THRIFT SAVINGS FUND 

Washington, DC 

FINANCIAL STATEMENTS 

December 31, 2016 and 2015 
TABLE OF CONTENTS 

PAGE 

INDEPENDENT AUDITORS’ REPORT .......................................................................................1 

FINANCIAL STATEMENTS.............................................................................................................3

Statements of Net Assets Available for Benefits .............................................................................4

Statements of Changes in Net Assets Available for Benefits ..........................................................5 

Notes to Financial Statements ..........................................................................................................6 

Appendix 1 ...............................................................................................................................14 

Appendix 2 ...............................................................................................................................15 
1

CliftonLarsonAllen LLP

CLAconnect.com

Independent Auditors’ Report

Members of the Board and Executive Director 

Federal Retirement Thrift Investment Board 

Washington, DC 

We have audited the accompanying financial statements of Thrift Savings Fund (the “Fund”), which 

comprise the statements of net assets available for benefits as of December 31, 2016 and 2015, and 

the related statements of changes in net assets available for benefits for the years then ended, and the 

related notes to the financial statements. 

Management's Responsibility for the Financial Statements

Plan management is responsible for the preparation and fair presentation of these financial 

statements in accordance with accounting principles generally accepted in the United States of 

America; this includes the design, implementation, and maintenance of internal control relevant to 

the preparation and fair presentation of financial statements that are free from material misstatement, 

whether due to fraud or error. 

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We 

conducted our audits in accordance with auditing standards generally accepted in the United States 

of America. Those standards require that we plan and perform the audit to obtain reasonable 

assurance about whether the financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures 

in the financial statements. The procedures selected depend on the auditors’ judgment, including the 

assessment of the risks of material misstatement of the financial statements, whether due to fraud or 

error. In making those risk assessments, the auditor considers internal control relevant to the Fund's 

preparation and fair presentation of the financial statements in order to design audit procedures that 

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the 

effectiveness of the Fund's internal control. Accordingly, we express no such opinion. An audit also 

includes evaluating the appropriateness of accounting policies used and the reasonableness of 

significant accounting estimates made by management, as well as evaluating the overall presentation 

of the financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis 

for our audit opinion.
2 

Opinion 

In our opinion, the financial statements referred to above present fairly, in all material respects, 

the net assets available for benefits of the Fund as of December 31, 2016 and 2015, and the 

changes in its net assets available for benefits for the years then ended in accordance with 

a 

accounting principles generally accepted in the United States of America. 

Baltimore, Maryland 

April 13, 2017 
3 

FINANCIAL STATEMENTS 
4 

2016 2015

ASSETS:

 Investments, at fair value: $495,351,668 $458,272,351

 Receivables:

 Employer contributions 332,555 316,816

 Participant contributions 861,564 813,580

 Notes receivable from participants (loans) 8, 8, 985,195 822,149

 Accrued interest 14,666 -

 Due for securities sold 42,870 100,131 

 Total receivables 10, 9, 294,111 995,415

 Fixed assets: 

 Furniture, equipment, and leasehold improvements,

 net of accumulated depreciation and amortization

 of $33,708 in 2016 and $30,414 in 2015 3,823 7,406 

 Data processing software, net of accumulated

 amortization of $57,989 in 2016 and $56,444 in 2015 5,808 2,087 

 Total fixed assets 9,493 9,631 

 Other assets 174 6 

 Total assets 505,655,584 468,277,265

LIABILITIES:

 Accounts payable 30,526 13,207 

 Accrued payroll and benefits 3,169 2,783 

 Benefits and notes receivable from participants payable 130,522 127,226

 Deferred rent and lease credits 8,657 8,601 

 Due for securities purchased 190,724 152,899

 Cash collateral payable 22,000,000 24, 799,000

 Total liabilities 22, 25, 363,598 103,716

FUNDS RESTRICTED FOR THE PURCHASE OF FIDUCIARY 

INSURANCE (3,697) (3,629) 

NET ASSETS AVAILABLE FOR BENEFITS $483,288,289 $443,169,920

See notes to financial statements and Independent Auditors' Report.

