5 U.S.C. § 8438 — Investment of Thrift Savings Fund

(a) Definitions. This subsection defines terms used in the rest of the section: - "Common Stock Index Investment Fund" means the fund set up under (b)(1)(C). - "Equity capital" means common and preferred stock, surplus, undivided profits, contingency reserves, and other capital reserves. - "Fixed Income Investment Fund" means the fund set up under (b)(1)(B). - "Government Securities Investment Fund" means the fund set up under (b)(1)(A). - "International Stock Index Investment Fund" means the fund set up under (b)(1)(E). - "Net worth" means capital, paid-in and contributed surplus, unassigned surplus, contingency reserves, group contingency reserves, and special reserves. - "Plan" means an employee benefit plan as defined in ERISA (29 U.S.C. section 1002(3)). - "Qualified professional asset manager" means one of four kinds of financial institutions that meet size and licensing tests: (A) a bank (as defined in the Investment Advisers Act) with power to manage plan assets and equity capital over $1,000,000; (B) an FDIC-insured savings and loan with trust powers granted by a state or government regulator, and equity capital or net worth over $1,000,000; (C) an insurance company licensed in more than one state to manage plan assets, with net worth over $1,000,000, and subject to state insurance regulation; or (D) a registered investment adviser managing over $50,000,000 in client assets, that either has shareholder or partner equity over $750,000 itself, or has its liabilities fully guaranteed by a large affiliated company, another qualified manager, or a well-capitalized broker-dealer. - "Shareholder's or partner's equity" (for the investment-adviser test) means the equity shown on the most recent balance sheet prepared under standard accounting rules, within 2 years before the manager's status is being determined. - "Small Capitalization Stock Index Investment Fund" means the fund set up under (b)(1)(D). (b) Setting up the funds. (1) The Board must create: (A) a Government Securities Investment Fund, invested in U.S. government securities issued under subsection (e); (B) a Fixed Income Investment Fund, invested in insurance contracts, certificates of deposit, or other interest-paying instruments chosen by qualified professional asset managers; (C) a Common Stock Index Investment Fund; (D) a Small Capitalization Stock Index Investment Fund; (E) an International Stock Index Investment Fund; and (F) if the Board authorizes it under paragraph (5), a "mutual fund window" letting participants invest in outside mutual funds. (2) For the Common Stock fund: (A) the Board picks a widely recognized stock index that reasonably represents the whole U.S. equity market; (B) the fund's portfolio must be built to track that index, matching each stock's percentage weight to its share of the index's total market value, as closely as practical. (3) For the Small Capitalization fund: (A) the Board picks an index representing the U.S. equity market excluding the stocks already in the Common Stock fund; (B) same index-tracking design rule as above. (4) For the International fund: (A) the Board picks an index representing international equity markets excluding the U.S.; (B) same index-tracking design rule. (5)(A) The Board may add a mutual fund window if it decides that's in participants' best interests. (B) Any extra costs of the window must be paid only by the participants who use it. (C) The Board can set other terms for the window, including risk-disclosure requirements, to protect participants. (D) The Board must consult the Employee Thrift Advisory Council before adding a mutual fund window or a mutual-fund-investing service. (c) How money gets invested. (1) The Executive Director invests available Fund money according to the elections described in subsection (d). (2) If someone hasn't made an election, the Executive Director must invest their money in an age-appropriate target date fund (made up of a mix of the funds described in subsection (b)), as the Executive Director determines is appropriate for their age. (d) Making investment elections. (1) At least twice a year, an employee or Member (or former employee/Member) can choose which of the funds and options in subsection (b) their account money is invested or reinvested in. (2) These elections can only be made following Executive Director regulations, within whatever time window those regulations set. (e) Special Treasury bonds for the government fund. (1) The Treasury Secretary can issue special interest-bearing U.S. bonds for the Government Securities Investment Fund to buy. (2)(A) These bonds' maturities are set based on the Fund's needs (as the Executive Director determines), and they pay interest at a rate equal to the average market yield on all marketable U.S. bonds, computed from market data as of the end of the previous month, that aren't due or callable for at least 4 years. (B) Any resulting yield that isn't an exact multiple of one-eighth of one percent gets rounded to the nearest eighth of a percent. (f) No voting rights. Neither the Board, other government agencies, the Executive Director, nor any employee, Member, former employee, or former Member may vote the shares of stock the Fund owns. (g) Debt-limit suspension protections. (1) Despite subsection (e), the Treasury Secretary can pause issuing new bonds to the Fund if issuing them would push the total public debt over the legal debt limit. (2) Any bonds that couldn't be issued solely because of the debt limit must be issued as soon as the debt limit allows. (3) Once the suspension period ends, the Treasury Secretary must immediately issue bonds, with whatever interest rates and maturities are needed, so that the Fund ends up holding exactly the bonds it would have held if the suspension had never happened. (4) On the first business day after a suspension period ends, the Treasury Secretary must pay the Fund, from the Treasury's general fund, the difference between (A) the interest the Fund would have earned if the un-issued bonds had actually been invested as planned, and (B) the interest the Fund actually earned instead. (5) Every business day during the suspension, the Executive Director must tell the Treasury Secretary what investments or redemptions would have happened that day if there'd been no suspension. (6) For this subsection and subsection (h): "public debt limit" means the cap set in section 3101(b) of title 31, and "debt issuance suspension period" means any period during which the Treasury Secretary determines that issuing more bonds would break that cap. (h) Reporting to Congress. (1) The Treasury Secretary must report to Congress on the Fund's status during any debt issuance suspension period requiring action under subsection (g)(3) or (4). The report is due within 30 days after the first business day after the suspension ends, and a copy must go to the Executive Director too. (2) Whenever the Treasury Secretary determines that the debt limit will keep them from fully following subsection (e), they must immediately notify Congress and the Executive Director in writing.