[Congressional Record Volume 142, Number 128 (Tuesday, September 17, 1996)]
[Senate]
[Pages S10724-S10727]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              THRIFT SAVINGS INVESTMENT FUNDS ACT OF 1996

  Mr. McCAIN. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of Calendar No. 412, S. 1080.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       A bill (S. 1080) to amend Chapter 84 of Title 5, United 
     States Code, to provide additional investment funds for the 
     Thrift Savings Plan.

  The PRESIDING OFFICER. Is there objection to the immediate 
consideration of the bill?
  There being no objection, the Senate proceeded to consider the bill 
which had been reported from the Committee on Governmental Affairs, 
with an amendment to strike all after the enacting clause and inserting 
in lieu thereof the following:

    TITLE I--ADDITIONAL INVESTMENT FUNDS FOR THE THRIFT SAVINGS PLAN

     SEC. 101. SHORT TITLE.

       This title may be cited as the ``Thrift Savings Investment 
     Funds Act of 1996''.

     SEC. 102. ADDITIONAL INVESTMENT FUNDS FOR THE THRIFT SAVINGS 
                   PLAN.

       Section 8438 of title 5, United States Code, is amended--
       (1) in subsection (a)--
       (A) by redesignating paragraphs (5) through (8) as 
     paragraphs (6) through (9), respectively;
       (B) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) the term `International Stock Index Investment Fund' 
     means the International Stock Index Investment Fund 
     established under subsection (b)(1)(E);'';
       (C) in paragraph (8) (as redesignated by subparagraph (A) 
     of this paragraph) by striking out ``and'' at the end 
     thereof;
       (D) in paragraph (9) (as redesignated by subparagraph (A) 
     of this paragraph)--
       (i) by striking out ``paragraph (7)(D)'' in each place it 
     appears and inserting in each such place ``paragraph 
     (8)(D)''; and
       (ii) by striking out the period and inserting in lieu 
     thereof a semicolon and ``and''; and
       (E) by adding at the end thereof the following new 
     paragraph:
       ``(10) the term `Small Capitalization Stock Index 
     Investment Fund' means the Small Capitalization Stock Index 
     Investment Fund established under subsection (b)(1)(D).''; 
     and
       (2) in subsection (b)--
       (A) in paragraph (1)--
       (i) in subparagraph (B) by striking out ``and'' at the end 
     thereof;
       (ii) in subparagraph (C) by striking out the period and 
     inserting in lieu thereof a semicolon; and
       (iii) by adding at the end thereof the following new 
     subparagraphs:
       ``(D) a Small Capitalization Stock Index Investment Fund as 
     provided in paragraph (3); and
       ``(E) an International Stock Index Investment Fund as 
     provided in paragraph (4).''; and
       (B) by adding at the end thereof the following new 
     paragraphs:
       ``(3)(A) The Board shall select an index which is a 
     commonly recognized index comprised of common stock the 
     aggregate market value of which represents the United States 
     equity markets excluding the common stocks included in the 
     Common Stock Index Investment Fund.
       ``(B) The Small Capitalization Stock Index Investment Fund 
     shall be invested in a portfolio designed to replicate the 
     performance of the index in subparagraph (A). The portfolio 
     shall be designed such that, to the extent practicable, the 
     percentage of the Small Capitalization Stock Index Investment 
     Fund that is invested in each stock is the same as the 
     percentage determined by dividing the aggregate market value 
     of all shares of that stock by the aggregate market value of 
     all shares of all stocks included in such index.
       ``(4)(A) The Board shall select an index which is a 
     commonly recognized index comprised of stock the aggregate 
     market value of which is a reasonably complete representation 
     of the international equity markets excluding the United 
     States equity markets.
       ``(B) The International Stock Index Investment Fund shall 
     be invested in a portfolio designed to replicate the 
     performance of the index in subparagraph (A). The portfolio 
     shall be designed such that, to the extent practicable, the 
     percentage of the International Stock Index Investment Fund 
     that is invested in each stock is the same as the percentage 
     determined by dividing the aggregate market value of all 
     shares of that stock by the aggregate market value of all 
     shares of all stocks included in such index.''.

     SEC. 103. ACKNOWLEDGEMENT OF INVESTMENT RISK.

