benefits Administrator which are consistent with the 
FCCS in the collection of debts owed to the Retirement Funds.
    (3) Sections 29.521 through 29.526 prescribe the standards that the 
Department will apply in decisions to waive recoupment or recovery of 
overpayments from the Retirement Funds under sections 11021(3) and 
11251(c)(2)(B) of the Act.



Sec. 29.502  Definitions.

    For purposes of this subpart--
    Additional charges means interest, penalties, and/or administrative 
costs owed on a debt.
    Administrative offset, as defined in 31 U.S.C. 3701(a)(1), means 
withholding funds payable by the United States to, or held by the United 
States for, a person to satisfy a debt the person owes the United 
States.
    Agency means:
    (1) An Executive agency as defined in section 105 of title 5, United 
States Code, including the U.S. Postal Service and the U.S. Postal Rate 
Commission;
    (2) A military department, as defined in section 102 of title 5, 
United States Code;
    (3) An agency or court in the judicial branch, including a court as 
defined in section 610 of title 28, United States Code, the District 
Court for the Northern Mariana Islands, and the Judicial Panel on 
Multidistrict Litigation;
    (4) An agency of the legislative branch, including the U.S. Senate 
and the U.S. House of Representatives; and
    (5) Other independent establishments that are entities of the 
Federal Government.
    Annuitant means a retired participant, former spouse, spouse, 
widow(er), child or other beneficiary receiving recurring Federal 
Benefit Payments.
    Annuity means the monthly benefit (including a retirement salary 
under the Judges Plan) of indefinite duration payable to an annuitant.
    Anticipated expenses means expenditures which are expected to occur 
and for which the debtor can provide documentation of the estimated 
cost.
    Beneficiary means an individual designated by a participant, or by 
the terms of the Judges Plan, Police Officers and Firefighters Plan, or 
Teachers Plan, who is or may become entitled to a benefit under those 
plans.
    Change of position for the worse means an individual would be left 
in a worse financial position after recovery of the overpayment than 
prior to the receipt of the overpayment because the individual 
reasonably relied on the amount of the overpayment to his or her 
detriment. For example, an individual has ``changed position for the 
worse'' if he or she made expenditures or assumed new liabilities that 
he or she would not have otherwise done, and he or she is unable to 
withdraw from the commitment without incurring significant financial 
loss.

[[Page 308]]

