THRIFT SAVINGS FUND 

Washington, DC 

FINANCIAL STATEMENTS 

December 31, 2018 and 2017 
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 

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, 2018 and 2017, 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

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.
Members of the Board and Executive Director 

Federal Retirement Thrift Investment Board 

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, 2018 and 2017, and the changes in its net 

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

generally accepted in the United States of America. 

a 

CliftonLarsonAllen LLP 

Baltimore, Maryland 

April 17, 2019 
3 

FINANCIAL STATEMENTS 
4 

2018 2017

ASSETS:

 Investments, at fair value: $558,931,138 $557,401,422

 Receivables:

 Employer contributions 444,081 345,665 

 Participant contributions 1,068,011 892,349 

 Notes receivable from participants (loans) 9,113,943 9,058,655 

 Accrued interest - 29,084 

 Due for securities sold 138,293 74,619 

 Total receivables 10,764,328 10,400,372 

 Fixed assets: 

 Furniture, equipment, and leasehold improvements,

 net of accumulated depreciation and amortization

 of $35,881 in 2018 and $35,028 in 2017 7,090 3,794 

 Data processing software, net of accumulated

 amortization of $62,795 in 2018 and $60,419 in 2017 2,919 3,682 

 Total fixed assets 7,476 10,009 

 Other assets 294 288 

 Total assets 569,705,769 567,809,558 

LIABILITIES:

 Accounts payable 52,616 15,637 

 Accrued payroll and benefits 3,892 5,225 

 Benefits and participant loans payable 188,004 145,274 

 Deferred rent and lease credits 8,709 9,222 

 Due for securities purchased 186,773 296,671 

 Cash collateral payable 23,000,000 15,000,000 

 Total liabilities 23,507,162 15,404,861 

FUNDS RESTRICTED FOR THE PURCHASE OF FIDUCIARY 

INSURANCE (3,562) (3,613) 

NET ASSETS AVAILABLE FOR BENEFITS $546,195,045 $552,401,084

See notes to financial statements and Independent Auditors' Report.

THRIFT SAVINGS FUND

Statements of Net Assets Available for Benefits

 As of December 31, 2018 and 2017

(In thousands)
5 

2018 2017

ADDITIONS: 

 Investment income:

 Interest $6,880,556 $5,083,173

 Net appreciation (depreciation) of investments (21,710,417) 54,322,921 

 Net investment income (loss) (14,829,861) 59,406,094 

 Contributions:

 Participant 22,198,250 20,858,511 

 Employer 9,667,387 8,971,337 

 Total contributions 31,865,637 29,829,848 

 Loan administrative fees 13,619 13,923 

 Interest income on notes receivable from participants (loans) 181,737 200,066 

 Total additions, net of investment loss 17,249,461 89,431,602 

DEDUCTIONS:

 Benefits paid to participants 22,790,246 19,761,846 

 Administrative expenses 298,700 232,651 

 Notes receivable from participants declared taxable distributions 366,605 324,394 

 Total deductions 23,455,551 20,318,891 

CHANGE IN FUNDS RESTRICTED FOR THE

 PURCHASE OF FIDUCIARY INSURANCE 51 84 

 Net increase (decrease) (6,206,039) 69,112,795 

NET ASSETS AVAILABLE FOR BENEFITS:

 Beginning of period 552,401,084 483,288,289 

 End of period $546,195,045 $552,401,084

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, 2018 and 2017

(In thousands)
6 

THRIFT SAVINGS FUND 

NOTES TO FINANCIAL STATEMENTS 

FOR YEARS ENDED DECEMBER 31, 2018 AND 2017 

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 covered under FERS, the Civil Service Retirement System (CSRS), or equivalent 

retirement systems (as provided by statute) and members of the uniformed services, who are covered under the 

Blended Retirement System (BRS), or the legacy uniformed services retirement system, are eligible to join the 

Plan immediately upon hire. 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. BRS participants are members of the uniformed services who first entered the uniformed services on 

or after January 1, 2018. Members covered under the legacy uniformed services retirement system were hired 

before January 1, 2018, with an opportunity for certain members, based on years of service, to elect coverage 

under BRS. Each group has different rules that govern contributions. As of December 31, 2018, there were 

approximately 5.5 million participants in the Plan, with approximately 3.3 million contributing through payroll 

deductions. As of December 31, 2017, there were approximately 5.2 million participants in the Plan, with 

approximately 3.1 million contributing through payroll deductions. 