       Section 8439(d) of title 5, United States Code, is amended 
     by striking out ``Each employee, Member, former employee, or 
     former Member who elects to invest in the Common Stock Index 
     Investment Fund or the Fixed Income Investment Fund described 
     in paragraphs (1) and

[[Page S10725]]

     (3),'' and inserting in lieu thereof ``Each employee, Member, 
     former employee, or former Member who elects to invest in the 
     Common Stock Index Investment Fund, the Fixed Income 
     Investment Fund, the International Stock Index Investment 
     Fund, or the Small Capitalization Stock Index Investment 
     Fund, defined in paragraphs (1), (3), (5), and (10),''.

     SEC. 104. EFFECTIVE DATE.

       This title shall take effect on the date of enactment of 
     this Act, and the Funds established under this title shall be 
     offered for investment at the earliest practicable election 
     period (described in section 8432(b) of title 5, United 
     States Code) as determined by the Executive Director in 
     regulations.
              TITLE II--THRIFT SAVINGS ACCOUNTS LIQUIDITY

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Thrift Savings Plan Act of 
     1996''.

     SEC. 202. NOTICE TO SPOUSES FOR IN-SERVICE WITHDRAWALS; DE 
                   MINIMUS ACCOUNTS; CIVIL SERVICE RETIREMENT 
                   SYSTEM PARTICIPANTS.

       Section 8351(b) of title 5, United States Code, is 
     amended--
       (1) in paragraph (5)--
       (A) in subparagraph (B)--
       (i) by striking out ``An election, change of election, or 
     modification (relating to the commencement date of a deferred 
     annuity)'' and inserting in lieu thereof ``An election or 
     change of election'';
       (ii) by inserting ``or withdrawal'' after ``and a loan'';
       (iii) by inserting ``and (h)'' after ``8433(g)'';
       (iv) by striking out ``the election, change of election, or 
     modification'' and inserting in lieu thereof ``the election 
     or change of election''; and
       (v) by inserting ``or withdrawal'' after ``for such loan''; 
     and
       (B) in subparagraph (D)--
       (i) by inserting ``or withdrawals'' after ``of loans''; and
       (ii) by inserting ``or (h)'' after ``8433(g)''; and
       (2) in paragraph (6)--
       (A) by striking out ``$3,500 or less'' and inserting in 
     lieu thereof ``less than an amount that the Executive 
     Director prescribes by regulation''; and
       (B) by striking out ``unless the employee or Member elects, 
     at such time and otherwise in such manner as the Executive 
     Director prescribes, one of the options available under 
     subsection (b)''.

     SEC. 203. IN-SERVICE WITHDRAWALS; WITHDRAWAL ELECTIONS, 
                   FEDERAL EMPLOYEES RETIREMENT SYSTEM 
                   PARTICIPANTS.

