Bonding

5 U.S.C. § 8478

• Title: 5 — Government Organization and Employees
• Chapter: SUBCHAPTER VII—FEDERAL RETIREMENT THRIFT INVESTMENT MANAGEMENT SYSTEM

Text

(a)(1) Except as provided in paragraph (2), each fiduciary and each person who handles funds or property of the Thrift Savings Fund shall be bonded as provided in this section.
(2)(A) Bond shall not be required of a fiduciary (or of any officer or employee of such fiduciary) if such fiduciary—
(i) is a corporation organized and doing business under the laws of the United States or of any State;
(ii) is authorized under such laws to exercise trust powers or to conduct an insurance business;
(iii) is subject to supervision or examination by Federal or State authority; and
(iv) has at all times a combined capital and surplus in excess of such minimum amount (not less than $1,000,000) as the Secretary of Labor prescribes in regulations.
(B) If—
(i) a bank or other financial institution would, but for this subparagraph, not be required to be bonded under this section by reason of the application of the exception provided in subparagraph (A),
(ii) the bank or financial institution is authorized to exercise trust powers, and
(iii) the deposits of the bank or financial institution are not insured by the Federal Deposit Insurance Corporation,
such exception shall apply to such bank or financial institution only if the bank or institution meets bonding requirements under State law which the Secretary of Labor determines are at least equivalent to those imposed on banks by Federal law.
(b)(1) The Secretary of Labor shall prescribe the amount of a bond under this section at the beginning of each fiscal year. Except as otherwise provided in this paragraph, such amount shall not be less than 10 percent of the amount of funds handled. In no case shall such bond be less than $1,000 nor more than $500,000, except that the Secretary of Labor, after due notice and opportunity for hearing to all interested parties, and other consideration of the record, may prescribe an amount in excess of $500,000.
(2) For the purpose of prescribing the amount of a bond under paragraph (1), the amount of funds handled shall be determined by reference to the amount of the funds handled by the person, group, or class to be covered by such bond or by their predecessor or predecessors, if any, during the preceding fiscal year, or to the amount of funds to be handled during the current fiscal year by such person, group, or class, estimated as provided in regulations prescribed by the Secretary of Labor.
(c) A bond required by subsection (a)—
(1) shall include such terms and conditions as the Secretary of Labor considers necessary to protect the Thrift Savings Fund against loss by reason of acts of fraud or dishonesty on the part of the bonded person directly or through connivance with others;
(2) shall have as surety thereon a corporate surety company which is an acceptable surety on Federal bonds under authority granted by the Secretary of the Treasury pursuant to sections 9304 through 9308 of title 31; and
(3) shall be in a form or of a type approved by the Secretary of Labor, including individual bonds or schedule or blanket forms of bonds which cover a group or class.
(d)(1) It shall be unlawful for any person to whom subsection (a) applies, to receive, handle, disburse, or otherwise exercise custody or control of any of the funds or other property of the Thrift Savings Fund without being bonded as required by this section.
(2) It shall be unlawful for any fiduciary, or any other person having authority to direct the performance of functions described in paragraph (1), to permit any such function to be performed by any person to whom subsection (a) applies unless such person has met the requirements of such subsection.
(e) Notwithstanding any other provision of law, any person who is required to be bonded as provided in subsection (a) shall be exempt from any other provision of law which would, but for this subsection, require such person to be bonded for the handling of the funds or other property of the Thrift Savings Fund.
(f) The Secretary of Labor shall prescribe such regulations as may be necessary to carry out the provisions of this section, including exempting a person or class of persons from the requirements of this section.

History

(Added Pub. L. 99–335, title I, §101(a), June 6, 1986, 100 Stat. 586; amended Pub. L. 99–556, title I, §§108, 115, Oct. 27, 1986, 100 Stat. 3132, 3134; Pub. L. 102–378, §2(72), Oct. 2, 1992, 106 Stat. 1355.)

Editorial Notes

Editorial Notes

Amendments
1992—Subsec. (a)(2)(B)(iii). Pub. L. 102–378 struck out "Corporation or the Federal Savings and Loan Insurance" before "Corporation".
1986—Subsec. (a)(1). Pub. L. 99–556, §108, struck out "(other than a member of the Employee Thrift Advisory Council with respect to his duties as a member)" after "each fiduciary".
Subsec. (c)(2). Pub. L. 99–556, §115, substituted "sections 9304 through 9308 of title 31" for "sections 6 through 13 of title 6".

Statutory Notes and Related Subsidiaries

Interim Bonding Regulations
Pub. L. 99–556, title I, §113, Oct. 27, 1986, 100 Stat. 3133, provided that:
"(a) In General.—Subject to subsection (b), until such time as the Secretary of Labor promulgates final regulations under section 8478 of title 5, United States Code, the Secretary of Labor may, with respect to the Thrift Savings Fund, apply the temporary regulations under section 412 of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1112] that are set forth in section 2550.412–1, and subchapter I of chapter XXV, of title 29 of the Code of Federal Regulations, as in effect on September 23, 1986.
"(b) Termination of Interim Authority.—The authority to apply the temporary regulations referred to in subsection (a) with respect to the Thrift Savings Fund shall expire not later than December 31, 1989."