THRIFT SAVINGS FUND

Statements of Net Assets Available for Benefits

 As of December 31, 2016 and 2015

(In thousands)
5 

2016 2015

ADDITIONS: 

 Investment income:

 Interest $4,005,911 $3,611,195

 Net appreciation of investments 25,115,342 559,387 

 Net investment income 29,121,253 4,170,582 

 Contributions:

 Participant 19,995,362 19,494,789 

 Employer 8,640,048 8,336,905 

 Total contributions 28,635,410 27,831,694 

 Loan administrative fees 13,844 13,479 

 Interest income on notes receivable from participants (loans) 184,185 179,294 

 Total additions 57,949,801 32,199,940 

DEDUCTIONS:

 Benefits paid to participants 17,279,190 16,598,747 

 Administrative expenses 234,412 185,578 

 Notes receivable from participants declared taxable distributions 317,763 318,344 

 Total deductions 17,831,365 17,102,669 

CHANGE IN FUNDS RESTRICTED FOR THE

 PURCHASE OF FIDUCIARY INSURANCE (68) 73 

 Net increase 40,118,368 15,097,344 

NET ASSETS AVAILABLE FOR BENEFITS:

 Beginning of period 443,169,921 428,072,576 

 End of period $483,288,289 $443,169,920

See notes to financial statements and Independent Auditors' Report.

THRIFT SAVINGS FUND

Statements of Changes in Net Assets Available for Benefits

 Years Ended December 31, 2016 and 2015

(In thousands)
6 

THRIFT SAVINGS FUND 

NOTES TO FINANCIAL STATEMENTS 

FOR YEARS ENDED DECEMBER 31, 2016 AND 2015 

1. PLAN DESCRIPTION 

The following description is provided for general information purposes. Participants should refer to the 

Summary of the Thrift Savings Plan, www.tsp.gov, and applicable legislation and regulations for more 

complete information. 

General—The Thrift Savings Plan (the Plan or the TSP) is a retirement savings and investment plan for Federal 

employees and members of the uniformed services. It was authorized by the United States Congress in the 

Federal Employees’ Retirement System Act of 1986 (FERSA). The Plan provides Federal employees and 

members of the uniformed services with a savings and tax benefit similar to what many private sector 

employers offer their employees under 401(k) plans. The Plan was primarily designed to be a key part of the 

retirement package (along with a basic annuity benefit and Social Security) for employees who are covered by 

the Federal Employees’ Retirement System (FERS). 

The Plan is administered by an independent Government agency, the Federal Retirement Thrift Investment 

Board (the Agency), which is charged with operating the Plan prudently and solely in the interest of the 

participants and their beneficiaries. Assets of the Plan are maintained in the Thrift Savings Fund (the Fund). 

Federal employees, who are participants in FERS, in the Civil Service Retirement System (CSRS), or in 

equivalent retirement systems (as provided by statute) and members of the uniformed services, are eligible to 

join the Plan immediately upon being hired. Generally, FERS employees are those employees hired on or after 

January 1, 1984, while CSRS employees are employees hired before January 1, 1984, who have not elected to 

convert to FERS. Each group has different rules that govern contributions. As of December 31, 2016, there 

were approximately 5.0 million participants in the Plan, with approximately 3.3 million contributing their own 

money. As of December 31, 2015, there were approximately 4.9 million participants in the Plan, with 

approximately 3.3 million contributing their own money. 

Contributions—The Plan is a defined contribution plan and, as such, the law specifies how much an employee 

may contribute and how much the employing agency must contribute to each FERS employee’s account. No 

participant under age 50 could contribute more than the Internal Revenue Service (IRS) elective deferral limit 

of $18,000 in 2016 and 2015.1 Participants age 50 and older who are already contributing the maximum 

amount of contributions for which they are eligible may make supplemental catch-up contributions (up to 

$6,000 in 2016 and 2015) from their basic pay. FERS participants are entitled to receive agency matching 

contributions on the first 5 percent of basic pay that they contribute each pay period, according to a formula 

prescribed by FERSA (5 United States Code (U.S.C.) § 8432(c)). For FERS employees, their employing 

agencies also contribute an agency automatic contribution equal to 1 percent of each employee’s basic pay each 

pay period, as prescribed by FERSA (5 U.S.C. § 8432(c)). Uniformed services members may also contribute 

up to 100% of designated special pay, incentive pay, and bonuses subject to the elective deferral limit. The 

Federal Government or uniformed services does not match amounts contributed by CSRS employees or 

uniformed services members.2 Civilian Federal Agencies are required to automatically enroll newly hired (and 

 

1 Members of the uniformed services who are serving in a combat zone earn tax-exempt pay. Contributions from tax-exempt pay 

do not count towards this elective deferral limit. 