       (a) In General.--Section 8433 of title 5, United States 
     Code, is amended--
       (1) by striking out subsections (b) and (c) and inserting 
     in lieu thereof the following:
       ``(b) Subject to section 8435 of this title, any employee 
     or Member who separates from Government employment is 
     entitled and may elect to withdraw from the Thrift Savings 
     Fund the balance of the employee's or Member's account as--
       ``(1) an annuity;
       ``(2) a single payment;
       ``(3) 2 or more substantially equal payments to be made not 
     less frequently than annually; or
       ``(4) any combination of payments as provided under 
     paragraphs (1) through (3) as the Executive Director may 
     prescribe by regulation.
       ``(c)(1) In addition to the right provided under subsection 
     (b) to withdraw the balance of the account, an employee or 
     Member who separates from Government service and who has not 
     made a withdrawal under subsection (h)(1)(A) may make one 
     withdrawal of any amount as a single payment in accordance 
     with subsection (b)(2) from the employee's or Member's 
     account.
       ``(2) An employee or Member may request that the amount 
     withdrawn from the Thrift Savings Fund in accordance with 
     subsection (b)(2) be transferred to an eligible retirement 
     plan.
       ``(3) The Executive Director shall make each transfer 
     elected under paragraph (2) directly to an eligible 
     retirement plan or plans (as defined in section 402(c)(8) of 
     the Internal Revenue Code of 1986) identified by the 
     employee, Member, former employee, or former Member for whom 
     the transfer is made.
       ``(4) A transfer may not be made for an employee, Member, 
     former employee, or former Member under paragraph (2) until 
     the Executive Director receives from that individual the 
     information required by the Executive Director specifically 
     to identify the eligible retirement plan or plans to which 
     the transfer is to be made.'';
       (2) in subsection (d)--
       (A) in paragraph (1) by striking out ``Subject to paragraph 
     (3)(A)'' and inserting in lieu thereof ``Subject to paragraph 
     (3)'';
       (B) by striking out paragraph (2) and redesignating 
     paragraph (3) as paragraph (2); and
       (C) in paragraph (2) (as redesignated under subparagraph 
     (B) of this paragraph)--
       (i) in subparagraph (A) by striking out ``(A)''; and
       (ii) by striking out subparagraph (B);
       (3) in subsection (f)(1)--
       (A) by striking out ``$3,500 or less'' and inserting in 
     lieu thereof ``less than an amount that the Executive 
     Director prescribes by regulation; and
       (B) by striking out ``unless the employee or Member elects, 
     at such time and otherwise in such manner as the Executive 
     Director prescribes, one of the options available under 
     subsection (b), or'' and inserting a comma;
       (4) in subsection (f)(2)--
       (A) by striking out ``February 1'' and inserting in lieu 
     thereof ``April 1'';
       (B) in subparagraph (A)--
       (i) by striking out ``65'' and inserting in lieu thereof 
     ``70\1/2\''; and
       (ii) by inserting ``or'' after the semicolon;
       (C) by striking out subparagraph (B); and
       (D) by redesignating subparagraph (C) as subparagraph (B);
       (5) in subsection (g)--
       (A) in paragraph (1) by striking out ``after December 31, 
     1987, and''; and
       (B) by striking out paragraph (2) and redesignating 
     paragraphs (3) through (5) as paragraphs (2) through (4), 
     respectively; and
       (6) by adding after subsection (g) the following new 
     subsection:
       ``(h)(1) An employee or Member may apply, before 
     separation, to the Board for permission to withdraw an amount 
     from the employee's or Member's account based upon--
       ``(A) the employee or Member having attained age 59\1/2\; 
     or
       ``(B) financial hardship.
       ``(2) A withdrawal under paragraph (1)(A) shall be 
     available to each eligible participant one time only.
       ``(3) A withdrawal under paragraph (1)(B) shall be 
     available only for an amount not exceeding the value of that 
     portion of such account which is attributable to 
     contributions made by the employee or Member under section 
     8432(a) of this title.
       ``(4) Withdrawals under paragraph (1) shall be subject to 
     such other conditions as the Executive Director may prescribe 
     by regulation.
       ``(5) A withdrawal may not be made under this subsection 
     unless the requirements of section 8435(e) of this title are 
     satisfied.''.
       (b) Invalidity of Certain Prior Elections.--Any election 
     made under section 8433(b)(2) of title 5, United States Code 
     (as in effect before the effective date of this title), with 
     respect to an annuity which has not commenced before the 
     implementation date of this title as provided by regulation 
     by the Executive Director in accordance with section 207 of 
     this title, shall be invalid.

     SEC. 204. SURVIVOR ANNUITIES FOR FORMER SPOUSES; NOTICE TO 
                   FEDERAL EMPLOYEES RETIREMENT SYSTEM SPOUSES FOR 
                   IN-SERVICE WITHDRAWALS.

       Section 8435 of title 5, United States Code, is amended--
       (1) in subsection (a)(1)(A)--
       (A) by striking out ``may make an election under subsection 
     (b)(3) or (b)(4) of section 8433 of this title or change an 
     election previously made under subsection (b)(1) or (b)(2) of 
     such section'' and inserting in lieu thereof ``may withdraw 
     all or part of a Thrift Savings Fund account under subsection 
     (b) (2), (3), or (4) of section 8433 of this title or change 
     a withdrawal election''; and
       (B) by adding at the end thereof ``A married employee or 
     Member (or former employee or Member) may make a withdrawal 
     from a Thrift Savings Fund account under subsection (c)(1) of 
     section 8433 of this title only if the employee or Member (or 
     former employee or Member) satisfies the requirements of 
     subparagraph (B).'';
       (2) in subsection (c)--
       (A) in paragraph (1)--
       (i) by striking out ``An election, change of election, or 
     modification of the commencement date of a deferred annuity'' 
     and inserting in lieu thereof ``An election or change of 
     election''; and
       (ii) by striking out ``modification, or transfer'' and 
     inserting in lieu thereof ``or transfer''; and
       (B) in paragraph (2) in the matter following subparagraph 
     (B)(ii) by striking out ``modification,'';
       (3) in subsection (e)--
       (A) in paragraph (1)--
       (i) in subparagraph (A)--

