THRIFT SAVINGS FUND 

Washington, DC 

FINANCIAL STATEMENTS 

December 31, 2014 and 2013
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 ..................................................................................................................................... 15 

Appendix 2 ..................................................................................................................................... 16 

Appendix 3 ..................................................................................................................................... 17 
1

   

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, 2014 and 2013, 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.

CliftonLarsonAllen LLP 

www.claconnect.com 

An independent member of Nexia International
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, 2014 and 2013, and the changes in its net

assets available for benefits for the years then ended in accordance with accounting principles generally

accepted

a 

in the United States of America.

Baltimore, Maryland

April 3, 2015
3

FINANCIAL STATEMENTS 
4

2014 2013

ASSETS:

 Investments, at fair value: 439,670,217 $ 397,059,539 $ 

RECEIVABLES:

 Employer contributions 301,512 293,208 

 Participant contributions 779,770 759,846 

 Notes receivable from Participants (Loans) 8, 8,785,546 800,389 

 Due for securities sold 72,965 34,862 

 Total receivables 9, 9,873,462 954,636 

 Fixed assets: 

 Furniture, equipment, and leasehold improvements,

 net of accumulated depreciation and amortization

 of $26,752 in 2014 and $23,519 in 2013 10,288 5,774 

 Data processing software, net of accumulated

 amortization of $55,407 in 2014 and $54,667 in 2013 2,221 190 

 Total fixed assets 12,509 5,964 

 Other assets 54 2,545 

 Total assets 449,637,416 406,941,510 

LIABILITIES:

 Accounts payable 22,808 22,751 

 Accrued payroll and benefits 2,505 2,475 

 Benefits and participant loans payable 131,546 134,604 

 Deferred rent and lease credits 8,693 7,922 

 Due for securities purchased 121,586 85,339 

 Cash Collateral Payable 21,274,000 12,174,000 

 Total liabilities 21,561,138 12,427,091 

FUNDS RESTRICTED FOR THE PURCHASE OF 

 FIDUCIARY INSURANCE (3,702) (3,997)

NET ASSETS AVAILABLE FOR BENEFITS $ 394,510,422 428,072,576 $ 

See notes to financial statements and Independent Auditors' Report.

THRIFT SAVINGS FUND

Statements of Net Assets Available for Benefits

As of December 31, 2014 and 2013

(In thousands)
5

2014 2013

ADDITIONS: 

 Investment income:

 U.S. Government Securities Investment Fund 3,830,072 $ 2,987,371 $ 

 Net appreciation in fair value of BlackRock funds 19,998,340 46,559,732 

 Asset manager rebates/ securities lending income (net) 28,860 43,564 

 Less investment expenses (4,996) (2,500)

 Net investment income 23,852,276 49,588,167

 Contributions:

 Participant 18,515,415 18,056,694 

 Employer 7,869,460 7,631,123

 Total contributions 26,384,875 25,687,817

 Loan administrative fees 13,384 14,774 

 Interest income on notes receivable from participants (Loans) 179,960 176,417 

 Total additions 50,430,495 75,467,175 

DEDUCTIONS: 

 Benefits paid to participants 16,382,50 15,424,167 4 

 Administrative expenses 166,572 161,138 

 Notes receivable from participants declared taxable distributions 319,560 324,262

 Total deductions 16,868,636 15,909,567

CHANGE IN FUNDS RESTRICTED FOR THE

 PURCHASE OF FIDUCIARY INSURANCE 295 117

 Net increase 33,562,15 59,557,725 4 

NET ASSETS AVAILABLE FOR BENEFITS:

 Beginning of period 394,510,422 334,952,697

 End of period 428,072,576 $ $ 394,510,422

THRIFT SAVINGS FUND

Statements of Changes in Net Assets Available for Benefits

Years Ended December 31, 2014 and 2013

(In thousands)