2 The Army ran a small test matching program for soldiers who agreed to enlist for five years or more. This program is no longer 

open to new soldiers. However, one soldier who took part in the test program is still serving and receiving matching 

contributions.
7 

rehired) eligible employees unless the employee makes an affirmative election not to participate in the Plan or 

to participate at other than the default rate of three percent. 

Participants may also transfer funds from traditional individual retirement accounts (IRAs) or other eligible 

employer plans into the Plan. The Plan also allows for Roth contributions and transfers from qualified 

employer sponsored plans. 

Investments—Pursuant to FERSA (5 U.S.C. § 8438), Plan participants are offered five investment funds: the 

Government Securities Investment Fund (G Fund), the Fixed Income Index Investment Fund (F Fund), the 

Common Stock Index Investment Fund (C Fund), the Small Capitalization Stock Index Investment Fund (S 

Fund), and the International Stock Index Investment Fund (I Fund). The Agency has contracted with 

BlackRock to act as investment manager, custodian and securities lending agent for the C, F, S, and I Fund 

accounts. 

The TSP Lifecycle Funds are asset allocation portfolios that use the Plan’s existing investment funds and target 

the mix based on the time horizon when the participant intends to withdraw the funds. As described in the TSP 

L Funds Information Sheet on the TSP website (www.tsp.gov), the L2020 Fund, the L2030 Fund and the L2040 

Fund are designed for participants who will withdraw their accounts five years before or after the year in the 

title of the account. The L Income Fund was designed to produce current income for the participants who are 

already receiving money from their accounts through monthly payments. The L2050 Fund is designed for 

participants who will withdraw their accounts in 2045 or later. The asset allocations are based on economic 

assumptions regarding future investment returns, inflation, economic growth, and interest rates. These asset 

allocations are adjusted quarterly, moving to a more conservative mix over time. Between quarterly 

adjustments, the asset allocations of each fund are maintained through daily rebalancing to that fund’s target 

allocation. The Agency, with the help of an investment consultant, reviews the assumptions underlying the 

asset allocations at least annually. 

Participants may allocate any portion of their contributions among the five individual investment funds and the 

five TSP Lifecycle Funds. Also, participants may reallocate their account balance among the individual 

investment funds and the TSP Lifecycle Funds through the interfund transfer process. The Agency restricts the 

number of interfund transfers a participant can make per month in order to curb frequent trading and its 

associated costs to all TSP participants. The first two interfund transfers per calendar month are unrestricted. 

After that, participants may move money only from the F, C, S, and I Funds and the TSP Lifecycle Funds to the 

G Fund.

Vesting—Plan participants are immediately vested in all of their own contributions and attributable earnings. 

Participants are also immediately vested in any agency matching contributions and attributable earnings. In 

order to be vested in the agency automatic (1%) contributions, a FERS employee must have either 2 or 3 years 

of service as described in section 8432(g) of FERSA. FERS employees who are not vested and who separate 

from the Federal Government forfeit all agency automatic contributions and attributable earnings. 

Forfeitures—Forfeited funds, consisting primarily of statutory forfeitures (pursuant to 5 U.S.C. §8432(g)) and 

agency contributions forfeited due to retirement coverage corrections made under the Federal Erroneous 

Retirement Coverage Correction Act (FERCCA), totaled $42,392,774 as of December 31, 2016, and 

$44,816,728 as of December 31, 2015. Under FERCCA, when a participant’s retirement coverage is corrected 

from FERS to CSRS, any excess agency contributions are forfeited to the Plan. All forfeitures are used by the 

Plan daily to offset accrued administrative expenses. If the forfeited funds (along with participant loan fees) are 

not sufficient to meet all administrative expenses, earnings on investments are then charged. 

Individual Accounts—An individual account is maintained for each Plan participant. As applicable, each 

participant’s account is credited with the participant’s contributions, agency automatic and matching 

contributions, and loan repayments and charged with loans and withdrawals. The value of the participant’s 

account reflects the number of shares and the daily share prices of the funds in which the participant is invested. 