    Compromise means accepting less than payment in full in satisfaction 
of a debt.
    Consent means the debtor has agreed in writing to administrative 
offset of one or more Federal Benefit Payments after receiving notice of 
the available rights under 31 U.S.C. 3716 and this subpart; to Federal 
salary offset after receiving notice of the available rights under 5 
U.S.C. 5514 and 31 CFR part 5; and to judgment offset under section 124 
of Public Law 97-276, 96 Stat. 1195-1196.
    Credit bureau has the same meaning as the definition of ``consumer 
reporting agency'' provided in 31 U.S.C. 3701(a)(3).
    Creditor agency means the agency to which a debt is owed.
    Debt has the same meaning as the definition of ``debt'' provided in 
31 U.S.C. 3701(b)(1), and includes an overpayment of Federal Benefit 
Payments.
    Debtor means a person who owes a debt or from whom a debt is to be 
recovered, including an annuitant.
    Delinquent means delinquent as defined in 31 CFR 900.2(b).
    Department means the Secretary of the Treasury or a designee 
authorized to exercise the Secretary's authority with respect to Federal 
Benefit Payments under the Act.
    FCCS means the Federal Claims Collection Standards (parts 900-904 of 
Title 31, Code of Federal Regulations).
    Liquid asset means cash or other property readily convertible into 
cash with little or no loss of value.
    Lump-sum credit means:
    (1) Under the Judges Plan, the Police Officers and Firefighters 
Plan, and the Teachers Plan, the unrefunded amount consisting of--
    (i) Retirement contributions from the basic salary of a participant;
    (ii) Amounts deposited covering earlier creditable service; and
    (iii) Such interest as authorized by statute to be included in the 
payment of refunds of retirement contributions; and
    (2) Under the Judges Plan, ``lump-sum credit for survivor annuity'' 
is defined in section 11-1561(10) of the D.C. Code.
    Offset means to withhold the amount of a debt, or a portion of that 
amount, from one or more payments due the debtor. Offset also means the 
amount withheld in this manner.
    Ordinary and necessary living expenses means such expenses as rent, 
mortgage payments, utilities, maintenance, food (including expenses for 
dining out), clothing, insurance (life, health, and accident), taxes, 
installment payments, medical expenses, reasonable expenses for 
recreation and vacations, expenses for support of a dependent when the 
debtor holds primary or joint legal responsibility for such support, and 
other miscellaneous expenses that the debtor can establish as being 
ordinary and necessary.
    Overpayment or overpayment debt means a payment of one or more 
Federal Benefit Payments to an individual in the absence of entitlement 
or in excess of the amount to which an individual is properly entitled.
    Participant means an individual who is or may become eligible to 
receive a benefit under the Police Officers and Firefighters Plan or 
Teachers Plan based on credit for service accrued as of June 30, 1997, 
or under the Judges Plan, or whose beneficiaries may be eligible to 
receive any such benefit.
    Refund means the payment of a lump-sum credit to an individual who 
meets all requirements for payment and files an application for it.
    Relinquish a valuable right means the individual has relinquished a 
valuable privilege, claim, entitlement, or benefit having monetary worth 
because of the overpayment or because of notice that such a payment 
would be made.
    Repayment schedule means the amount of each payment and the number 
of payments to be made to liquidate the debt as determined by the 
Department or the Benefits Administrator.
    Salary offset means any offset authorized by 5 U.S.C. 5514 and 31 
U.S.C. 3716.
    Substantially all, as used in Sec. 29.524, means that a debtor's 
income is less than or equal to his or her ordinary and necessary 
expenses plus a reasonable monthly allowance for unexpected or emergency 
expenses and does not allow for the deduction of a reasonable monthly 
installment payment to recover the debt.

[[Page 309]]

    Voluntary repayment agreement means an agreement wherein the debtor 
makes installment payments to repay an overpayment debt in accordance 
with a repayment schedule agreed to by the Benefits Administrator or the 
Department.
    Waiver means a decision not to recover all or part of an overpayment 
debt owed to the Retirement Funds under authority of sections 11021(3) 
or 11251(c)(2)(B) of the Act.



Sec. 29.503  Prohibition against collection of debts.

    (a) Debts may be collected from Federal Benefit Payments only to the 
extent expressly authorized by Federal debt collection statutes and any 
other applicable Federal law.
    (b) When collection of a debt from Federal Benefit Payments is 
authorized under paragraph (a) of this section, the collection will be 
made in accordance with this subpart and other applicable federal law.



Sec. 29.504  Status of debts.

    A payment of a Federal Benefit Payment to a debtor because of an 
error on the part of the Department or Benefits Administrator, or the 
failure of the creditor agency to properly and/or timely submit a debt 
claim, does not erase the debt or affect the validity of the claim by 
the creditor agency.



Sec. 29.505  Compromise of debts; termination and suspension of collection actions.

    The procedures for compromise of a claim for an overpayment or the 
termination or suspension of a collection action seeking to recover an 
overpayment, other than waiver of an overpayment under Secs. 29.521 
through 29.526, are controlled exclusively by the FCCS and 31 CFR part 
5.



Sec. 29.506  Recovery of other debts owed to the United States.

    (a) Procedures for Creditor Agencies. Agencies seeking to recover a 
debt by offset of Federal Benefit Payments payable to the debtor must 
comply with the offset procedures set forth in 31 U.S.C. 3716 and the 
FCCS. A creditor agency may seek to collect a debt through offset of 
Federal Benefit Payments pursuant to the Department's procedures for 
administrative offset set forth in 31 CFR part 5.
    (b) Offset by the Benefits Administrator. As required by 31 U.S.C. 
3716(c), the Benefits Administrator must compare payment records of the 
Retirement Funds with records of debts submitted to the Financial 
Management Service for collection by administrative offset, and must 
offset payments to satisfy, in whole or in part, debts owed by any 
annuitant.