       (I) by inserting ``or withdrawal'' after ``A loan'';
       (II) by inserting ``and (h)'' after ``8433(g)''; and
       (III) by inserting ``or withdrawal'' after ``such loan'';

       (ii) in subparagraph (B) by inserting ``or withdrawal'' 
     after ``loan''; and
       (iii) in subparagraph (C)--

       (I) by inserting ``or withdrawal'' after ``to a loan''; and
       (II) by inserting ``or withdrawal'' after ``for such 
     loan''; and

       (B) in paragraph (2)--
       (i) by inserting ``or withdrawal'' after ``loan''; and
       (ii) by inserting ``and (h)'' after ``8344(g)''; and
       (4) in subsection (g)--
       (A) by inserting ``or withdrawals'' after ``loans''; and
       (B) by inserting ``and (h)'' after ``8344(g)''.

     SEC. 205. DE MINIMUS ACCOUNTS RELATING TO THE JUDICIARY.

       (a) Justices and Judges.--Section 8440a(b)(7) of title 5, 
     United States Code, is amended--
       (1) by striking out ``$3,500 or less'' and inserting in 
     lieu thereof ``less than an amount that the Executive 
     Director prescribes by regulation''; and
       (2) by striking out ``unless the justice or judge elects, 
     at such time and otherwise in such manner as the Executive 
     Director prescribes, one of the options available under 
     section 8433(b)''.
       (b) Bankruptcy Judges and Magistrates.--Section 8440b(b) of 
     title 5, United States Code, is amended--
       (1) in paragraph (7) in the first sentence by inserting 
     ``of the distribution'' after ``equal to the amount''; and
       (2) in paragraph (8)--
       (A) by striking out ``$3,500 or less'' and inserting in 
     lieu thereof ``less than an amount that the Executive 
     Director prescribes by regulation''; and
       (B) by striking out ``unless the bankruptcy judge or 
     magistrate elects, at such time and otherwise in such manner 
     as the Executive Director prescribes, one of the options 
     available under subsection (b)''.
       (c) Federal Claims Judges.--Section 8440c(b) of title 5, 
     United States Code, is amended--
       (1) in paragraph (7) in the first sentence by inserting 
     ``of the distribution'' after ``equal to the amount''; and
       (2) in paragraph (8)--

[[Page S10726]]

       (A) by striking out ``$3,500 or less'' and inserting in 
     lieu thereof ``less than an amount that the Executive 
     Director prescribes by regulation''; and
       (B) by striking out ``unless the judge elects, at such time 
     and otherwise in such manner as the Executive Director 
     prescribes, one of the options available under section 
     8433(b)''.

     SEC. 206. DEFINITION OF BASIC PAY.

       (a) In General.--(1) Section 8401(4) of title 5, United 
     States Code, is amended by striking out ``except as provided 
     in subchapter III of this chapter,''.
       (2) Section 8431 of title 5, United States Code, is 
     repealed.
       (b) Technical and Conforming Amendments.--(1) The table of 
     sections for chapter 84 of title 5, United States Code, is 
     amended by striking out the item relating to section 8431.
       (2) Section 5545a(h)(2)(A) of title 5, United States Code, 
     is amended by striking out ``8431,''.
       (3) Section 615(f) of the Treasury, Postal Service, and 
     General Government Appropriations Act, 1996 (Public Law 104-
     52; 109 Stat. 500; 5 U.S.C. 5343 note) is amended by striking 
     out ``section 8431 of title 5, United States Code,''.

     SEC. 207. EFFECTIVE DATE.

       This title shall take effect on the date of the enactment 
     of this Act and withdrawals and elections as provided under 
     the amendments made by this title shall be made at the 
     earliest practicable date as determined by the Executive 
     Director in regulations.


                           Amendment No. 5367

  Mr. McCAIN. I understand that there is an amendment submitted by 
Senators Kerrey and Pryor, and I ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Arizona [Mr. McCain], for Mr. Kerrey, for 
     himself and Mr. Pryor, proposes an amendment numbered 5367.