Administrative expenses are a component of the share price calculation. The benefit to which a participant is 

entitled is the amount of the participant’s vested account balance. 
8 

Notes Receivable From Participants (Loans)—Participants may apply for loans from their accounts. There are 

two types of Plan loans: general purpose and residential. General purpose loans can be obtained for any 

purpose, with a repayment period from 1 to 5 years. Residential loans can be obtained for the purpose of 

purchasing a primary residence, with a repayment period from 1 to 15 years. Participant loans may only be 

taken from participant contributions and attributable earnings. The minimum loan amount is $1,000 and the 

maximum loan amount is $50,000. A $50 fee is deducted from the proceeds of the loan. During the twelve 

months ending December 31, 2016 and 2015, loan fees of $13,844,400 and $13,478,800 were used to offset 

administrative expenses, respectively. 

The interest rate for loans is the G Fund rate at the time the loan agreement is issued. The rate is fixed at this 

level for the life of each loan. Participant loans are valued at their unpaid balances. Interest earned on loans is 

allocated to the participant account as loan payments are made to that account. 

By IRS regulation, the Agency must identify each calendar quarter any participant loan that is in default. The 

participant then has until the end of the following calendar quarter to pay the overdue amount. If not paid, a 

taxable distribution of the unpaid loan balance, plus accrued interest, will be declared. Taxable loan 

distributions also occur when a participant separates from service and does not repay an outstanding loan 

balance. Participants should refer to the booklet, TSP Loans, for more information. 

Payment of Benefits—After leaving service, a participant may leave their money in the TSP. If they choose to 

withdrawal their money, they may elect benefit withdrawals in the form of a partial withdrawal or they may 

choose a full withdrawal as a single payment, a series of monthly payments, or a life annuity. Participants may 

choose to combine any two or all three of the available full withdrawal options. Participants should refer to the 

booklet, Withdrawing Your TSP Account After Leaving Federal Service, for more complete information. 

Participants should refer to the booklet, TSP In-Service Withdrawals, for information on withdrawal options 

while employed in Federal service. 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

Basis of Accounting—The accompanying financial statements have been prepared in accordance with 

accounting principles generally accepted in the United States of America. Revenue is recognized when earned 

and expenses are recognized when incurred. Benefits and participant loans payable for the last three trade dates 

of each month are recorded when withdrawn from participants’ accounts. 

Investments—All investments are stated at fair value, based upon the quoted market values of the underlying 

securities at the end of each period. The Agency invests in (or redeems from) the Thrift Savings Fund 

investment funds each business day. Purchases and sales of securities are recorded on a trade-date basis. 

The Plan offers its participants various investment funds that are exposed to different types and amounts of risk, 

including interest rate, credit, and market risk. The funds (except for the G Fund, which is invested in a way to 

avoid losses) can be expected to experience greater or lesser volatility over time, depending upon each fund’s 

individual risk profile, thus affecting the fund balances from one period to the next. 

During the twelve-month periods ended December 31, 2016 and December 31, 2015, the Plan’s investment 

funds consisted of the following (objectives of the investment funds are described in the various TSP Fund 

Information Sheets, available on www.tsp.gov): 

The G Fund invests in short-term nonmarketable U.S. Treasury securities specially issued to the Thrift Savings 

Plan. All investments in the G Fund earned interest at a rate that is equal, by law, to the weighted average yield 

on outstanding U.S. Treasury marketable securities with 4 or more years to maturity. The interest rate is set 

every month based on the data as of the last business day of the previous month. 

The F Fund invests in a separate account that is passively managed and tracks the Bloomberg Barclays U.S. 

Aggregate Bond Index. The F Fund uses sampling to attempt to replicate the characteristics of the Barclays 
9 

Index. As of December 31, 2016, the separate account held 6,645 securities totaling $26.2 billion. As of 

December 31, 2015, the separate account held 6,580 securities totaling $24.8 billion. 

The C Fund invests in a separate account that is passively managed and tracks the S&P 500 Index. The C Fund 

separate account holds stocks of all the companies represented in the S&P 500 Index in virtually the same 

weights as they are represented in the S&P 500 Index. As of December 31, 2016, the separate account held 

$156.4 billion of securities. As of December 31, 2015, the separate account held $142.4 billion of securities. 

The S Fund invests in a separate account that is passively managed and tracks the Dow Jones U.S. Completion 

Total Stock Market Index by holding most of the stocks with larger capitalizations in virtually the same weights 

as they are represented in the index and by holding a representative sample of the remaining stocks in the index. 