                       Collection of Overpayments



Sec. 29.511  Demand letters.

    Except as provided in Sec. 29.516(e), before starting collection 
action to recover an overpayment, the Benefits Administrator must send a 
demand letter that informs the debtor in writing--
    (a) That an overpayment has occurred, the amount of the overpayment, 
and the facts giving rise to the overpayment;
    (b) The date by which payment of the debt should be made to avoid 
additional charges (i.e., interest, penalties and administrative costs) 
permitted by the FCCS and enforced collection;
    (c) The requirement that any overpayment debt delinquent for more 
than 180 days be transferred to the Department of the Treasury's 
Financial Management Service for collection;
    (d) The name, address, and phone number of the appropriate person or 
office the debtor may contact about the debt;
    (e) The remedies which may be used to enforce payment of the debt, 
including assessment of interest, administrative costs and penalties; 
administrative wage garnishment; the use of collection agencies; Federal 
salary offset; tax refund offset; administrative offset; and litigation.
    (f) Whether offset is available and, if so, the types of payment(s) 
to be offset or eligible for offset, the repayment schedule (if any), 
the right to request an adjustment in the repayment schedule, and the 
right to request a voluntary repayment agreement in lieu of offset;
    (g) An explanation of the Department's policy on interest, 
penalties, and administrative costs as set forth in

[[Page 310]]

31 CFR part 5, the FCCS, and 31 U.S.C. 3717, including a statement that 
such assessments must be made unless excused in accordance with the 
FCCS;
    (h) The debtor's opportunity to request repayment in installments if 
the debtor can show an inability to repay the debt in one lump sum;
    (i) The debtor's opportunity to inspect and/or receive a copy of the 
records relating to the overpayment;
    (j) The method and time period (60 calendar days) for requesting 
reconsideration, waiver, and/or compromise of the overpayment;
    (k) That all requests for waiver or compromise must be accompanied 
by a disclosure of the debtor's financial condition and ability to pay 
the debt;
    (l) The standards used by the Department in deciding requests for 
waiver (set forth in Secs. 29.521 through 29.526) and compromise (set 
forth in 31 CFR 902.2); and
    (m) The fact that a timely filing of a request for reconsideration, 
waiver and/or compromise, or a subsequent timely appeal of a 
reconsideration decision, will stop collection proceedings, unless--
    (1) Failure to take the offset would substantially prejudice the 
Federal Government's ability to collect the debt; and
    (2) The time before the payment is to be made does not reasonably 
permit the completion of these procedures.



Sec. 29.512  Reconsideration by the Benefits Administrator.

