L Fund Still in Development

The TSP continues to work, with the aid of a contractor, on developing the lifecycle, or L fund, which the TSP’s governing board approved last fall. That fund will allow investors to choose from certain target dates to withdraw the money—for example, 2010, 2020 or 2030—and the money will be allocated among the other five funds according to a predetermined risk/reward ratio. Also, the fund will be automatically adjusted to maintain the desired ratio, plus it will become more conservative as the withdrawal date approaches. As with similar funds offered in the private sector, once the withdrawal date has been reached, the fund would become a current income fund—in the TSP, probably meaning invested exclusively or almost exclusively in the G fund—and a new target date fund ten years beyond the longest one would be added.