See notes to financial statements and Independent Auditors’ Report 
6

THRIFT SAVINGS FUND

NOTES TO FINANCIAL STATEMENTS 

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 

DECEMBER 31, 2013 

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, 

2014, there were approximately 4.7 million participants in the Plan, with approximately 2.9 million 

contributing their own money. As of December 31, 2013, there were approximately 4.6 million participants in 

the Plan, with approximately 2.9 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 $17,500 in 2014 and 2013.1 Participants age 50 and older who are already contributing the maximum 

amount of contributions for which they are eligible may make supplemental tax-deferred catch-up 

contributions (up to $5,500 in 2014 and 2013) 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. 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, soldiers who took part in the test program and who are still serving their initial term of 

enlistment continue to receive 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 qualified Roth contributions and transfers from 

qualified Roth 401K 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 contracted with BlackRock Institutional Trust Company, N.A. (BlackRock) for investment in the 

collective investment trusts in which the C, F, S, and I Funds were invested until June 2011, March 2013, 

September 2014, and November 2013 respectively. In June 2011, the Executive Director approved the use of 

the G Fund as an investment vehicle for the securities lending collateral. To facilitate this, in August 2011, 

March 2013, September 2014 and November 2013, respectively, the C, F, S, and I Funds were moved from 

commingled funds to separate accounts. The Agency has contracted with BlackRock to act as investment 

manager and securities lending agent for the C, F, S, and I Fund accounts. 

The TSP Lifecycle Funds are asset allocation portfolios that were designed for the TSP by Mercer Investment 

Consulting, Inc. (Mercer) using the Plan’s existing investment funds and targeting the mix to a 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 Mercer’s 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 Mercer, 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 $36,290,097 as of December 31, 2014, and 

$45,209,761 as of December 31, 2013. 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. 
8

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. 

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. In 2014, loan fees of 

$13,384,050 were used to offset administrative expenses. In 2013, loan fees of $14,773,750 were used to 

offset administrative expenses. 

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, participants 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, 2014 and December 31, 2013, 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): 
9

The G Fund was invested 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 average of 

market rates of return on outstanding U.S. Treasury marketable securities with 4 or more years to maturity. 

The F Fund was invested primarily in a separate account that is passively managed and tracks the Barclays 

Capital U.S. Aggregate Bond Index. Before March 2013, the F Fund was invested primarily in the BlackRock 

U.S. Debt Index Fund “E”. 

As of December 31, 2014, the separate account contained approximately 28 percent mortgage-backed 

securities (28 percent securities issued by the Government National Mortgage Association (GNMA or Ginnie 

Mae), Federal National Mortgage Association (FNMA or Fannie Mae), and Federal Home Loan Mortgage 

Association (FHLMC or Freddie Mac), 2 percent commercial mortgage-backed securities and 1 percent 

hybrid ARMs); 28 percent investment-grade corporate securities (U.S. and sovereign); 36 percent Treasury 

securities; 3 percent Agency securities; and 2 percent asset-backed securities and taxable municipals. 

As of December 31, 2014, the separate account held 6,343 securities totaling $24.0 billion, with a weightedaverage life of 5.1 years. As of December 31, 2013, the separate account held $23.6 billion of securities. 

 The C Fund is invested primarily 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, 2014, the 

separate account held $140.7 billion of securities. As of December 31, 2013, the separate account held $120.8 

billion of securities. 

The S Fund was invested primarily 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, 2014, the separate account held $50.6 billion of securities. 

Before September 2014, the S Fund was invested primarily in the BlackRock Extended Equity Market Index 

Fund “E,” which in turn held shares of the Extended Equity Market Master Fund. Both the BlackRock 

Extended Market Index Fund “E” and the Master Fund are passively managed commingled funds. As of 

December 31, 2013, the S Fund constituted $46.6 billion of the BlackRock Extended Equity Market Index 

Fund “E”. 

The I Fund was invested primarily in a separate account that is passively managed and tracks the MSCI EAFE 

Index. As of December 31, 2014, the separate account held $33.1 billion of securities. As of December 31, 

2013, the I Fund holdings constituted $33.3 billion of securities. Before November 2013, the I Fund was 

invested primarily in the BlackRock EAFE Equity Index Fund “E”. 