    (a) Right to reconsideration of overpayment determinations. 
Individuals who receive a demand letter and who wish to contest the 
existence or amount of the overpayment may ask the Benefits 
Administrator to reconsider the determination.
    (b) Requests for waiver or compromise. Individuals who wish to seek 
waiver or compromise of the overpayment may file such requests with the 
Department under Sec. 29.514. An individual may file a request for 
reconsideration in addition to a request for waiver or compromise.
    (c) Form and timing of requests for reconsideration. (1) A request 
for reconsideration must be in writing and must state the basis for the 
request. Individuals requesting reconsideration will be given a full 
opportunity to present any pertinent information and documentation 
supporting their position and should, to the extent possible, include 
such information and documentation in their request.
    (2) A request for reconsideration must be received by the Benefits 
Administrator within 60 calendar days of the date of the demand letter. 
The Department may extend the time limit for filing when the individual 
shows that he or she was not notified of the time limit and was not 
otherwise aware of it, or that he or she was prevented by circumstances 
beyond his or her control from making the request within the time limit, 
or for other good and sufficient reason.
    (3) When a request for reconsideration covered by this subpart is 
properly filed before the death of the debtor, it will be processed to 
completion unless the relief sought is nullified by the debtor's death.
    (d) Reconsideration decisions. (1) The Benefits Administrator's 
decision on a request for reconsideration will be based upon the 
individual's written submissions, evidence of record, and other 
pertinent available information.
    (2) A reconsideration decision by the Benefits Administrator must--
    (i) Be in writing;
    (ii) Provide notice of the extent of the individual's liability for 
the overpayment, if any;
    (iii) If the individual is determined to be liable for all or a 
portion of the overpayment, reaffirm or modify the conditions for the 
collection of the overpayment previously proposed in the demand letter;
    (iv) Provide notice of the right to appeal the Benefits 
Administrator's decision to the Department, the address to which such an 
appeal must be submitted, and the time limits applicable to such an 
appeal; and
    (v) State that a timely appeal of the Benefits Administrator's 
decision to the Department will suspend action to collect the debt.
    (e) Appeal of reconsideration decisions. The Department will review 
an appeal of a reconsideration decision under Sec. 29.513.

[[Page 311]]



Sec. 29.513  Appeals to the Department.

    (a) Form of appeal. An appeal of a reconsideration decision under 
Sec. 29.512 must be in writing and must state the basis for the appeal.
    (b) Time limits on appeals. (1) An appeal must be received by the 
Department within 60 calendar days from the date of the reconsideration 
decision.
    (2) The Department may extend the time limit for filing when the 
individual shows that he or she was not notified of the time limit and 
was not otherwise aware of it, or that he or she was prevented by 
circumstances beyond his or her control from making the request within 
the time limit, or for other good and sufficient reason.
    (c) Final decision. After consideration of the appeal, the 
Department will issue a final decision. The Department's decision will 
be in writing, will fully set forth the Department's findings and 
conclusions on the appeal, and will contain notice of the right to 
judicial review provided in Sec. 29.515. If the Department determines 
that the individual is liable for all or a portion of the overpayment, 
the decision also will contain the conditions for the collection of the 
overpayment. Copies of the final decision will be sent to the individual 
seeking appeal and to the Benefits Administrator.



Sec. 29.514  Requests for waiver and/or compromise.

    (a) Right to request waiver and/or compromise. Individuals who 
receive a demand letter regarding an overpayment may ask the Department 
to waive and/or compromise, in whole or part, the amount of the 
overpayment.
    (b) Requests for reconsideration. Individuals who have filed a 
request for reconsideration under Sec. 29.512 may also request a waiver 
and/or compromise under this section.
    (c) Form and timing of requests for waiver and/or compromise. (1) A 
request for waiver and/or compromise must be in writing and must state 
the basis for the request. Individuals making such requests will be 
given a full opportunity to present any pertinent information and 
documentation supporting their position and should, to the extent 
possible, include such information and documentation in their request. 
Individuals seeking waiver or compromise of an overpayment must also 
submit required financial information identified in the demand letter.
    (2) A request for waiver or compromise must be filed with the 
Department. If the request is sent by mail, it must be postmarked within 
60 calendar days of the date of the demand letter. If the request is 
hand delivered or delivered electronically, it must be received within 
60 calendar days of the date of the demand letter. The Department may 
extend the time limit for filing when the individual shows that he or 
she was not notified of the time limit and was not otherwise aware of 
it, or that he or she was prevented by circumstances beyond his or her 
control from making the request within the time limit, or for other good 
and sufficient reason.
    (3) When a request for waiver and/or compromise under this section 
is properly filed before the death of the debtor, it will be processed 
to completion unless the relief sought is nullified by the debtor's 
death.
    (d) Waiver and/or compromise decisions. (1) The Department's 
decision on a request for waiver and/or compromise will be based upon 
the individual's written submissions, evidence of record, and other 
pertinent available information. An individual's request for waiver will 
be evaluated by the standards set forth in Sec. 29.521 through 
Sec. 29.526. An individual's request for compromise will be evaluated by 
the standards set forth in the FCCS in 31 CFR part 902.
    (2) A waiver or compromise decision by the Department will--
    (i) Be in writing;
    (ii) Provide notice of whether the overpayment will be waived or 
compromised, and the extent to which the individual is still liable for 
the overpayment, if at all;
    (iii) If the individual is determined to be liable for all or a 
portion of the overpayment, reaffirm or modify the conditions for the 
collection of the overpayment previously proposed in the demand letter; 
and
    (iv) Be issued within 120 calendar days from the Department's 
receipt of a timely request for waiver and/or compromise. This time 
limit does not apply

