To amend title 5, United States Code, to provide for the automatic enrollment of new participants in the Thrift Savings Plan, and for other purposes.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Thrift Savings 
Plan Enhancement Act of 2008''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Automatic enrollments.
Sec. 3. Qualified Roth contribution program.
Sec. 4. Authority to establish self-directed investment options.
Sec. 5. Reporting requirements.
Sec. 6. Acknowledgement of risk.

SEC. 2. AUTOMATIC ENROLLMENTS.

    (a) Automatic Enrollment of New Participants.--
            (1) In general.--Section 8432(b) of title 5, United States 
        Code, is amended by striking paragraphs (2) through (4) and 
        inserting the following:
    ``(2)(A) The Board shall by regulation provide for new participants 
to be automatically enrolled to make contributions under subsection (a) 
at the default percentage of basic pay.
    ``(B) For purposes of this paragraph, the default percentage shall 
be equal to 3 percent or such other percentage, not less than 2 percent 
nor more than 5 percent, as the Board may by regulation prescribe.
    ``(C) The regulations shall include provisions under which any 
individual who would otherwise be automatically enrolled in accordance 
with subparagraph (A) may--
            ``(i) modify the percentage or amount to be contributed 
        pursuant to automatic enrollment, effective from the start of 
        such enrollment; or
            ``(ii) decline automatic enrollment altogether.
    ``(D) For purposes of this paragraph, the term `new participant' 
means any individual participating in the Thrift Savings Plan pursuant 
to an appointment or election which occurs after any regulations under 
subparagraph (A) first take effect.
    ``(E) Sections 8351(a)(1), 8440a(a)(1), 8440b(a)(1), 8440c(a)(1), 
8440d(a)(1), and 8440e(a)(1) shall be applied in a manner consistent 
with the purposes of this paragraph.''.
            (2) Technical amendment.--Section 8432(b)(1) of title 5, 
        United States Code, is amended by striking the parenthetical 
        matter in subparagraph (B).
    (b) Default Investments.--Section 8438(c)(2) of title 5, United 
States Code, is amended to read as follows:
    ``(2) If an election has not been made with respect to any sums in 
the Thrift Savings Fund which are available for investment, the 
Executive Director shall invest such sums in--
            ``(A) the Government Securities Investment Fund; or
            ``(B) such alternative fund or funds (in lieu of the fund 
        under subparagraph (A)) as the Board may designate in 
        regulations.
The designation of an alternative fund by regulations under 
subparagraph (B) may be made only if, in the judgment of the Board, 
such designation would be in the best interests of participants. Any 
decision under the preceding sentence shall be made after consultation 
with the Employee Thrift Advisory Council (established under section 
8473).''.

SEC. 3. QUALIFIED ROTH CONTRIBUTION PROGRAM.

    (a) In General.--Subchapter III of chapter 84 of title 5, United 
States Code, is amended by inserting after section 8432c the following:
``Sec. 8432d. Qualified Roth contribution program
    ``(a) Definitions.--For purposes of this section--
            ``(1) the term `qualified Roth contribution program' means 
        a program described in paragraph (1) of section 402A(b) of the 
        Internal Revenue Code of 1986 which meets the requirements of 
        paragraph (2) of such section; and
            ``(2) the terms `designated Roth contribution' and 
        `elective deferral' have the meanings given such terms in 
        section 402A of the Internal Revenue Code of 1986.
    ``(b) Authority To Establish.--The Board shall by regulation 
provide for the inclusion in the Thrift Savings Plan of a qualified 
Roth contribution program, under such terms and conditions as the Board 
may prescribe.
    ``(c) Required Provisions.--The regulations under subsection (b) 
shall include--
            ``(1) provisions under which an election to make designated 
        Roth contributions may be made--
                    ``(A) by any individual who is eligible to make 
                contributions under section 8351, 8432(a), 8440a, 
                8440b, 8440c, 8440d, or 8440e; and
                    ``(B) by any individual, not described in 
                subparagraph (A), who is otherwise eligible to make 
                elective deferrals under the Thrift Savings Plan;
            ``(2) any provisions which may, as a result of the 
        enactment of this section, be necessary in order to clarify the 
        meaning of any reference to an `account' made in section 
        8432(f), 8433, 8434(d), 8435, 8437, or any other provision of 
        law; and
            ``(3) any other provisions which may be necessary to carry 
        out this section.''.
    (b) Clerical Amendment.--The analysis for chapter 84 of title 5, 
United States Code, is amended by inserting after the item relating to 
section 8432c the following:

``8432d. Qualified Roth contribution program.''.

SEC. 4. AUTHORITY TO ESTABLISH SELF-DIRECTED INVESTMENT OPTIONS.

    (a) In General.--Section 8438(b)(1) of title 5, United States Code, 
is amended--
            (1) in subparagraph (D), by striking ``and'' at the end;
            (2) in subparagraph (E), by striking the period and 
        inserting ``; and''; and
            (3) by adding after subparagraph (E) the following:
                    ``(F) self-directed investment options, if the 
                Board authorizes such options under paragraph (5).''.
    (b) Requirements.--Section 8438(b) of title 5, United States Code, 
is amended by adding at the end the following:
    ``(5)(A) The Board may authorize the addition of self-directed 
investment options under the Thrift Savings Plan if the Board 
determines that the addition of such options would be in the best 
interests of participants.
    ``(B) The self-directed investment options shall be limited to--
            ``(i) low-cost, passively-managed index funds that offer 
        diversification benefits; and
            ``(ii) other investment options, if the Board determines 
        the options to be appropriate retirement investment vehicles 
        for participants.
    ``(C) The Board shall ensure that any administrative expenses 
related to self-directed investment options are borne solely by the 
participants who use such options.
    ``(D) The Board may establish such other terms and conditions for 
self-directed investment options as the Board considers appropriate to 
protect the interests of participants, including requirements relating 
to risk disclosure.
    ``(E) The Board shall consult with the Employee Thrift Advisory 
Council (established under section 8473) before establishing any self-
directed investment option.''.

