US Laws, Codes, Statutes & Cases

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[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
  January 24, 2002 and December 19, 2002]
[CITE: 5USC8438]

 
             TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
 
                           PART III--EMPLOYEES
 
                   Subpart G--Insurance and Annuities
 
            CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
 
                   SUBCHAPTER III--THRIFT SAVINGS PLAN
 
Sec. 8438. Investment of Thrift Savings Fund

    (a) For the purposes of this section--
        (1) the term ``Common Stock Index Investment Fund'' means the 
    Common Stock Index Investment Fund established under subsection 
    (b)(1)(C);
        (2) the term ``equity capital'' means common and preferred 
    stock, surplus, undivided profits, contingency reserves, and other 
    capital reserves;
        (3) the term ``Fixed Income Investment Fund'' means the Fixed 
    Income Investment Fund established under subsection (b)(1)(B);
        (4) the term ``Government Securities Investment Fund'' means the 
    Government Securities Investment Fund established under subsection 
    (b)(1)(A);
        (5) the term ``International Stock Index Investment Fund'' means 
    the International Stock Index Investment Fund established under 
    subsection (b)(1)(E);
        (6) the term ``net worth'' means capital, paid-in and 
    contributed surplus, unassigned surplus, contingency reserves, group 
    contingency reserves, and special reserves;
        (7) the term ``plan'' means an employee benefit plan, as defined 
    in section 3(3) of the Employee Retirement Income Security Act of 
    1974 (29 U.S.C. 1002(3));
        (8) the term ``qualified professional asset manager'' means--
            (A) a bank, as defined in section 202(a)(2) of the 
        Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(2)) which--
                (i) has the power to manage, acquire, or dispose of 
            assets of a plan; and
                (ii) has, as of the last day of its latest fiscal year 
            ending before the date of a determination for the purpose of 
            this clause, equity capital in excess of $1,000,000;

            (B) a savings and loan association, the accounts of which 
        are insured by the Federal Deposit Insurance Corporation, 
        which--
                (i) has applied for and been granted trust powers to 
            manage, acquire, or dispose of assets of a plan by a State 
            or Government authority having supervision over savings and 
            loan associations; and
                (ii) has, as of the last day of its latest fiscal year 
            ending before the date of a determination for the purpose of 
            this clause, equity capital or net worth in excess of 
            $1,000,000;

            (C) an insurance company which--
                (i) is qualified under the laws of more than one State 
            to manage, acquire, or dispose of any assets of a plan;
                (ii) has, as of the last day of its latest fiscal year 
            ending before the date of a determination for the purpose of 
            this clause, net worth in excess of $1,000,000; and
                (iii) is subject to supervision and examination by a 
            State authority having supervision over insurance companies; 
            or

            (D) an investment adviser registered under section 203 of 
        the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) if the 
        investment adviser has, on the last day of its latest fiscal 
        year ending before the date of a determination for the purpose 
        of this subparagraph, total client assets under its management 
        and control in excess of $50,000,000, and--
                (i) the investment adviser has, on such day, 
            shareholder's or partner's equity in excess of $750,000; or
                (ii) payment of all of the investment adviser's 
            liabilities, including any liabilities which may arise by 
            reason of a breach or violation of a duty described in 
            section 8477 of this title, is unconditionally guaranteed 
            by--
                    (I) a person (as defined in section 8471(4) of this 
                title) who directly or indirectly, through one or more 
                intermediaries, controls, is controlled by, or is under 
                common control with the investment adviser and who has, 
                on the last day of the person's latest fiscal year 
                ending before the date of a determination for the 
                purpose of this clause, shareholder's or partner's 
                equity in an amount which, when added to the amount of 
                the shareholder's or partner's equity of the investment 
                adviser on such day, exceeds $750,000;
                    (II) a qualified professional asset manager 
                described in subparagraph (A), (B), or (C); or
                    (III) a broker or dealer registered under section 15 
                of the Securities Exchange Act of 1934 (15 U.S.C. 78o) 
                that has, on the last day of the broker's or dealer's 
                latest fiscal year ending before the date of a 
                determination for the purpose of this clause, net worth 
                in excess of $750,000;

        (9) the term ``shareholder's or partner's equity'', as used in 
    paragraph (8)(D) with respect to an investment adviser or a person 
    (as defined in section 8471(4) of this title) who is affiliated with 
    the investment adviser in a manner described in clause (ii)(I) of 
    such paragraph (8)(D), means the equity shown in the most recent 
    balance sheet prepared for such investment adviser or affiliated 
    person, in accordance with generally accepted accounting principles, 
    within 2 years before the date on which the investment adviser's 
    status as a qualified professional asset manager is determined for 
    the purposes of this section; and
        (10) the term ``Small Capitalization Stock Index Investment 
    Fund'' means the Small Capitalization Stock Index Investment Fund 
    established under subsection (b)(1)(D).