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). BlackRock has worked with pricing vendors to confirm its understanding of 

their pricing methodologies and has consulted with BlackRock’s independent auditors, 

PricewaterhouseCoopers LLP, to perform necessary analysis to support BlackRock’s approach to comply with 

FASB ASC 820-10. 
10

Pursuant to BlackRock’s global pricing policy, to the extent possible, securities and other assets held by Funds 

are valued using independent market quotations. 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 readily available 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 net asset value of a Fund is calculated based on the compilation of primarily observable market 

information. The number of units of the Fund that are outstanding on the calculation date is derived from 

observable purchase and redemption activity in the Fund. Accordingly, pursuant to FASB ASC 820-10, the 

unit values for all separate accounts are classified as Level II Prices. 

The table at Appendix 1 sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value for 

the years ended December 31, 2014 and December 31, 2013. 

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. 

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

as follows: the C Fund ($3.9 million and $2.4 million as of December 31, 2014, and December 31, 2013, 

respectively), the F Fund ($3.9 million and $2.9 million as of December 31, 2014 and December 31, 2013, 

respectively), the I Fund ($5.8 million and $0.6 million as of December 31, 2014 and December 31, 2013, 

respectively), and the S Fund ($9.7 million as of December 31, 2014 and $0.0 as of December 31, 2013, 

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. (As stated in Appendix 3, a portion of the 

cash collateral for securities lending by the C Fund ($6.6 billion and $5.4 billion as of December 31, 2014 and 

December 31, 2013, respectively), the F Fund ($5.1 billion and $6.5 as of December 31, 2014 and December 

31, 2013), the I Fund ($0.6 billion and $0.3 billion as of December 31, 2014 and December 31, 2013), and the 

S Fund ($9 billion and $0.0 as of December 31, 2014 and December 31, 2013 respectively), is invested in the 

G Fund and is shown as on the Statement 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 
11

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, 2014, and December 31, 

2013 respectively. 

Securities Lending Income— Securities lending income, as disclosed in the statement of operations, 

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. 

Cash collateral received by a lending fund may be invested in a series of short term investment funds managed 

by BTC (collectively, the "Cash Collateral Funds"). Eligible securities investments for the Cash Collateral 

Funds may include corporate debt obligations; asset-backed securities; mortgage backed securities; debt 

instruments issued by banks; supranational and sovereign debt obligations; promissory notes; loan 

participations; insurance company funding agreements; or derivative instruments used to create synthetic 

interest rate, credit and liquidity exposure. The Funds' investments in the Cash Collateral Funds are included 

in investments on the statements of net assets available for benefits. The obligation to the borrowers of the 

securities for the return of the cash collateral appears as a liability on the statements of net assets available for 

benefits and is equal to the value of the cash collateral provided. The Securities Lending Table, shown in 

Appendix 3, is a summary of the value of the securities on loan and the respective total collateral held by each 

Fund at December 31, 2014, and December 31, 2013. The differences, if any, between the collateral value 

listed in the schedule and the Funds' investments in the Cash Collateral Funds included as an investment on 

the statements of net assets available for benefits represents collateral held in the form of U.S. Government 

obligations. 

The securities lending income earned by a Fund consists of borrower fees (negotiated fees paid by the 

borrower if it posts U.S. government obligations or letters of credit as collateral) and/or earnings from 

investment of cash collateral posted by borrowers. The return on Cash Collateral Funds is net of a cash 

management fee, accrued daily, and based upon the net assets of the Cash Collateral Funds. A portion of the 

return from investment of cash collateral may be paid to the borrowers of the securities as a negotiated rebate 

of interest earned on the cash collateral. BTC bears all operational costs with respect to securities lending 

transactions. Collateral reinvestment risk is retained by the Fund. Securities lending transactions are entered 

into by the Funds under Master Securities Lending Agreements (“MSLA”) which provide the right, in the 

event of default (including bankruptcy or insolvency) for the non-defaulting party to liquidate the collateral 

and calculate a net exposure to the defaulting party. In the event that a borrower defaults, the Fund, as lender, 

would offset the market value of the collateral received against the market value of the securities loaned. The 

value of the collateral is typically greater than that of the market value of the securities loaned, leaving the 

lender with a net amount payable to the defaulting party. However, bankruptcy or insolvency laws of a 

particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of 

an MSLA counterparty’s bankruptcy or insolvency. Under the MSLA, the Funds can resell or re-pledge the 

collateral and the borrower can resell or re-pledge the loaned securities. 
12

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 expense was approximately $4.0 million and $3.5 million for the years ended December 31, 2014 

and December 31, 2013. 