As of December 31, 2016, the separate account held $55.6 billion of securities. As of December 31, 2015, the 

separate account held $50.2 billion of securities. 

The I Fund invests in a separate account that is passively managed and tracks the MSCI EAFE Index. As of 

December 31, 2016, the I Fund held $35.0 billion of securities. As of December 31, 2015, the separate account 

held $34.0 billion of securities. 

Fair Market Valuations—The Plan follows the FASB’s ASC 820-10, which provides a comprehensive 

framework for measuring fair value and expands disclosures which are required about fair value measurements. 

Specifically, FASB ASC 820-10 sets forth a definition of fair value and establishes a hierarchy prioritizing the 

inputs to valuation techniques. 

Under FASB ASC 820-10, the fair value hierarchy prioritizes inputs to valuation techniques used to measure 

fair value into three broad levels: Level I, Level II, and Level III. Inputs may be based on independent market 

data (“observable inputs”) or they may be internally developed (“unobservable inputs”). The hierarchy gives 

the highest priority to quoted prices in active markets for identical assets (Level I) and the lowest priority to 

unobservable inputs (Level III). 

An “independent market quotation” for a security or other asset is defined as a quoted price in an active market 

for an identical security or asset (a “Level I Price”). 

As a general principle, the current “fair market value” of a security or other asset is the amount that a Fund 

might reasonably expect to: (i) receive upon the sale of the security or asset; or (ii) pay to transfer the liability 

associated with the security or asset in an orderly transaction between market participants on the date on which 

the security or asset is being valued. In the event that a Level I Price is not based on a quoted market price for a 

given type of security or asset, the fair value of the security or other asset is determined by using pricing inputs 

that are either directly or indirectly observable on the valuation date for the security or asset, which may include 

the use of models or other valuation methodologies (a “Level II Price”). 

Level I Prices and Level II Prices are provided by broker dealers or by pricing providers, services, and vendors 

(together, “pricing sources”) approved by the BlackRock Global Pricing Committee or its delegates. The 

pricing sources approved by the BlackRock Global Pricing Committee vary according to security or asset type 

and include, but are not limited to, Reuters, Bloomberg, IDC, and Mark-it Partners. 

The separate accounts have a readily determinable fair value as these securities transact on a daily basis without 

restrictions. The readily determinable fair value is used to determine net asset value per share. The net asset 

value is based upon the fair value of the underlying investments. 

The table at Appendix 1 sets forth by level, within the fair value hierarchy and at net asset value, the Plan’s 

assets at fair value for the years ended December 31, 2016 and December 31, 2015. 

The F Fund, C Fund, S Fund, and I Fund include temporary investments in the same U.S. Treasury securities 

held by the G Fund pending daily purchase of shares in their respective index funds and to cover liquidity 

needs, such as loans and withdrawals from the Thrift Savings Fund.
10 

The separate accounts incurred an investment management fee for the separate account program management 

for the prior twelve months as follows: the C Fund ($6.0 million and $5.2 million as of December 31, 2016 and 

2015, respectively), the F Fund ($4.5 million and $4.0 million as of December 31, 2016 and 2015, 

respectively), the I Fund ($4.8 million and $5.3 million as of December 31, 2016 and 2015, respectively), and 

the S Fund ($20.0 million and $19.7 million as of December 31, 2016 and 2015, respectively). 

The separate accounts in which the C, S, and I Funds are invested may invest in futures contracts and other 

derivatives to the extent contemplated by the fund guidelines. As part of the investment strategies, derivative 

instruments may be used to provide liquidity for daily investments or to manage currency, interest, and other 

exposures. 

The F, C, S, and I Funds also participate in securities lending activities, under agreements between BlackRock 

and third parties to lend debt and equity securities in exchange for collateral. The collateral received, which is 

required to equal 102% of the value of the domestic securities lent and 105% of the value of international 

securities, is marked to market each day, and may be invested in cash collateral funds managed by BlackRock, 

which in turn invest in money market securities and instruments. A portion of the cash collateral for securities 

lending by the F,C,S, and I Funds ($22.0 billion and $24.8 billion as of December 31, 2016 and 2015, 

respectively), is invested in the G Fund, and is shown on the Statements of Net Assets as “Investments” and the 

corresponding cash collateral payable. 