[[Page 312]]

to requests for compromise that are referred to the Department of 
Justice for consideration pursuant to 31 CFR 902.1(b).



Sec. 29.515  Judicial review.

    An individual whose request for reconsideration has been denied (in 
whole or part) in a final decision by the Department under Sec. 29.513 
may, within 180 days of the date of the final decision, file a civil 
action in the United States District Court for the District of Columbia. 
Any such civil action must be filed in accordance with the rules of that 
court.



Sec. 29.516  Collection of overpayments.

    (a) Means of collection. Collection of an overpayment may be made by 
means of offset under Sec. 29.517, or under any statutory provision 
providing for offset of money due the debtor from the Federal Government 
including, but not limited to, Federal Benefit Payments. Collection may 
also be effected by referral to the Justice Department for litigation, 
as provided in Sec. 29.520, or referral to a collection agency as 
provided in Sec. 29.519, or by other means authorized by federal law.
    (b) Additional charges. Interest, penalties, and administrative 
costs will be assessed on the overpayment in accordance with standards 
established in 31 U.S.C. 3717 and 31 CFR 901.9. Additional charges will 
be waived when required by the FCCS. The Department will waive the 
collection of interest on the overpayment pending the Benefits 
Administrator's consideration of a request for reconsideration and the 
Department's consideration of a request for waiver and/or compromise or 
the appeal of a reconsideration decision. In addition, such charges may 
be waived when the Department determines--
    (1) Collection of those charges would be against equity and good 
conscience under the standards prescribed in Secs. 29.523 through 
29.525; or
    (2) Waiver of those charges would be in the best interest of the 
United States.
    (c) Collection in installments. (1) Whenever feasible, overpayments 
will be collected in one lump sum.
    (2) However, installment payments may be effected when--
    (i) The debtor establishes that he or she is financially unable to 
pay in one lump sum; or
    (ii)(A) The benefit payable is insufficient to make collection in 
one lump sum;
    (B) The debtor fails to respond to a demand for full payment; and
    (C) Offset is available.
    (d) Offset Amount. (1) The amount offset from a monthly Federal 
Benefit Payment will be the lesser of:
    (i) The amount of the debt, including any interest, penalties and 
administrative costs;
    (ii) An amount equal to 15 percent of the monthly Federal Benefit 
Payment; or
    (iii) The amount, if any, by which the monthly Federal Benefit 
Payment exceeds $750.
    (2) For purposes of this subsection, the ``monthly Federal Benefit 
Payment'' is the amount of the gross monthly benefit after any 
reductions or deductions required under law, including reductions made 
to recover overpayments of Federal Benefit Payments.
    (e) Commencement of collection. (1) Except as provided in paragraph 
(e)(2) of this section, collection will begin after the time limits for 
requesting further rights stated in Sec. 29.512 through Sec. 29.514 
expire and no such requests have been made, or after the Benefits 
Administrator and/or the Department have issued decisions on all timely 
requests for or appeals of those rights, unless failure to make an 
offset would substantially prejudice the Department's ability to collect 
the overpayment and the time before the payment is to be made does not 
reasonably permit the completion of the proceedings in Sec. 29.511 
through Sec. 29.514 or litigation. When offset begins without completion 
of the administrative review process, these procedures will be completed 
promptly, and amounts recovered by offset but later found not owed will 
be refunded promptly.
    (2) The procedures identified in Sec. 29.511 through Sec. 29.514 
will not be applied when the overpayment is caused by--