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). 

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 by President Obama. 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 by President Obama. 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. 

Reclassification – Certain amounts in the 2013 financial statements have been reclassified to conform with the 

2014 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 

Effective January 31, 2014, the Agency ended two of its support services contracts with Serco Systems, Inc. 

(Serco) that handled TSP software maintenance and development, systems operations, data center operations, 

and recordkeeping. Effective February 1st, 2014, the Agency transitioned to 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 
13

Operations (data center, data network, service desk, voice network, end user services), Applications Services, 

and Recordkeeping. The annual cost of all recordkeeping services and support is approximately $85 million 

for CY 2014. 

 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 an 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 CY 2014 is 

approximately $8.9 million. The Active Network contract value for CY 2014 is approximately $5.2 million. 

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 $361,000 to $488,000. 

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 $39,568 to $49,970. 

The call center operating lease ends in August 2015, with an option to extend for a five-year period. Monthly 

base rental payments are $12,548. The business continuity space is an annual obligation and monthly rental 

payments are $7,075. 

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

Calendar Year Amount 

2015 $5,376,129 

2016 4,951,411

2017 5,144,450

2018 5,273,124

 Thereafter 45,088,644 

Total $65,833,759

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

approximately $5.6 million and $3.7 million for the years ended December 31, 2014 and December 31, 2013, 

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, 2014 and December 31, 2013 was $3,702,000 and $3,997,000, 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. 
14

6. SUBSEQUENT EVENTS 

Agency management evaluated subsequent events through April 3, 2015, the date the financial statements were 

available to be issued. Events or transactions occurring after December 31, 2014, but prior to April 3, 2015, 

that provided additional evidence about conditions that existed at December 31, 2014, have been recognized in 

the financial statements for the twelve-month period ending December 31, 2014. Events or transactions that 

provided evidence about conditions that did not exist at December 31, 2014, but arose before the financial 

statements were available to be issued, have not been recognized in the financial statements for the twelvemonth period ended December 31, 2014 

****** 
15

Appendix 1

Fair Value Measurements as of December 31, 2014 

(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 Fund $191,268,871 $ - $ - $191,268,871 

TSP F Fund – U.S. Debt Index 

Fund - 18,971,924 - 18,971,924 

TSP C Fund - Equity Index 

Account - 134,082,024 - 134,082,024 

TSP I Fund- EAFE Equity 

Index Fund - 32,467,810 - 32,467,810 

TSP S Fund- Extended 

Equity Index Fund - 41,605,588 - 41,605,588 

TSP F Fund Pledged - 5,050,000 - 5,050,000 

TSP C Fund Pledged - 6,624,000 - 

 

6,624,000 

TSP I Fund Pledged - 600,000 - 

 

600,000 

TSP S Fund Pledged - 9,000,000 - 

 

9,000,000 

Total assets at fair value $191,268,871 $248,401,346 $ - $439,670,217 

 

Fair Value Measurements as of December 31, 2013 

(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 Fund $172,695,083 $ - $ - $172,695,083 

TSP F Fund – U.S. Debt Index 

Fund - 17,183,962 - 17,183,962 

TSP C Fund - Equity Index 

Account - 115,402,094 - 115,402,094 

TSP I Fund- EAFE Equity 

Index Fund - 33,025,520 - 33,025,520 

BlackRock Extended Equity 

Market Index Fund - 46,578,880 - 46,578,880 

TSP F Fund Pledged - 6,450,000 - 6,450,000 

TSP C Fund Pledged - 5,424,000 - 

 

5,424,000 

TSP I Fund Pledged - 

 

300,000 - 

 