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 or BRS 

member’s account. No participant under age 50 may contribute more than the Internal Revenue Service (IRS) 

elective deferral limit of $18,500 in 2018 and $18,000 in 2017.1 Participants age 50 and older who are already 

contributing the maximum amount of contributions for which they are eligible may make supplemental taxdeferred catch-up contributions (up to $6,000 in both 2018 and 2017) from their basic pay. FERS and eligible 

BRS 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.) 

 

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. 
7 

§ 8432(c)).2 For FERS and eligible BRS participants, their employing agencies also contribute an agency 

automatic contribution equal to 1 percent of the employee’s or member’s basic pay each pay period, as 

prescribed by FERSA (5 U.S.C. § 8432(c)).3

 Uniformed services members may also contribute up to 100% of 

designated special pay, incentive pay, and bonuses. These contributions are not eligible for matching 

contributions. The Federal Government or uniformed services does not match amounts contributed by CSRS 

employees or uniformed services members in the legacy retirement system.3 Civilian Federal Agencies and 

the uniformed services are required to automatically enroll newly hired (and rehired) eligible employees or 

members unless the employee or member makes an affirmative election not to participate in the Plan or to 

participate at other than the default rate of three percent.4 

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

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

Roth 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 F, C, 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. With the help of an investment consultant, the Agency reviews the assumptions 

underlying the asset allocations regularly and typically on an annual basis. 

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 balances among the individual 

investment funds and the TSP Lifecycle Funds through the interfund transfer process. In order to curb 

frequent trading and its associated costs to all TSP participants, the Agency restricts the number of interfund 

transfers a participant can make per month. The first two interfund transfers per calendar month are 

 

2 BRS participants who first entered service on or after January 1, 2018, are eligible to receive matching contributions after 2

years of service. BRS participants who first entered service on December 31, 2017, or earlier and opted into the BRS are 

immediately eligible to receive matching contributions. 

3 BRS participants who first entered service on or after January 1, 2018, are eligible to receive the government automatic 

contribution after 60 days of service. The Department of 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, five soldiers who took part in the test 

program are still serving and receiving matching contributions.

4 Certain members of the uniformed services are also subject to annual automatic re-enrollment every January 1 if they have 

stopped making contributions in the previous calendar year. 
8 

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 and a BRS participant must have 2 years of service as described in section 8432(g) of FERSA. 

FERS and BRS employees who are not vested and who separate from the Federal Government forfeit all 

agency automatic contributions and attributable earnings.5 

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, the majority of which are made under 

the Federal Erroneous Retirement Coverage Correction Act (FERCCA), totaled $41,764,124 and $48,140,043 

for the twelve month period ended December 31, 2018 and 2017, respectively. 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 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. 

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 

month period ended December 31, 2018 and 2017, loan fees of $13,619,000 and $13,923,000, respectively 

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 leave their money in the TSP. If they choose to 

withdraw 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. 

 

5 Civilian and military service cannot be combined to meet the vesting requirements. 
9 

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. Except for the G Fund, which is invested in a way to 

avoid losses, depending upon each fund’s individual risk profile, the funds can be expected to experience 

volatility over time, thus affecting the fund balances from one period to the next. 

During the twelve-month period ended December 31, 2018 and December 31, 2017, 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. By law, all investments in the G Fund earned interest at a rate that is equal 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. As of December 31, 2018 and 

December 30, 2017, the G Fund fair value was $253.4 billion and $220.4 billion, respectively. 

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 index. As 

of December 31, 2018, the separate account held $27.6 billion of securities. As of December 31, 2017, the 

separate account held $28.3 billion of securities. 