The major source of risk in any securities lending program is that the securities and instruments in which the 

cash collateral received (against security loans) is invested may decline in value. BlackRock’s responsibilities 

include performing appropriate borrower and collateral investment credit analysis, demanding adequate types 

and levels of collateral and complying with applicable Department of Labor and Federal Financial Institutions 

Examiner Council regulations regarding securities lending. 

The tables at Appendix 2 show how the participants’ account balances in the various investment options are 

allocated among the core TSP Funds as of and for the years ended December 31, 2016, and 2015, respectively. 

Securities Lending Income—Securities lending income represents the income earned from the investment of 

the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities 

lending agent. During the term of the loan, the Fund earns dividend or interest income on the securities loaned 

but does not receive interest income on any securities received as collateral. Loans of securities are terminable 

at any time and the borrower, after notice, is required to return borrowed securities within the standard time 

period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return 

borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs 

in gaining access to the collateral. The Fund also could suffer a loss if the value of an investment purchased 

with cash collateral falls below the market value of loaned securities or if the value of an investment purchased 

with cash collateral falls below the value of the original cash collateral received. 

Fixed Assets—All fixed assets were recorded at cost and are depreciated on a straight-line basis over their 

estimated useful lives, which range as follows: 

Furniture and Equipment 3 to 10 years

Leasehold Improvements 10 years

Data Processing Software 3 to 10 years

Depreciation and amortization expense was approximately $4.8 million and $4.7 million for the years ended 

December 31, 2016 and 2015, respectively. 

Earnings Allocation—Net earnings are used to calculate the daily share price of each investment fund as 

defined in regulations issued by the Agency (5 Code of Federal Regulations (CFR) Part 1645). 
11 

Contributions Receivable—Contributions receivable are estimated as the amount of contributions recorded 

through the first 2 weeks of the month following the date of the financial statements and represent both 

participant and employer portions of contributions. 

Estimates—The preparation of financial statements in conformity with accounting principles generally 

accepted in the United States of America requires management to make estimates and assumptions that affect 

the reported amounts of net assets available for benefits and changes therein. Actual results could differ from 

those estimates. 

Thrift Savings Plan Enhancement Act of 2009—On June 22, 2009, the Thrift Savings Plan Enhancement Act 

(the Act or P.L. 111-31) was signed into law. The Act provides for immediate agency automatic (1%) and 

matching contributions for FERS employees (implemented in August 2009). The Act also requires civilian 

Federal agencies to automatically enroll newly hired (and rehired) eligible employees unless the employee 

makes an affirmative election not to participate in the Fund or elect a deferral rate other than the deferral rate of 

3 percent (implemented in August 2010). The Act also allows the Agency to establish accounts for the 

surviving spouses of TSP participants (implemented December 2010). In addition, the Act also gives the 

Federal Retirement Thrift Investment Board the authority to establish a qualified Roth contribution program 

(implemented in May 2012) and the authority to establish a mutual fund window. 

Smart Saving Act of 2014—On December 18, 2014, the Smart Savings Act (the Act or P.L.113-225) was 

signed into law. The Act requires the TSP to invest the contributions of automatically enrolled civilian 

employees in an “age-appropriate target date asset allocation investment fund” no later than nine months after 

enactment (implemented September 2015). 

National Defense Authorization Act for Fiscal Year 2016—On November 25, 2015, the FY 2016 National 

Defense Authorization Act (Public Law 114-92) was signed into law. The Act creates a new “blended 

retirement” system for all uniformed services members who enter service beginning January 1, 2018. The Act 

also provides service members with less than 12 years of service as of January 1, 2018, with the opportunity to 

elect retirement coverage under the new “blended retirement” system. The Act provides for automatic (1 

percent) and matching contributions for members covered by the new blended retirement system. The Act also 

requires the services to automatically enroll new service members in the Plan. The TSP expects enrollment to 

climb substantially as a result of the impending automatic enrollment of new service members into the TSP. 

Reclassification – Certain amounts in the 2015 financial statements have been reclassified to conform to the 

2016 presentation. These reclassifications do not affect net assets available for benefits as previously reported. 

3. INCOME TAX STATUS 

FERSA (5 U.S.C. § 8440(a)(1)) states that the Thrift Savings Fund shall be treated as a trust described in 

section 401(a) of the Internal Revenue Code (I.R.C. or Code), which is exempt from taxation under section 

501(a) of the Code. This status was reaffirmed in the Tax Reform Act of 1986, Section 1147 (codified at I.R.C. 