    (b)(1) The Board shall establish--
        (A) a Government Securities Investment Fund under which sums in 
    the Thrift Savings Fund are invested in securities of the United 
    States Government issued as provided in subsection (e);
        (B) a Fixed Income Investment Fund under which sums in the 
    Thrift Savings Fund are invested in--
            (i) insurance contracts;
            (ii) certificates of deposits; or
            (iii) other instruments or obligations selected by qualified 
        professional asset managers,

    which return the amount invested and pay interest, at a specified 
    rate or rates, on that amount during a specified period of time;
        (C) a Common Stock Index Investment Fund as provided in 
    paragraph (2);
        (D) a Small Capitalization Stock Index Investment Fund as 
    provided in paragraph (3); and
        (E) an International Stock Index Investment Fund as provided in 
    paragraph (4).

    (2)(A) The Board shall select an index which is a commonly 
recognized index comprised of common stock the aggregate market value of 
which is a reasonably complete representation of the United States 
equity markets.
    (B) The Common Stock Index Investment Fund shall be invested in a 
portfolio designed to replicate the performance of the index selected 
under subparagraph (A). The portfolio shall be designed such that, to 
the extent practicable, the percentage of the Common Stock Index 
Investment Fund that is invested in each stock is the same as the 
percentage determined by dividing the aggregate market value of all 
shares of that stock by the aggregate market value of all shares of all 
stocks included in such index.
    (3)(A) The Board shall select an index which is a commonly 
recognized index comprised of common stock the aggregate market value of 
which represents the United States equity markets excluding the common 
stocks included in the Common Stock Index Investment Fund.
    (B) The Small Capitalization Stock Index Investment Fund shall be 
invested in a portfolio designed to replicate the performance of the 
index in subparagraph (A). The portfolio shall be designed such that, to 
the extent practicable, the percentage of the Small Capitalization Stock 
Index Investment Fund that is invested in each stock is the same as the 
percentage determined by dividing the aggregate market value of all 
shares of that stock by the aggregate market value of all shares of all 
stocks included in such index.
    (4)(A) The Board shall select an index which is a commonly 
recognized index comprised of stock the aggregate market value of which 
is a reasonably complete representation of the international equity 
markets excluding the United States equity markets.
    (B) The International Stock Index Investment Fund shall be invested 
in a portfolio designed to replicate the performance of the index in 
subparagraph (A). The portfolio shall be designed such that, to the 
extent practicable, the percentage of the International Stock Index 
Investment Fund that is invested in each stock is the same as the 
percentage determined by dividing the aggregate market value of all 
shares of that stock by the aggregate market value of all shares of all 
stocks included in such index.
    (c)(1) The Executive Director shall invest the sums available in the 
Thrift Savings Fund for investment as provided in elections made under 
subsection (d).
    (2) If an election has not been made with respect to any sums in the 
Thrift Savings Fund available for investment, the Executive Director 
shall invest such sums in the Government Securities Investment Fund.
    (d)(1) At least twice each year, an employee or Member (or former 
employee or Member) may elect the investment funds referred to in 
subsection (b) into which the sums in the Thrift Savings Fund credited 
to such individual's account are to be invested or reinvested.
    (2) An election may be made under paragraph (1) only in accordance 
with regulations prescribed by the Executive Director and within such 
period as the Executive Director shall provide in such regulations.
    (e)(1) The Secretary of the Treasury is authorized to issue special 
interest-bearing obligations of the United States for purchase by the 
Thrift Savings Fund for the Government Securities Investment Fund.
    (2)(A) Obligations issued for the purpose of this subsection shall 
have maturities fixed with due regard to the needs of such Fund as 
determined by the Executive Director, and shall bear interest at a rate 
equal to the average market yield (computed by the Secretary of the 
Treasury on the basis of market quotations as of the end of the calendar 
month next preceding the date of issue of such obligations) on all 
marketable interest-bearing obligations of the United States then 
forming a part of the public debt which are not due or callable earlier 
than 4 years after the end of such calendar month.
    (B) Any average market yield computed under subparagraph (A) which 
is not a multiple of one-eighth of 1 percent, shall be rounded to the 
nearest multiple of one-eighth of 1 percent.
    (f) The Board, other Government agencies, the Executive Director, an 
employee, a Member, a former employee, and a former Member may not 
exercise voting rights associated with the ownership of securities by 
the Thrift Savings Fund.
    (g)(1) Notwithstanding subsection (e) of this section, the Secretary 
of the Treasury may suspend the issuance of additional amounts of 
obligations of the United States, if such issuances could not be made 
without causing the public debt of the United States to exceed the 
public debt limit, as determined by the Secretary of the Treasury.
    (2) Any issuances of obligations to the Government Securities 
Investment Fund which, solely by reason of the public debt limit are not 
issued, shall be issued under subsection (e) by the Secretary of the 
Treasury as soon as such issuances can be issued without exceeding the 
public debt limit.
    (3) Upon expiration of the debt issuance suspension period, the 
Secretary of the Treasury shall immediately issue to the Government 
Securities Investment Fund obligations under chapter 31 of title 31 that 
(notwithstanding subsection (e)(2) of this section) bear such interest 
rates and maturity dates as are necessary to ensure that, after such 
obligations are issued, the holdings of obligations of the United States 
by the Government Securities Investment Fund will replicate the 
obligations that would then be held by the Government Securities 
Investment Fund under the procedure set forth in paragraph (5), if the 
suspension of issuances under paragraph (1) of this subsection had not 
occurred.
    (4) On the first business day after the expiration of any debt 
issuance suspension period, the Secretary of the Treasury shall pay to 
the Government Securities Investment Fund, from amounts in the general 
fund of the Treasury of the United States not otherwise appropriated, an 
amount equal to the excess of the net amount of interest that would have 
been earned by the Government Securities Investment Fund from 
obligations of the United States during such debt issuance suspension 
period if--
        (A) amounts in the Government Securities Investment Fund that 
    were available for investment in obligations of the United States 
    and were not invested during such debt issuance suspension period 
    solely by reason of the public debt limit had been invested under 
    the procedure set forth in paragraph (5), over
        (B) the net amount of interest actually earned by the Government 
    Securities Investment Fund from obligations of the United States 
    during such debt issuance suspension period.