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, 2018, the separate account held 

$177.5 billion of securities. As of December 31, 2017, the separate account held $193.8 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, 2018, the separate account held $59.7 billion of securities. As of December 31, 

2017, the separate account held $67.6 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, 2018, the separate account held $40.7 billion of securities. As of December 31, 2017, the 

separate account held $47.2 billion of securities. 

Fair Market Valuations—The Plan’s agent, BlackRock, 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. 
10 

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 Valuation Committee or its delegates. The 

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

type and include, but are not limited to, Thomson Reuters, FTSE TMX (formerly PC-Bond/DEX), Bloomberg, 

ICE Data Services (formerly Interactive Data/Standard and Poor’s Securities Evaluation Service) and IHS 

Markit. 

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 as of December 31, 2018 and December 31, 2017. 

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 fees payable to the investment manager for the separate account 

program management for the prior twelve months as follows: the F Fund ($4.4 million and $4.6 million as of 

December 31, 2018 and 2017, respectively), the C Fund ($2.9 million and $2.8 million as of December 31, 

2018 and 2017, respectively), the S Fund ($14.9 million and $16.4 million as of December 31, 2018 and 2017, 

respectively) and I Fund ($4.6 million and $4.3 million as of December 31, 2018 and 2017, respectively). To 

the extent contemplated by the fund guidelines, the separate accounts in which the C, S, and I Funds are 

invested may invest in futures contracts and other derivatives. 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 ($23.0 billion and $15.0 billion as of December 31, 2018 and 2017, 

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

corresponding cash collateral payable. 

A 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 
11 

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 standards 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 December 31, 2018, and 2017, 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 

During the twelve-month period ended December 31, 2018 and 2017, depreciation and amortization expense 

was approximately $3.2 million and $3.7 million, 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). 

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, and the disclosure of contingent 

assets and liabilities. 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. 

TSP Modernization Act of 2017 – On November 17, 2017, the TSP Modernization Act (the Act or P.L.115-

84) was signed into law. The Act liberalizes the current statutory withdrawal options available to TSP 

participants and eliminates the current requirement for TSP participants to make an election for a full 
12 

distribution of their account at age 70 1⁄2. Work has begun to implement this Act; the Act requires full 

implementation by November 17, 2019. 

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 contracted 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), application services, and recordkeeping. During the twelve-month period ended December 31, 

2018 and 2017, the cost of all recordkeeping systems and operations support is approximately $191.5 million 

and $126.5 million, respectively.

The Agency has contracted with Serco to provide a contact center in Virginia and with RA Outdoors, LLC to 

provide a contact center in Maryland and Texas. During the twelve-month period ended December 31, 2018 

and 2017, the cost of the Serco contact center contract is approximately $33.3 million and $28.1 million, 

respectively. During the twelve-month period ended December 31, 2018 and 2017, the cost of the RA 

Outdoors, LLC contract is approximately $16.7 million and $8.0 million, respectively. 

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

The current Washington, DC operating lease ends September 2026. Monthly base rental payments under the 

current lease range from approximately $397,212 to $488,214. The Agency subleases office space in the same 

building it occupies in Washington, D.C. The current subleases end March 2023. Monthly base rental 

payments under the current subleases range from approximately $350,733 to $392,973. 

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

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

Calendar Year Amount

2019 $9,398,581 

2020 9,553,708

2021 9,859,794

2022 10,128,888

 Thereafter 22,368,586 

Total $61,309,557

Rent expense is recorded on a straight-line basis over the lease terms. During the twelve-month period ended 

December 31, 2018 and 2017 rent expense under the leases was approximately $9.4 million and $6.9 million, 

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 
13 

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 as of 

December 31, 2018 and 2017 was $3,561,594and $3,612,764, 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 17, 2019, the date the financial statements 

were available to be issued. Events or transactions occurring after December 31, 2018 but prior to April 17, 

2019, that provided additional evidence about conditions that existed at December 31, 2018, have been 

recognized in the financial statements for the twelve-month period ending December 31, 2018. Events or 

transactions that provided evidence about conditions that did not exist at December 31, 2018, 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, 2018.