§ 7701(j)). It is not necessary for the Plan to apply for a tax status determination letter as it is qualified by 

statute. 

4. COMMITMENTS AND CONTINGENCIES 

The Agency has entered into a contract with Science Applications International Corporation (SAIC) to provide 

a broad range of IT and IT-related recordkeeping support services, including Program management and Cross 

Functional Services, Infrastructure and Operations (data center, data network, service desk, voice network, end 

user services), Applications Services, and Recordkeeping. The annual cost of all recordkeeping systems and 

operations support is approximately $136.3 million and $95.7 million for calendar year 2016 and 2015, 

respectively.

The Agency continues to maintain contracts with Serco to provide a call center in Virginia and with The Active 

Network, Inc. to provide a call center in Maryland. The term of the Serco call center contract is one year with a 
12 

one-year option. The term of The Active Network contract is three years with three one-year options renewable 

at the Agency’s discretion. The Serco call center contract value for calendar year 2016 and 2015 is 

approximately $6.2 million and $5.7 million, respectively. The Active Network contract value for calendar 

year 2016 and 2015 is approximately $9.5 million and $8.9 million, respectively. 

The Agency leases the office space it occupies in Washington, DC, the call center space in Virginia, and the 

Agency’s business continuity space in northern Virginia, under operating leases. The current Washington, DC 

operating lease ends September 2026. Monthly base rental payments under the current lease range from 

approximately $372,446 to $488,214. 

The Agency subleases office space in the same building it occupies in Washington, D.C. The current sublease 

ends in March 2023. Monthly base rental payments under current sublease range from $42,447 to $49,970. 

The call center operating lease in Virginia has monthly base rental payments of $12,548. The lease agreement for 

the business continuity space in northern Virginia has monthly rental payments of $6,970. 

Future minimum lease commitments (through calendar year 2026) under the operating leases are: 

Calendar 

Year Amount 

2017 $7,122,441 

2018 9,484,781

2019 9,721,414

2020 9,964,400

 Thereafter 43,331,978 

Total $79,625,014

Rent expense is recorded on a straight-line basis over the lease terms. Rent expense under the leases was 

approximately $5.9 million and $5.8 million for the years ended December 31, 2016 and December 31, 2015, 

respectively. 

5. FIDUCIARY INSURANCE 

FERSA (5 U.S.C. § 8479(b)(1)) provides that the Executive Director may assess Federal agencies for the 

purpose of buying fiduciary insurance. The Agency’s Executive Director exercised this authority in 1987 and 

required agencies to submit an amount equal to 1 percent of their agency automatic contributions. Such sums 

were collected during 1987 and 1988 and are invested to the extent not currently required to purchase fiduciary 

insurance. In February 1988, the Executive Director instructed agencies to discontinue the 1 percent fiduciary 

insurance contributions. The balance of funds available for the purchase of fiduciary insurance for the years 

ended December 31, 2016 and 2015 was $3,696,546 and $3,629,051, respectively. These funds are invested in 

the same securities held by the G Fund and are included in total investments on the accompanying statements of 

net assets available for benefits, with a corresponding reduction in the net assets available for benefits. By 

statute, such amounts cannot be allocated to participants’ accounts. The Agency has determined that the current 

insurance reserve is adequate to fund coverage needs for the foreseeable future. 

6. SUBSEQUENT EVENTS 

Agency management evaluated subsequent events through April 13, 2017, the date the financial statements 

were available to be issued. Events or transactions occurring after December 31, 2016 but prior to April 13, 

2017 that provided additional evidence about conditions that existed at December 31, 2016, have been 

recognized in the financial statements for the twelve-month period ending December 31, 2016. Events or 

transactions that provided evidence about conditions that did not exist at December 31, 2016, but arose before 

the financial statements were available to be issued, have not been recognized in the financial statements for the 

twelve-month period ended December 31, 2016. 