SEC. 5. REPORTING REQUIREMENTS.

    (a) Annual Report.--The Board shall, not later than March 31 of 
each year, submit to Congress an annual report on the operations of the 
Thrift Savings Plan. Such report shall include, for the prior calendar 
year, information on the number of participants as of the last day of 
such prior calendar year, the median balance in participants' accounts 
as of such last day, demographic information on participants, the 
percentage allocation of amounts among investment funds or options, the 
status of the development and implementation of self-directed 
investment options, and such other information as the Board considers 
appropriate. A copy of each annual report under this subsection shall 
be made available to the public through an Internet website.
    (b) Reporting of Fees and Other Information.--
            (1) In general.--The Board shall include in the periodic 
        statements provided to participants under section 8439(c) the 
        amount of the investment management fees, administrative 
        expenses, and any other fees or expenses paid with respect to 
        each investment fund and option under the Thrift Savings Plan. 
        Any such statement shall also provide--
                    (A) information on the employee's estimated income 
                replacement rate, as determined by the Executive 
                Director based on the employee's most recent account 
                balance and rates of contributions; and
                    (B) a statement notifying participants as to how 
                they may access the annual report described in 
                subsection (a) as well as any other information 
                concerning the Thrift Savings Plan that might be 
                useful.
            (2) Use of estimates.--For purposes of providing the 
        information required under this subsection, the Executive 
        Director may provide a reasonable and representative estimate 
        of any fees or expenses described in paragraph (1) and shall 
        indicate any such estimate as being such an estimate. Any such 
        estimate shall be based on the previous year's experience.
    (c) Definitions.--For purposes of this section--
            (1) the term ``Board'' has the meaning given such term by 
        8401(5) of title 5, United States Code;
            (2) the term ``participant'' has the meaning given such 
        term by section 8471(3) of title 5, United States Code; and
            (3) the term ``account'' means an account established under 
        section 8439 of title 5, United States Code.

SEC. 6. ACKNOWLEDGEMENT OF RISK.

    (a) In General.--Section 8439(d) of title 5, United States Code, is 
amended--
            (1) by striking the matter after ``who elects to invest 
        in'' and before ``shall sign an acknowledgement'' and inserting 
        ``any investment fund or option under this chapter, other than 
        the Government Securities Investment Fund,''; and
            (2) by striking ``either such Fund'' and inserting ``any 
        such fund or option''.
    (b) Coordination With Provisions Relating to Investments in the 
Absence of an Election.--Subsection (d) of section 8439 of title 5, 
United States Code (as amended by subsection (a)) is further amended--
            (1) by redesignating subsection (d) as subsection (d)(1); 
        and
            (2) by adding at the end the following:
    ``(2)(A) In the case of an investment made under section 8438(c)(2) 
in any fund or option to which paragraph (1) would otherwise apply, the 
participant involved shall, for purposes of this subsection, be 
deemed--
            ``(i) to have elected to invest in such fund or option; and
            ``(ii) to have executed the acknowledgement required under 
        paragraph (1).
    ``(B)(i) The Executive Director shall prescribe regulations under 
which written notice shall be provided to a participant whenever an 
investment is made under section 8438(c)(2)(B) on behalf of such 
particpant in the absence of an affirmative election described in 
section 8438(c)(1).
    ``(ii) The regulations shall ensure that any such notice shall be 
provided to the participant within 7 calendar days after the effective 
date of the default election.
    ``(C) For purposes of this paragraph, the term `participant' has 
the meaning given such term by section 8471(3).''.
    (c) Coordination With Provisions Relating to Fiduciary 
Responsibilities, Liabilities, and Penalties.--Section 8477(e)(1)(C) is 
amended--
            (1) by redesignating subparagraph (C) as subparagraph 
        (C)(i); and
            (2) by adding at the end the following:
    ``(ii) A fiduciary shall not be liable under subparagraph (A), and 
no civil action may be brought against a fiduciary--
            ``(I) for providing for the automatic enrollment of a 
        participant in accordance with section 8432(b)(2)(A); or
            ``(II) for enrolling a participant in a default investment 
        fund in accordance with section 8438(c)(2)(B).''.

Summary: Thrift Savings Plan Enhancement Act of 2008 - Revises requirements for participation in the Thrift Savings Plan (TSP) to require the Federal Retirement Thrift Investment Board to provide regulations for automatic enrollment of new participants to make contributions at the default percentage of basic pay.



 Allows a default investment in an alternative fund or funds (in lieu of the Government Securities Investment Fund (G Fund)), as the Board may designate in regulations, if an election has not been made with respect to any TSP sums available for investment.

Requires the Board to include in the TSP, by regulation, a qualified Roth contribution progam (under which an employee may elect to make designated Roth contributions in lieu of elective deferrals under the retirement plan).

Authorizes the Board to permit the addition of self-directed investment options under the TSP if it determines that such an addition would be in the best interests of participants.

Limits such investment options to: (1) low-cost, passively-managed index funds that offer diversification benefits; and (2) other appropriate retirement investment vehicles for participants.

Deems a participant, in the case of a default investment in the G Fund or an alternative fund, to have: (1) elected to invest in such fund; and (2) executed the acknowledgement of risk otherwise required.