300,000 

Total assets at fair value $172,695,083 $224,364,456 $ - $397,059,539 

 
16

Appendix 2

Investment 

O ptions

G Fund 

Investment

F Fund 

Investment

C Fund 

Investment

S Fund 

Investment

I Fund 

Investment Total 

G Fund $145,375,551 - - - - $145,375,551

F Fund - $20,196,715 - - - 20,196,715

C Fund - - $118,514,176 - - 118,514,176

S Fund - - - $42,494,258 - 42,494,258

I Fund - - - - $20,735,782 20,735,782

L Income 4,969,894 403,514 797,611 199,959 332,864 6,703,842

L 2020 9,922,650 1,187,976 6,189,793 1,872,055 3,446,734 22,619,208

L 2030 6,085,132 1,185,961 7,204,712 2,590,845 4,028,844 21,095,494

L 2040 2,986,707 873,178 6,031,231 2,550,315 3,359,512 15,800,943

L 2050 475,176 176,148 1,912,654 822,978 1,145,794 4,532,750

Differences (*) 21,453,761 (1,568) 55,847 75,178 18,280 21,601,498

Statement of 

Net Assets $191,268,871 $24,021,924 $140,706,024 $50,605,588 $33,067,810 $439,670,217

Investment Summary by Fund as of December 31, 2014

(in thousands)

(*) Differences are a result of timing differences, including investment transactions not settled as of December 31, 2014. These differences 

may not be allocated down to the L Funds until the following business day. The differences in the G, C, F, S and I Funds are largely due to 

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

Investment 

O ptions

G Fund 

Investment

F Fund 

Investment

C Fund 

Investment

S Fund 

Investment

I Fund 

Investment Total 

G Fund $141,018,162 - - - - $141,018,162

F Fund - $18,867,598 - - - 18,867,598

C Fund - - $101,693,518 - - 101,693,518

S Fund - - - $39,609,967 - 39,609,967

I Fund - - $22,728,742 22,728,742

L Income 4,604,315 372,849 749,601 187,430 311,422 6,225,617

L 2020 8,164,083 1,456,308 5,753,801 1,774,129 3,191,741 20,340,062

L 2030 4,444,869 1,448,457 6,176,604 2,260,956 3,434,251 17,765,137

L 2040 1,857,311 1,210,267 5,128,818 2,167,166 2,867,457 13,231,019

L 2050 135,807 270,962 1,317,168 566,132 790,458 3,080,527

Differences (*) 12,470,536 7,521 6,584 13,100 1,449 12,499,190

Statement of 

Net Assets $172,695,083 $23,633,962 $120,826,094 $46,578,880 $33,325,520 $397,059,539

Investment Summary by Fund as of December 31, 2013

(in thousands)

(*) Differences are a result of timing differences, including investment transactions not settled as of December 31, 2013. These 

differences may not be allocated down to the L Funds until the following business day. The differences in the G, C, F and I Funds are 

largely due to the security lending program for the C, F and I Funds.
17

Appendix 3 

Securities Lending by Fund as of December 31, 2014

(in thousands)

Fund name

Securities on 

Loan, at 

value

Cash 

collateral 

received

Non-cash 

collateral 

received, at 

fair value Net amount

TSP C Fund - Equity Index Account $6,479,620 $6,624,000 $ - $ -

TSP I Fund - International Stock Index 

Investment Fund Account 567,603 600,000 - -

TSP F Fund - Fixed Income Index 

Account 4,943,302 5,050,000 - -

TSP S Fund - Small Cap Index Account 8,763,412 9,000,000 - -

Total $20,753,937 $21,274,000 $ - $ -

Securities Lending by Fund as of December 31, 2013

(in thousands)

Fund name

Securities on 

Loan, at 

value

Cash 

collateral 

received

Non-cash 

collateral 

received, at 

fair value Net amount

TSP C Fund - Equity Index Account $5,299,014 $5,424,000 $ - $ -

TSP I Fund - International Stock Index 

Investment Fund Account 278,263 300,000 - -

TSP F Fund - Fixed Income Index 

Account 6,319,739 6,450,000 - -

Total $11,897,016 $12,174,000 $ - $ -

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