  Mr. FORD. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 15, line 2 of the bill, change the ``;'' to an 
     ``,'' and add the following: ``and by adding at the end of 
     the paragraph the following sentence:
       `` `Before a loan is issued, the Executive Director shall 
     provide in writing the employee or Member with appropriate 
     information concerning the cost of the loan relative to other 
     sources of financing, as well as the lifetime cost of the 
     loan, including the difference in interest rates between the 
     funds offered by the Thrift Savings Fund, and any other 
     effect of such loan on the employee's or Members's final 
     account balance.' ''

  Mr. McCAIN. I ask unanimous consent that the amendment be agreed to, 
the committee amendment, as amended, be agreed to, the bill then be 
deemed read a third time, passed, the amendment to the title be agreed 
to, the motion to reconsider be laid upon the table, and that any 
statements relating to the bill be placed at appropriate place in the 
Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 5367) was agreed to.
  The committee amendment in the nature of a substitute, as amended, 
was agreed to.
  The bill was deemed read the third time, and passed, as follows:

                                S. 1080

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,
    TITLE I--ADDITIONAL INVESTMENT FUNDS FOR THE THRIFT SAVINGS PLAN

     SEC. 101. SHORT TITLE.

       This title may be cited as the ``Thrift Savings Investment 
     Funds Act of 1996''.

     SEC. 102. ADDITIONAL INVESTMENT FUNDS FOR THE THRIFT SAVINGS 
                   PLAN.

       Section 8438 of title 5, United States Code, is amended--
       (1) in subsection (a)--
       (A) by redesignating paragraphs (5) through (8) as 
     paragraphs (6) through (9), respectively;
       (B) by inserting after paragraph (4) the following new 
     paragraph:
       ``(5) the term `International Stock Index Investment Fund' 
     means the International Stock Index Investment Fund 
     established under subsection (b)(1)(E);'';
       (C) in paragraph (8) (as redesignated by subparagraph (A) 
     of this paragraph) by striking out ``and'' at the end 
     thereof;
       (D) in paragraph (9) (as redesignated by subparagraph (A) 
     of this paragraph)--
       (i) by striking out ``paragraph (7)(D)'' in each place it 
     appears and inserting in each such place ``paragraph 
     (8)(D)''; and
       (ii) by striking out the period and inserting in lieu 
     thereof a semicolon and ``and''; and
       (E) by adding at the end thereof the following new 
     paragraph:
       ``(10) the term `Small Capitalization Stock Index 
     Investment Fund' means the Small Capitalization Stock Index 
     Investment Fund established under subsection (b)(1)(D).''; 
     and
       (2) in subsection (b)--
       (A) in paragraph (1)--
       (i) in subparagraph (B) by striking out ``and'' at the end 
     thereof;
       (ii) in subparagraph (C) by striking out the period and 
     inserting in lieu thereof a semicolon; and
       (iii) by adding at the end thereof the following new 
     subparagraphs:
       ``(D) a Small Capitalization Stock Index Investment Fund as 
     provided in paragraph (3); and
       ``(E) an International Stock Index Investment Fund as 
     provided in paragraph (4).''; and
       (B) by adding at the end thereof the following new 
     paragraphs:
       ``(3)(A) The Board shall select an index which is a 
     commonly recognized index comprised of common stock the 
     aggregate market value of which represents the United States 
     equity markets excluding the common stocks included in the 
     Common Stock Index Investment Fund.
       ``(B) The Small Capitalization Stock Index Investment Fund 
     shall be invested in a portfolio designed to replicate the 
     performance of the index in subparagraph (A). The portfolio 
     shall be designed such that, to the extent practicable, the 
     percentage of the Small Capitalization Stock Index Investment 
     Fund that is invested in each stock is the same as the 
     percentage determined by dividing the aggregate market value 
     of all shares of that stock by the aggregate market value of 
     all shares of all stocks included in such index.
       ``(4)(A) The Board shall select an index which is a 
     commonly recognized index comprised of stock the aggregate 
     market value of which is a reasonably complete representation 
     of the international equity markets excluding the United 
     States equity markets.
       ``(B) The International Stock Index Investment Fund shall 
     be invested in a portfolio designed to replicate the 
     performance of the index in subparagraph (A). The portfolio 
     shall be designed such that, to the extent practicable, the 
     percentage of the International Stock Index Investment Fund 
     that is invested in each stock is the same as the percentage 
     determined by dividing the aggregate market value of all 
     shares of that stock by the aggregate market value of all 
     shares of all stocks included in such index.''.

     SEC. 103. ACKNOWLEDGEMENT OF INVESTMENT RISK.