[[Page 313]]

    (i) A retroactive adjustment in the periodic rate of annuity or any 
deduction taken from annuity when the adjustment is a result of the 
annuitant's election of different entitlements under law, if the 
adjustment is made within 120 days of the effective date of the 
election; or
    (ii) interim estimated payments made before the formal determination 
of entitlement to annuity, if the amount is recouped from the total 
annuity payable on the first day of the month following the later of--
    (A) The last interim payment or
    (B) The date the formal determination is made.
    (f) Collection of delinquent debts. (1) Debts delinquent over 180 
days. The Benefits Administrator must refer all overpayment debts that 
are over 180 days delinquent to the Secretary for collection pursuant to 
31 U.S.C. 3711(g) and 3716, and 31 CFR part 901.
    (2) Debts delinquent less than 180 days. Once an overpayment debt 
becomes delinquent, the Benefits Administrator should refer it to the 
Secretary for collection by centralized administrative offset pursuant 
to 31 CFR 901.3, unless collection of the debt by some other means is 
likely to occur in a more timely and efficient manner.
    (3) Once a debt is referred under this subsection, the Benefits 
Administrator has no further obligation to collect the debt.



Sec. 29.517  Collection by offset.

    (a) Offset from retirement payments. An overpayment may be collected 
in whole or in part from any refund payment or recurring Federal Benefit 
Payments.
    (b) Offset from other payments--(1) Administrative offset. When 
offset under subsection (a) is not available, an overpayment may be 
offset from other Federal payments due the debtor from other agencies 
under the procedures set forth in 31 CFR part 5 and 31 CFR 901.3(c).
    (2) Salary offset. When the debtor is an employee of the Federal 
Government, the Department may effect collection of an overpayment by 
offset of the debtor's pay in accordance with regulations published to 
implement such offsets under 5 U.S.C. 5514 (see 5 CFR part 550, subpart 
K; 31 CFR 285.7; and 31 CFR Part 5). Due process described in the 
federal salary offset regulations of 31 CFR part 5 will apply. When the 
debtor did not receive a hearing under those regulations and requests 
such a hearing, one will be conducted in accordance with 5 CFR part 550, 
subpart K and 31 CFR part 5.
    (3) Tax refund offset. The Department may effect collection of an 
overpayment by offset of the debtor's tax refund in accordance with the 
Department's tax refund offset regulations found at 31 CFR part 5.



Sec. 29.518  Reporting delinquent debts to credit bureaus.

    (a) Notice. If a debtor's response to the demand letter does not 
result in payment in full, payment by offset, or payment in accordance 
with a voluntary repayment agreement or other repayment schedule 
acceptable to the Benefits Administrator, and the debtor's rights under 
Sec. 29.512 through Sec. 29.514 have been exhausted, the Benefits 
Administrator must report the debtor to a credit bureau. In addition, a 
debtor's failure to make subsequent payments in accordance with a 
repayment schedule must result in a report to a credit bureau. Before 
making a report to a credit bureau, the Benefits Administrator must 
notify the debtor in writing that--
    (1) The payment is overdue;
    (2) The Benefits Administrator intends, after 60 days, to make a 
report as described in paragraph (b) of this section to a credit bureau;
    (3) The debtor's right to dispute the liability has been exhausted 
under Sec. 29.512 through Sec. 29.514; and
    (4) The debtor may avoid having the Benefits Administrator report 
the debtor to a credit bureau by paying the debt in one lump sum or 
making payments current under a repayment schedule.
    (b) Report. If, after being sent the notice described in paragraph 
(a) of this section, the debtor does not pay the overpayment debt or 
make payments current under a repayment schedule or fails to respond to 
the notice, and 60 days have elapsed since the notice was mailed, the 
Benefits Administrator will report to a credit bureau that the

