(a) In the case of a participant who has not separated from Government service, loan payments must be made through payroll deduction in accordance with the loan agreement. Once loan payments begin, the employing agency cannot terminate the payroll deductions at the employee's request, unless the TSP or its record keeper instructs it to do so.

(b) The participant may make additional payments by mailing a check or guaranteed funds to the TSP record keeper or by enrolling in loan direct debit repayments from his or her personal savings or checking account. If the TSP record keeper receives a payment that repays the outstanding loan amount and overpays the loan by $10.00 or more, the overpayment will be refunded to the participant. Overpayments of less than $10.00 will be applied to the participant's account and will not be refunded. If a loan overpayment refund is returned as undeliverable, the TSP record keeper will attempt to locate the participant. If the participant does not respond within 90 days, the overpayment refund will be forfeited to the TSP. The participant can claim the forfeited funds, although they will not be credited with TSP investment fund returns.

(c) The initial payment on a loan is due on or before the 60th day following the loan issue date. Interest accrues on the loan from the date of issuance.

(d) Subsequent payments are due at regular intervals as prescribed in the loan agreement, or most recent amortization, according to the participant's pay cycle.

(e) Missed payment. In the case of a participant who has not separated from Government service, if a payment is not made when due, the TSP record keeper will notify the participant of the missed payment.

(1) Making up the missed payment. The participant may make up the missed payment using one of the following methods:

(i) A personal check,

(ii) Guaranteed funds, or

(iii) Direct debit.

(2) Deemed distribution. If the participant has not made a payment in accordance with paragraph (e)(1) of this section and has not resumed payroll deductions by the end of the cure period described in § 1655.1, the TSP record keeper will declare the loan to be a deemed distribution in accordance with § 1655.15(a).

(3) Resuming payroll deductions. When payroll deductions resume, the first deduction shall be applied to the earliest missed payment. Each subsequent regularly scheduled deduction shall be applied to the next missed payment. This process shall continue on a rolling basis, such that the participant remains behind in payments until:

(i) A make up payment is submitted for each missed payment in accordance with paragraph (e)(1) of this section;

(ii) The loan reaches its maximum term and a deemed distribution of the remaining missed payment(s) is declared under § 1655.15(a); or

(iii) Additional missed payments trigger a deemed distribution under § 1655.15(a).

(f) Interest will accrue on all missed payments and will be included in the calculation of any deemed distribution subsequently declared in accordance with § 1655.15(a). Interest will also accrue on payments missed while a participant is in nonpay status and on any deemed distribution until it is repaid in full.

(g) A participant who has separated from Government service with an outstanding loan balance may continue making loan repayments via check, guaranteed funds, or loan direct debit repayments. If a separated participant does not begin making post-separation loan repayments or pay off the loan in full by the deadline imposed by the TSP record keeper, the TSP record keeper will declare the outstanding loan balance and accrued interest to be a loan offset in accordance with § 1655.15(b). In the case of a separated participant who commences post-separation loan repayments, if a payment is not made when due, the TSP record keeper will notify the separated participant of the missed payment and he or she must make up the payment in full. The make-up payment must be in the form of a check, guaranteed funds, or a one-time payment via loan direct debit from his or her personal savings or checking account. If the participant does not make up all missed payments by the end of the cure period described in § 1655.1, the TSP record keeper will declare the outstanding loan balance and accrued interest to be a loan offset in accordance with § 1655.15(b).