       Section 8439(d) of title 5, United States Code, is amended 
     by striking out ``Each employee, Member, former employee, or 
     former Member who elects to invest in the Common Stock Index 
     Investment Fund or the Fixed Income Investment Fund described 
     in paragraphs (1) and (3),'' and inserting in lieu thereof 
     ``Each employee, Member, former employee, or former Member 
     who elects to invest in the Common Stock Index Investment 
     Fund, the Fixed Income Investment Fund, the International 
     Stock Index Investment Fund, or the Small Capitalization 
     Stock Index Investment Fund, defined in paragraphs (1), (3), 
     (5), and (10),''.

     SEC. 104. EFFECTIVE DATE.

       This title shall take effect on the date of enactment of 
     this Act, and the Funds established under this title shall be 
     offered for investment at the earliest practicable election 
     period (described in section 8432(b) of title 5, United 
     States Code) as determined by the Executive Director in 
     regulations.
              TITLE II--THRIFT SAVINGS ACCOUNTS LIQUIDITY

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Thrift Savings Plan Act of 
     1996''.

     SEC. 202. NOTICE TO SPOUSES FOR IN-SERVICE WITHDRAWALS; DE 
                   MINIMUS ACCOUNTS; CIVIL SERVICE RETIREMENT 
                   SYSTEM PARTICIPANTS.

       Section 8351(b) of title 5, United States Code, is 
     amended--
       (1) in paragraph (5)--
       (A) in subparagraph (B)--
       (i) by striking out ``An election, change of election, or 
     modification (relating to the commencement date of a deferred 
     annuity)'' and inserting in lieu thereof ``An election or 
     change of election'';
       (ii) by inserting ``or withdrawal'' after ``and a loan'';
       (iii) by inserting ``and (h)'' after ``8433(g)'';
       (iv) by striking out ``the election, change of election, or 
     modification'' and inserting in lieu thereof ``the election 
     or change of election''; and
       (v) by inserting ``or withdrawal'' after ``for such loan''; 
     and
       (B) in subparagraph (D)--
       (i) by inserting ``or withdrawals'' after ``of loans''; and
       (ii) by inserting ``or (h)'' after ``8433(g)''; and
       (2) in paragraph (6)--
       (A) by striking out ``$3,500 or less'' and inserting in 
     lieu thereof ``less than an amount that the Executive 
     Director prescribes by regulation''; and
       (B) by striking out ``unless the employee or Member elects, 
     at such time and otherwise in such manner as the Executive 
     Director prescribes, one of the options available under 
     subsection (b)''.

     SEC. 203. IN-SERVICE WITHDRAWALS; WITHDRAWAL ELECTIONS, 
                   FEDERAL EMPLOYEES RETIREMENT SYSTEM 
                   PARTICIPANTS.

       (a) In General.--Section 8433 of title 5, United States 
     Code, is amended--
       (1) by striking out subsections (b) and (c) and inserting 
     in lieu thereof the following:
       ``(b) Subject to section 8435 of this title, any employee 
     or Member who separates from Government employment is 
     entitled and may elect to withdraw from the Thrift Savings 
     Fund the balance of the employee's or Member's account as--

[[Page S10727]]