****** 
13 

Appendix 1 

Quoted Prices in 

Active Markets 

for Identical 

Assets

Significant Other 

Observable 

Inputs 

Significant 

Unobservable 

Inputs 

Description (Level 1) (Level 2) (Level 3) Total

U.S. Government 

Securities Investment 

Account

$222,304,445 $ - $ - $222,304,445

TSP F Fund – U.S. Debt 

Index Account - 26,161,866 - 26,161,866

TSP C Fund - Equity Index 

Account - 156,378,700 - 156,378,700

TSP I Fund- EAFE Equity 

Index Account - 34,926,057 - 34,926,057

TSP S Fund- Extended 

Equity Index Account - 55,580,600 - 55,580,600

Total assets at fair value $222,304,445 $273,047,223 $ - $495,351,668

Fair Value Measurements as of December 31, 2016

(in thousands)

Quoted Prices in 

Active Markets 

for Identical 

Assets

Significant Other 

Observable 

Inputs 

Significant 

Unobservable 

Inputs 

Description (Level 1) (Level 2) (Level 3) Total

U.S. Government 

Securities Investment $206,929,770 $ - $ - $206,929,770

TSP F Fund – U.S. Debt 

Index Account - 24,788,942 - 24,788,942 

TSP C Fund - Equity Index 

Account - 142,406,460 - 142,406,460 

TSP I Fund- EAFE Equity 

Index Account - 33,985,423 - 33,985,423 

TSP S Fund- Extended 

Equity Index Account - 50,161,756 - 50,161,756 

Total assets at fair value $206,929,770 $251,342,581 $ - $458,272,351

Fair Value Measurements as of December 31, 2015

(in thousands)

 
14 

 Appendix 2 

Investment 

Options

G Fund 

Investment

F Fund 

Investment

C Fund 

Investment

S Fund 

Investment

I Fund 

Investment Total 

G Fund $168,945,157 - - - - $168,945,157

F Fund - $21,266,662 - - - 21,266,662

C Fund - - $129,651,058 - - 129,651,058

S Fund - - - $47,690,201 - 47,690,201

I Fund - - - - $19,975,509 19,975,509

L Income 5,322,769 432,585 801,817 200,641 433,766 7,191,578

L 2020 12,520,901 1,435,003 5,675,499 1,510,849 3,109,534 24,251,786

L 2030 8,159,835 1,551,355 8,993,839 2,582,928 5,010,690 26,298,647

L 2040 4,184,470 1,186,936 8,028,302 2,481,639 4,548,977 20,430,324

L 2050 870,466 308,027 3,175,499 1,054,191 1,830,620 7,238,803

Differences (*) 22,300,847 (18,702) 52,686 60,151 16,961 22,411,943 

Statement of 

Net Assets $222,304,445 $26,161,866 $156,378,700 $55,580,600 $34,926,057 $495,351,668

Investment Summary by Fund as of December 31, 2016

(in thousands)

(*) Differences are a result of timing differences, including investment transactions not settled as of December 31, 2016. These 

differences may not be allocated down to the L Funds until the following business day. The differences in the G Fund is largely due 

to the securities lending program for the C, F, S and I Funds.

Investment 

Options

G Fund 

Investment

F Fund 

Investment

C Fund 

Investment

S Fund 

Investment

I Fund 

Investment Total 

G Fund $155,598,726 - - - - $155,598,726

F Fund - $20,156,858 - - - 20,156,858

C Fund - - $118,877,103 - - 118,877,103

S Fund - - - $41,625,500 - 41,625,500

I Fund - - - - $20,985,506 20,985,506

L Income 5,001,222 406,201 803,385 201,171 333,436 6,745,415

L 2020 10,582,605 1,340,174 6,018,718 1,779,831 3,311,611 23,032,939

L 2030 6,727,049 1,443,002 7,733,840 2,725,658 4,305,061 22,934,610

L 2040 3,303,690 1,130,678 6,590,248 2,769,256 3,628,616 17,422,488

L 2050 560,874 315,137 2,382,680 1,022,398 1,410,408 5,691,497

Differences (*) 25,155,604 (3,108) 486 37,942 10,785 25,201,709

Statement of 

Net Assets $206,929,770 $24,788,942 $142,406,460 $50,161,756 $33,985,423 $458,272,351

Investment Summary by Fund as of December 31, 2015

(in thousands)

(*) Differences are a result of timing differences, including investment transactions not settled as of December 31, 2015. These 

differences may not be allocated down to the L Funds until the following business day. The differences in the G Fund is largely due 

to the securities lending program for the C, F, S and I Funds.

This information is an integral part of the accompanying financial statements.