****** 
14 

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

$253,356,456 $ - $ - $253,356,456

TSP F Fund – U.S. Debt 

Index Account - 27,635,348 - 27,635,348

TSP C Fund - Equity 

Index Account - 177,548,440 - 177,548,440

TSP S Fund- Extended 

Equity Index Account - 59,698,026 - 59,698,026

TSP I Fund- EAFE Equity 

Index Account - 40,692,868 - 40,692,868

Total assets at fair value $253,356,456 $305,574,682 $ - $558,931,138

Fair Value Measurements as of December 31, 2018

(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 $220,422,873 $ - $ - $220,422,873

TSP F Fund – U.S. Debt 

Index Account - 28,286,180 - 28,286,180 

TSP C Fund - Equity 

Index Account - 193,825,423 - 193,825,423 

TSP S Fund- Extended 

Equity Index Account - 67,640,939 - 67,640,939 

TSP I Fund- EAFE Equity 

Index Account - 47,226,007 - 47,226,007 

Total assets at fair value $220,422,873 $336,978,549 $ - $557,401,422

Fair Value Measurements as of December 31, 2017

(in thousands)
15 

 Appendix 2 

Investment 

Options

G Fund 

Investment

F Fund 

Investment

C Fund 

Investment

S Fund 

Investment

I Fund 

Investment Total 

G Fund $188,385,889 - - - - $188,385,889

F Fund - $20,200,611 - - - 20,200,611

C Fund - - $144,773,331 - - 144,773,331

S Fund - - - $50,064,889 - 50,064,889

I Fund - - - - $22,600,852 22,600,852

L Income 6,514,146 529,303 994,157 248,726 530,343 8,816,675

L 2020 16,760,554 1,688,948 4,533,578 1,181,115 2,438,468 26,602,663

L 2030 11,135,932 2,342,999 11,170,949 3,167,305 6,120,053 33,937,238

L 2040 5,551,097 1,945,570 10,304,253 3,128,653 5,733,664 26,663,237

L 2050 1,490,290 922,827 5,741,763 1,882,469 3,254,147 13,291,496

Differences (*) 23,518,548 5,090 30,409 24,869 15,341 23,594,257 

Statement of 

Net Assets $253,356,456 $27,635,348 $177,548,440 $59,698,026 $40,692,868 $558,931,138

Investment Summary by Fund as of December 31, 2018

(in thousands)

(*) Differences are a result of timing differences, including investment transactions not settled as of December 31, 2018. 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 F, C, S and I Funds.

Investment 

Options

G Fund 

Investment

F Fund 

Investment

C Fund 

Investment

S Fund 

Investment

I Fund 

Investment Total 

G Fund $165,419,304 - - - - $165,419,304

F Fund - $21,384,382 - - - 21,384,382

C Fund - - $160,525,412 - - 160,525,412

S Fund - - - $57,823,445 - 57,823,445

I Fund - - - - $28,583,842 28,583,842

L Income 6,286,902 510,336 946,484 236,244 511,530 8,491,496

L 2020 15,716,705 1,769,752 5,537,964 1,457,486 3,025,559 27,507,466

L 2030 10,781,965 2,188,642 11,279,419 3,211,335 6,269,322 33,730,683

L 2040 5,488,384 1,763,205 10,315,259 3,154,651 5,827,898 26,549,397

L 2050 1,381,324 677,126 5,168,558 1,701,160 2,972,186 11,900,354

Differences (*) 15,348,289 (7,263) 52,327 56,618 35,670 15,485,641 

Statement of 

Net Assets $220,422,873 $28,286,180 $193,825,423 $67,640,939 $47,226,007 $557,401,422

Investment Summary by Fund as of December 31, 2017

(in thousands)

(*) Differences are a result of timing differences, including investment transactions not settled as of December 31, 2017. 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 F, C, S and I Funds.

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