    (5) On each business day during the debt limit suspension period, 
the Executive Director shall notify the Secretary of the Treasury of the 
amounts, by maturity, that would have been invested or redeemed each day 
had the debt issuance suspension period not occurred.
    (6) For purposes of this subsection and subsection (h) of this 
section--
        (A) the term ``public debt limit'' means the limitation imposed 
    by section 3101(b) of title 31; and
        (B) the term ``debt issuance suspension period'' means any 
    period for which the Secretary of the Treasury determines for 
    purposes of this subsection that the issuance of obligations of the 
    United States may not be made without exceeding the public debt 
    limit.

    (h)(1) The Secretary of the Treasury shall report to Congress on the 
operation and status of the Thrift Savings Fund during each debt 
issuance suspension period for which the Secretary is required to take 
action under paragraph (3) or (4) of subsection (g) of this section. The 
report shall be submitted as soon as possible after the expiration of 
such period, but not later than 30 days after the first business day 
after the expiration of such period. The Secretary shall concurrently 
transmit a copy of such report to the Executive Director.
    (2) Whenever the Secretary of the Treasury determines that, by 
reason of the public debt limit, the Secretary will be unable to fully 
comply with the requirements of subsection (e) of this section, the 
Secretary shall immediately notify Congress and the Executive Director 
of the determination. The notification shall be made in writing.

(Added Pub. L. 99-335, title I, Sec. 101(a), June 6, 1986, 100 Stat. 
551; amended Pub. L. 100-43, Sec. 2, May 22, 1987, 101 Stat. 315; Pub. 
L. 100-366, Sec. 2(a), July 13, 1988, 102 Stat. 826; Pub. L. 101-335, 
Sec. 3(a), July 17, 1990, 104 Stat. 320; Pub. L. 102-378, Sec. 2(68), 
Oct. 2, 1992, 106 Stat. 1355; Pub. L. 104-208, div. A, title I, 
Sec. 101(f) [title VI, Sec. 659 [title I, Sec. 102]], Sept. 30, 1996, 
110 Stat. 3009-314, 3009-372; Pub. L. 104-316, title I, Sec. 103(i), 
Oct. 19, 1996, 110 Stat. 3829.)