       ``(1) an annuity;
       ``(2) a single payment;
       ``(3) 2 or more substantially equal payments to be made not 
     less frequently than annually; or
       ``(4) any combination of payments as provided under 
     paragraphs (1) through (3) as the Executive Director may 
     prescribe by regulation.
       ``(c)(1) In addition to the right provided under subsection 
     (b) to withdraw the balance of the account, an employee or 
     Member who separates from Government service and who has not 
     made a withdrawal under subsection (h)(1)(A) may make one 
     withdrawal of any amount as a single payment in accordance 
     with subsection (b)(2) from the employee's or Member's 
     account.
       ``(2) An employee or Member may request that the amount 
     withdrawn from the Thrift Savings Fund in accordance with 
     subsection (b)(2) be transferred to an eligible retirement 
     plan.
       ``(3) The Executive Director shall make each transfer 
     elected under paragraph (2) directly to an eligible 
     retirement plan or plans (as defined in section 402(c)(8) of 
     the Internal Revenue Code of 1986) identified by the 
     employee, Member, former employee, or former Member for whom 
     the transfer is made.
       ``(4) A transfer may not be made for an employee, Member, 
     former employee, or former Member under paragraph (2) until 
     the Executive Director receives from that individual the 
     information required by the Executive Director specifically 
     to identify the eligible retirement plan or plans to which 
     the transfer is to be made.'';
       (2) in subsection (d)--
       (A) in paragraph (1) by striking out ``Subject to paragraph 
     (3)(A)'' and inserting in lieu thereof ``Subject to paragraph 
     (3)'';
       (B) by striking out paragraph (2) and redesignating 
     paragraph (3) as paragraph (2); and
       (C) in paragraph (2) (as redesignated under subparagraph 
     (B) of this paragraph)--
       (i) in subparagraph (A) by striking out ``(A)''; and
       (ii) by striking out subparagraph (B);
       (3) in subsection (f)(1)--
       (A) by striking out ``$3,500 or less'' and inserting in 
     lieu thereof ``less than an amount that the Executive 
     Director prescribes by regulation; and
       (B) by striking out ``unless the employee or Member elects, 
     at such time and otherwise in such manner as the Executive 
     Director prescribes, one of the options available under 
     subsection (b), or'' and inserting a comma;
       (4) in subsection (f)(2)--
       (A) by striking out ``February 1'' and inserting in lieu 
     thereof ``April 1'';
       (B) in subparagraph (A)--
       (i) by striking out ``65'' and inserting in lieu thereof 
     ``70\1/2\''; and
       (ii) by inserting ``or'' after the semicolon;
       (C) by striking out subparagraph (B); and
       (D) by redesignating subparagraph (C) as subparagraph (B);
       (5) in subsection (g)--
       (A) in paragraph (1) by striking out ``after December 31, 
     1987, and'', and by adding at the end of the paragraph the 
     following sentence: ``Before a loan is issued, the Executive 
     Director shall provide in writing the employee or Member with 
     appropriate information concerning the cost of the loan 
     relative to other sources of financing, as well as the 
     lifetime cost of the loan, including the difference in 
     interest rates between the funds offered by the Thrift 
     Savings Fund, and any other effect of such loan on the 
     employee's or Member's final account balance.''; and
       (B) by striking out paragraph (2) and redesignating 
     paragraphs (3) through (5) as paragraphs (2) through (4), 
     respectively; and
       (6) by adding after subsection (g) the following new 
     subsection:
       ``(h)(1) An employee or Member may apply, before 
     separation, to the Board for permission to withdraw an amount 
     from the employee's or Member's account based upon--
       ``(A) the employee or Member having attained age 59\1/2\; 
     or
       ``(B) financial hardship.
       ``(2) A withdrawal under paragraph (1)(A) shall be 
     available to each eligible participant one time only.
       ``(3) A withdrawal under paragraph (1)(B) shall be 
     available only for an amount not exceeding the value of that 
     portion of such account which is attributable to 
     contributions made by the employee or Member under section 
     8432(a) of this title.
       ``(4) Withdrawals under paragraph (1) shall be subject to 
     such other conditions as the Executive Director may prescribe 
     by regulation.
       ``(5) A withdrawal may not be made under this subsection 
     unless the requirements of section 8435(e) of this title are 
     satisfied.''.
       (b) Invalidity of Certain Prior Elections.--Any election 
     made under section 8433(b)(2) of title 5, United States Code 
     (as in effect before the effective date of this title), with 
     respect to an annuity which has not commenced before the 
     implementation date of this title as provided by regulation 
     by the Executive Director in accordance with section 207 of 
     this title, shall be invalid.

     SEC. 204. SURVIVOR ANNUITIES FOR FORMER SPOUSES; NOTICE TO 
                   FEDERAL EMPLOYEES RETIREMENT SYSTEM SPOUSES FOR 
                   IN-SERVICE WITHDRAWALS.

       Section 8435 of title 5, United States Code, is amended--
       (1) in subsection (a)(1)(A)--
       (A) by striking out ``may make an election under subsection 
     (b)(3) or (b)(4) of section 8433 of this title or change an 
     election previously made under subsection (b)(1) or (b)(2) of 
     such section'' and inserting in lieu thereof ``may withdraw 
     all or part of a Thrift Savings Fund account under subsection 
     (b) (2), (3), or (4) of section 8433 of this title or change 
     a withdrawal election''; and
       (B) by adding at the end thereof ``A married employee or 
     Member (or former employee or Member) may make a withdrawal 
     from a Thrift Savings Fund account under subsection (c)(1) of 
     section 8433 of this title only if the employee or Member (or 
     former employee or Member) satisfies the requirements of 
     subparagraph (B).'';
       (2) in subsection (c)--
       (A) in paragraph (1)--
       (i) by striking out ``An election, change of election, or 
     modification of the commencement date of a deferred annuity'' 
     and inserting in lieu thereof ``An election or change of 
     election''; and
       (ii) by striking out ``modification, or transfer'' and 
     inserting in lieu thereof ``or transfer''; and
       (B) in paragraph (2) in the matter following subparagraph 
     (B)(ii) by striking out ``modification,'';
       (3) in subsection (e)--
       (A) in paragraph (1)--
       (i) in subparagraph (A)--

