The Federal Retirement Thrift Investment Board (FRTIB) is proposing a change to the rules about how loans from the Thrift Savings Plan are managed. Currently, any interest that has already been collected on a loan must be paid off before payments can be made toward the principal and current interest. The new rule suggests that the interest be added to the principal when recalculating the loan, making the process more in line with the practices used for similar private-sector plans. This change will not significantly impact small entities or require additional reporting.
Simple Explanation
The Federal Retirement Thrift Investment Board wants to change a rule so that when people pay back their retirement plan loans, they put any extra interest together with the unpaid money, like stacking blocks, to make it easier for them to pay it all back.