                               Amendments

    1996--Subsec. (a). Pub. L. 104-208, Sec. 101(f) [title VI, Sec. 659 
[title I, Sec. 102(1)]], added par. (5), redesignated former pars. (5) 
to (8) as (6) to (9), respectively, in par. (9) substituted ``paragraph 
(8)(D)'' for ``paragraph (7)(D)'' in two places, and added par. (10).
    Subsec. (b). Pub. L. 104-208, Sec. 101(f) [title VI, Sec. 659 [title 
I, Sec. 102(2)]], in par. (1) added subpars. (D) and (E) and added pars. 
(3) and (4).
    Subsec. (h)(1). Pub. L. 104-316 struck out ``and the Comptroller 
General of the United States'' before period at end.
    1992--Subsec. (a)(7)(B). Pub. L. 102-378 substituted ``Deposit'' for 
``Savings and Loan''.
    1990--Subsec. (b)(1)(A). Pub. L. 101-335, Sec. 3(a)(2), substituted 
``subsection (e)'' for ``subsection (f)''.
    Subsec. (c)(1). Pub. L. 101-335, Sec. 3(a)(3), substituted ``The'' 
for ``Subject to subsection (e), the''.
    Subsec. (d)(1). Pub. L. 101-335, Sec. 3(a)(4), struck out ``and not 
subject to subsection (e)'' after ``individual's account''.
    Subsec. (e). Pub. L. 101-335, Sec. 3(a)(1), redesignated subsec. (f) 
as (e) and struck out former subsec. (e) which related to minimum 
percentages to be invested in Government Securities Investment Fund and 
limitations on reinvestment of sums invested in Government Securities 
Investment Fund prior to years 1992 and 1997.
    Subsec. (f). Pub. L. 101-335, Sec. 3(a)(1), redesignated subsec. (g) 
as (f). Former subsec. (f) redesignated (e).
    Subsec. (g). Pub. L. 101-335, Sec. 3(a)(1), (5), (6), redesignated 
subsec. (h) as (g) and substituted ``subsection (e)'' for ``subsection 
(f)'' in pars. (1) and (2), ``subsection (e)(2)'' for ``subsection 
(f)(2)'' in par. (3), and ``subsection (h)'' for ``subsection (i)'' in 
par. (6). Former subsec. (g) redesignated (f).
    Subsecs. (h), (i). Pub. L. 101-335, Sec. 3(a)(1), (7), redesignated 
subsec. (i) as (h) and substituted ``subsection (g)'' for ``subsection 
(h)'' in par. (1) and ``subsection (e)'' for ``subsection (f)'' in par. 
(2). Former subsec. (h) redesignated (g).
    1988--Subsec. (e)(3)(A). Pub. L. 100-366 struck out ``and the 
earnings attributable to the investment of such sums'' after ``paragraph 
(1)''.
    1987--Subsecs. (h), (i). Pub. L. 100-43 added subsecs. (h) and (i).


                    Effective Date of 1996 Amendment

    Section 101(f) [title VI, Sec. 659 [title I, Sec. 104]] provided 
that: ``This title [title I (Secs. 101-104) of section 659 of section 
101(f) of Pub. L. 104-208, amending this section and section 8439 of 
this title and enacting provisions set out as a note under section 8401 
of this title] shall take effect on the date of enactment of this Act 
[Sept. 30, 1996], and the Funds established under this title shall be 
offered for investment at the earliest practicable election period 
(described in section 8432(b) of title 5, United States Code) as 
determined by the Executive Director in regulations.''


                    Effective Date of 1990 Amendment

    Amendment by Pub. L. 101-335 effective as of second election period 
described in section 8432(b) of this title beginning after July 17, 
1990, or as of such earlier date as Executive Director may by regulation 
prescribe, see section 3(c) of Pub. L. 101-335, set out as a note under 
section 8351 of this title.


                    Effective Date of 1988 Amendment

    Section 2(b) of Pub. L. 100-366 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply with respect to 
earnings attributable to contributions made to the Thrift Savings Fund 
on or after April 1, 1987.''


                   Removal of Investment Restrictions

    Section 3(b)(4) of Pub. L. 101-335 provided that: ``Any other 
provision of law, in effect on the date of enactment of this Act [July 
17, 1990], which provides that any amounts contributed to the Thrift 
Savings Fund, or earnings thereon, may be invested or reinvested only in 
the Government Securities Investment Fund established under section 
8438(b)(1)(A) of title 5, United States Code, shall cease to be 
effective.''

                  Section Referred to in Other Sections

    This section is referred to in sections 8437, 8439, 8472, 8477 of 
this title.