[[Page 314]]

debtor is responsible for an unpaid debt and provide the following 
information:
    (1) The debtor's name, address, taxpayer identification number, and 
any other information necessary to establish the identity of the 
individual;
    (2) The amount, status, and history of the debt; and
    (3) The fact that the debt arose in connection with the 
administration of Federal Benefit Payments under a District Retirement 
Fund.
    (c) Subsequent reports. The Benefits Administrator must update its 
report to the credit bureau whenever it has knowledge of events that 
substantially change the status or the amount of the liability.
    (d) Other reporting of delinquent debts. Pursuant to 31 CFR 901.4, 
delinquent overpayment debts should be reported to the Department of 
Housing and Urban Development's Credit Alert Interactive Voice Response 
System (CAIVRS).
    (e) Privacy Act considerations. A delinquent debt may not be 
reported under this section unless a notice issued pursuant to the 
Privacy Act, 5 U.S.C. 552a(e)(4), authorizes the disclosure of 
information about the debtor to a credit bureau or CAIVRS.



Sec. 29.519  Referral to a collection agency.

    (a) The Department retains the responsibility for resolving 
disputes, compromising debts, referring overpayment debts for 
litigation, and suspending or terminating collection action.
    (b) The Department may not refer overpayment debts to commercial 
collection agencies until all procedures required by or requested under 
Sec. 29.511 through Sec. 29.514 have been completed.



Sec. 29.520  Referral for litigation.

    The Department may refer to the Justice Department for litigation 
overpayment debts which cannot be compromised or waived, or on which 
collection activity cannot be suspended or terminated, and which the 
Department has been unable to recover pursuant to the collection 
activity described in Sec. 29.511 through Sec. 29.519. (See 31 CFR part 
904.) Such debts should be referred to the Justice Department as early 
as possible, but at least within 1 year of the date such debts last 
became delinquent. In the case of overpayments arising from fraud, 
misrepresentation, or the presentation of a false claim, referral should 
be made to the Justice Department immediately. (See 31 CFR 900.3(a).) 
Referral of a debt to the Justice Department will suspend processing 
under Sec. 29.511 through Sec. 29.519 of this subpart.

                  Standards for Waiver of Overpayments



Sec. 29.521  Conditions for waiver and other adjustments.

    (a) General. Overpayments made from the Retirement Funds will be 
recovered unless there is substantial evidence that the individual from 
whom recovery is to be made is eligible for waiver.
    (b) Waiver. The Department may waive an overpayment from the 
Retirement Funds (provided there is no indication of fraud, 
misrepresentation, or lack of good faith on the part of the debtor) 
under sections 11021(3) or 11251(c)(2)(B) of the Act when it is 
established by substantial evidence that the individual from whom 
recovery is to be made--
    (1) Is not at fault in causing or contributing to the overpayment, 
and
    (2) Recovery would be against equity and good conscience.
    (c) Adjustment in the installment schedule. (1)(i) An overpayment 
will not be waived because of financial hardship if a reasonable 
installment schedule can be established for repayment of the debt by 
adjusting the installment schedule originally established.
    (ii) For example, if the Department finds that the original 
installment schedule--24 installments at $125 each--causes the debtor 
financial hardship, but that repayment in 60 installments at $50 each 
does not, it may adjust the installments and recover the debt in full.
    (2) Where it has been determined that an individual is ineligible 
for a waiver, but the individual has shown that collection action 
pursuant to the original installment schedule would cause him or her 
financial hardship, the Department may--

[[Page 315]]

    (i) Adjust the installment schedule if the individual shows that it 
would cause him or her financial hardship to make payments at the rate 
initially scheduled by the Department; or
    (ii) Terminate the collection action under 31 CFR 903.3 if the costs 
of collecting the debt are anticipated to exceed the amount recoverable.



Sec. 29.522  Fault.