       (I) by inserting ``or withdrawal'' after ``A loan'';
       (II) by inserting ``and (h)'' after ``8433(g)''; and
       (III) by inserting ``or withdrawal'' after ``such loan'';

       (ii) in subparagraph (B) by inserting ``or withdrawal'' 
     after ``loan''; and
       (iii) in subparagraph (C)--

       (I) by inserting ``or withdrawal'' after ``to a loan''; and
       (II) by inserting ``or withdrawal'' after ``for such 
     loan''; and

       (B) in paragraph (2)--
       (i) by inserting ``or withdrawal'' after ``loan''; and
       (ii) by inserting ``and (h)'' after ``8344(g)''; and
       (4) in subsection (g)--
       (A) by inserting ``or withdrawals'' after ``loans''; and
       (B) by inserting ``and (h)'' after ``8344(g)''.

     SEC. 205. DE MINIMUS ACCOUNTS RELATING TO THE JUDICIARY.

       (a) Justices and Judges.--Section 8440a(b)(7) of title 5, 
     United States Code, is amended--
       (1) by striking out ``$3,500 or less'' and inserting in 
     lieu thereof ``less than an amount that the Executive 
     Director prescribes by regulation''; and
       (2) by striking out ``unless the justice or judge elects, 
     at such time and otherwise in such manner as the Executive 
     Director prescribes, one of the options available under 
     section 8433(b)''.
       (b) Bankruptcy Judges and Magistrates.--Section 8440b(b) of 
     title 5, United States Code, is amended--
       (1) in paragraph (7) in the first sentence by inserting 
     ``of the distribution'' after ``equal to the amount''; and
       (2) in paragraph (8)--
       (A) by striking out ``$3,500 or less'' and inserting in 
     lieu thereof ``less than an amount that the Executive 
     Director prescribes by regulation''; and
       (B) by striking out ``unless the bankruptcy judge or 
     magistrate elects, at such time and otherwise in such manner 
     as the Executive Director prescribes, one of the options 
     available under subsection (b)''.
       (c) Federal Claims Judges.--Section 8440c(b) of title 5, 
     United States Code, is amended--
       (1) in paragraph (7) in the first sentence by inserting 
     ``of the distribution'' after ``equal to the amount''; and
       (2) in paragraph (8)--
       (A) by striking out ``$3,500 or less'' and inserting in 
     lieu thereof ``less than an amount that the Executive 
     Director prescribes by regulation''; and
       (B) by striking out ``unless the judge elects, at such time 
     and otherwise in such manner as the Executive Director 
     prescribes, one of the options available under section 
     8433(b)''.

     SEC. 206. DEFINITION OF BASIC PAY.

       (a) In General.--(1) Section 8401(4) of title 5, United 
     States Code, is amended by striking out ``except as provided 
     in subchapter III of this chapter,''.
       (2) Section 8431 of title 5, United States Code, is 
     repealed.
       (b) Technical and Conforming Amendments.--(1) The table of 
     sections for chapter 84 of title 5, United States Code, is 
     amended by striking out the item relating to section 8431.
       (2) Section 5545a(h)(2)(A) of title 5, United States Code, 
     is amended by striking out ``8431,''.
       (3) Section 615(f) of the Treasury, Postal Service, and 
     General Government Appropriations Act, 1996 (Public Law 104-
     52; 109 Stat. 500; 5 U.S.C. 5343 note) is amended by striking 
     out ``section 8431 of title 5, United States Code,''.

     SEC. 207. EFFECTIVE DATE.

       This title shall take effect on the date of the enactment 
     of this Act and withdrawals and elections as provided under 
     the amendments made by this title shall be made at the 
     earliest practicable date as determined by the Executive 
     Director in regulations.

  The title was amended so as to read:

       A bill to amend chapters 83 and 84 of title 5, United 
     States Code, to provide additional investment funds for the 
     Thrift Savings Plan, to permit employees to gain additional 
     liquidity in their Thrift Savings Accounts, and for other 
     purposes.
     
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