    (a) General rule. A debtor is considered to be at fault if he or 
she, or any other person having an interest in obtaining a waiver of the 
claim, caused or contributed to the accrual of the overpayment. The 
Department considers a debtor or any other person having an interest in 
obtaining a waiver of the claim to have caused or contributed to the 
accrual of an overpayment if--
    (1) Payment resulted from the individual's incorrect but not 
fraudulent statement, which the individual knew or should have known to 
be incorrect; or
    (2) Payment resulted from the individual's failure to disclose facts 
in his or her possession which the individual knew or should have known 
were material, when the Department has identified that the individual 
has a duty to report and has clearly notified the individual of this 
reporting requirement.
    (3) The following factors may affect the decision as to whether the 
debtor is or is not at fault where the debtor submitted an incorrect 
statement, or the debtor failed to disclose material facts in his or her 
possession--
    (i) The debtor's age;
    (ii) The debtor's physical and/or mental condition; and
    (iii) The availability and nature of the information provided to the 
debtor by the Department.
    (b) Knowledge of an overpayment. (1) Individuals who are aware that 
they are not entitled to a payment or are aware that a payment is higher 
than the payment to which they are entitled are not considered to have 
contributed to the overpayment if they promptly contact the Benefits 
Administrator and question the correctness of the payment and take no 
further action in reliance of the overpayment.
    (2) Any contact made with the Benefits Administrator concerning the 
overpayment within 60 days of receipt (if the overpayment is a recurring 
payment, contact must be made within 60 days of the initial payment) 
will satisfy the prompt notification requirement.
    (c) Reasonable person standard. The Department will use a reasonable 
person standard to determine whether an individual should have known 
that a statement was incorrect or that material facts in the 
individual's possession should have been disclosed. The reasonable 
person standard will take into account the objective factors set forth 
is paragraph (a)(3) of this section.



Sec. 29.523  Equity and good conscience.

    Recovery is against equity and good conscience when there is 
substantial evidence that--
    (a) It would cause financial hardship to the person from whom it is 
sought no matter what the amount and length of the proposed installment;
    (b) The recipient of the overpayment can show (regardless of his or 
her financial circumstances) that due to the notice that such payment 
would be made or because of the incorrect payment he or she either has 
relinquished a valuable right or has changed positions for the worse; or
    (c) Recovery would be unconscionable under the circumstances.



Sec. 29.524  Financial hardship.

    Financial hardship may be deemed to exist when the debtor needs 
substantially all of his or her current and anticipated income and 
liquid assets to meet current and anticipated ordinary and necessary 
living expenses during the projected period of collection. Financial 
hardship will not be found to exist when the debtor merely establishes 
that the repayment causes a financial burden, i.e., when it is 
inconvenient to repay the debt. If there are anticipated changes in 
income or expenses that would allow for the recovery of the overpayment 
at a later date, the Department may suspend collection action until a 
future date.
    (a) Considerations. Pertinent considerations in determining whether 
recovery would cause financial hardship include the following:

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    (1) The debtor's financial ability to pay at the time collection is 
scheduled to be made, and
    (2) Income to other family member(s), if such member's ordinary and 
necessary living expenses are included in expenses reported by the 
debtor.



Sec. 29.525  Ordinary and necessary living expenses.

    An individual's ordinary and necessary living expenses include rent, 
mortgage payments, utilities, maintenance, transportation, food, 
clothing, insurance (life, health, and accident), taxes, installment 
payments for which the individual is already liable, medical expenses, 
support expenses for which the individual is legally responsible, and 
other miscellaneous expenses that the individual can establish as being 
ordinary and necessary.



Sec. 29.526  Waiver precluded.

    Waivers will not be offered or granted when--
    (1) The overpayment was obtained by fraud, misrepresentation, or by 
improper negotiation of checks or withdrawal of electronic fund transfer 
payments after the death of the payee; or
    (2) The overpayment was made to an estate and a timely demand for 
repayment is made prior to the final disbursement by the administrator 
or executor of the estate.

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          Subtitle B--Regulations Relating to Money and Finance

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