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Default Investment Fund for Civilian and Beneficiary TSP Participants

On September 5, 2015, the default investment fund for newly enrolled civilian Thrift Savings Plan (TSP) participants (and spouse beneficiaries of deceased civilian participants) changed from the Government Securities Investment (G) Fund to an age-appropriate Lifecycle (L) Fund, in accordance with the Smart Savings Act, Public Law 113-255, which was signed into law on December 18, 2014.

This bulletin discusses how the default investment fund is applied, and how participants, agencies, and payroll TSP representatives are affected. It supersedes TSP Bulletin 15-2, New Default Investment Fund for Civilian and Beneficiary TSP Participants, dated August 21, 2015.

What are the Lifecycle (L) Funds?

The L Funds are funds that are invested according to a professionally designed mix of stocks, bonds, and government securities. These funds are designed to provide participants with an easy, convenient way of investing their Thrift Savings Plan (TSP) accounts among the five individual TSP funds based on when the participants will need the money in retirement. Detailed information on the L Funds can be found under the Fund Options section of

Who is defaulted to an age-appropriate L Fund?

TSP regulations at 5 CFR § 1601.13 state that the default TSP investment fund will be used for new participants who have not made a contribution allocation with the TSP at the time contributions are made. This primarily affects newly enrolled civilian participants, rehired civilian participants who have $0.00 balances in their TSP accounts, and new beneficiary participants. Participants subject to these default investment rules are sent a “Welcome Letter” from the TSP that includes the date of birth used to determine their age-appropriate L Fund, along with the “acknowledgement of risk” information required by the Smart Savings Act.

  • Newly Enrolled Civilian Participants
    All civilian employees first enrolled in the TSP on or after September 5, 2015 (either through automatic enrollment or their own contribution election) have their TSP contributions invested in an age-appropriate L Fund until they make a contribution allocation with the TSP. Participants who were enrolled in the TSP prior to September 5, 2015, retain their current contribution allocations. Participants who were enrolled prior to September 5, 2015, and who have not yet made a contribution allocation, retain their default investment in the G Fund.
  • Rehired Civilian Participants Who Do Not Have a TSP Account Balance
    Civilian employees who are rehired on or after September 5, 2015, and who have $0.00 balances in their TSP accounts from their previous period of employment have their TSP contributions invested in an age-appropriate L Fund until they make a contribution allocation with the TSP. Those employees who are rehired on or after September 5, 2015, and have an existing TSP account with a balance greater than $0.00 will retain the last contribution allocation on file with the TSP. If no contribution allocation is on file, a re-hired employee with a positive account balance will continue to have their TSP contributions invested in the G Fund.
  • Beneficiary Participants
    When a TSP participant dies, the TSP will (once notified) move the deceased participant’s entire account balance into the G Fund before processing payment to any designated or statutory beneficiaries. A surviving spouse who is entitled to receive $200 or more of a deceased participant’s TSP account will have the entire death benefit automatically deposited into a Beneficiary Participant Account (BPA). New BPAs created on or after September 5, 2015, use the age-appropriate L Fund based on the age of the beneficiary participant as the default investment. More information on BPAs is available in a separate bulletin on TSP death benefits

How is a participant’s default L Fund determined?

The TSP uses a target retirement age of 63 to determine which L Fund will serve as the default investment fund for civilian and beneficiary participants who are subject to the default investment rules, as described in the previous section. The year the participant reaches age 63 is matched with the corresponding L Fund, rounding up or down as necessary.

On July 1, 2020, the L 2020 Fund was retired, and the TSP added six new L Funds that have 5-year increments rather than the previous 10-year increments. The age-appropriate default investment funds are now as follows:

Default Fund For those born in years: Expected TSP drawdown in:
L Income 1957 or earlier Already withdrawing, or will start withdrawing before 2021
L 2025 1958 – 1964 2021 – 2027
L 2030 1965 – 1969 2028 – 2032
L 2035 1970 – 1974 2033 – 2037
L 2040 1975 – 1979 2038 – 2042
L 2045 1980 – 1984 2043 – 2047
L 2050 1985 – 1989 2048 – 2052
L 2055 1990 – 1994 2053 – 2057
L 2060 1995 – 1999 2058 – 2062
L 2065 2000 and later 2063 and later

The TSP uses the date of birth listed on the Employee Data (06) Record (EDR) to determine the appropriate default L Fund for a participant. It is therefore extremely important that the participant’s servicing payroll office submit an EDR with the correct date of birth when enrolling a newly hired or rehired employee. Employing agencies will be responsible for paying breakage (lost earnings) when an incorrect date of birth caused by agency error results in default investment in the wrong L Fund. See the Error Correction section below for more information.

The TSP will use the DOB listed on Form TSP-3, Designation of Beneficiary, or Form TSP-17, Information Relating to Deceased Participant, to determine the appropriate default L Fund for a new beneficiary participant.

What is the procedure for correcting errors?

In accordance with 5 CFR § 1605, TSP participants are not entitled to breakage when they are invested in the wrong default L Fund as a result of their own error (i.e., providing an incorrect date of birth at the time of hire). However, a participant who is defaulted into the wrong L Fund as a result of employing agency error is entitled to receive breakage, provided the error is discovered by either the participant or the employing agency within 30 days of the date on the Welcome Letter sent by the TSP to the participant upon receipt of their first contribution. If the Welcome Letter is returned as undeliverable, the 30-day window is extended to 30 days after the participant’s first quarterly or, if earlier, annual statement is posted to If the error is discovered after either of these time periods, the employing agency may use its own discretion in deciding whether or not it will pay breakage. The period for which the participant is eligible for breakage starts at the time the error is made and ends when the participant first reports the error to their employing agency, or when the participant performs a contribution allocation or interfund transfer, whichever is earlier.

When an employing agency learns that a participant’s date of birth is incorrect, the servicing payroll office must submit an EDR to the TSP with the corrected date of birth. However, because the TSP will be unaware of the source of the error or whether the participant is entitled to receive breakage, receiving a new date of birth will not trigger corrective action by the TSP, other than to update the date of birth. The agency should notify the affected employee that only participants are responsible for making investment changes to their TSP accounts. If they wish, employees can make an interfund transfer to redirect money already in the account, or a contribution allocation to direct the investment of new contributions going into the TSP.

To request a breakage calculation for an employee, the employing agency should submit Form TSP-5-B, Request to Calculate Breakage. The TSP will calculate and charge the employing agency breakage, based on the initial, incorrect L Fund default investment and the accurate, age-appropriate L Fund, regardless of the participant’s current contribution allocation. Once the calculation is completed and the participant’s account is made whole, Form TSP-5-B will be returned to the agency contact shown on the form. Section V of the form will show the amount of breakage for which the agency is responsible. The agency should use the information on the returned form to reconcile their records for TSP purposes.

TSP errors are uncommon because most participant data is received electronically and does not require any manual processing. If a TSP error occurs, the participant will be entitled to receive breakage from the TSP, subject to the same 30-day window described.

July 01, 2020
Questions concerning this bulletin should be directed to your Agency Technical Services representative.

Chapter 3, Eligibility

Chapter 6, Account maintenance


TSP Bulletin 15-2, New Default Investment Fund for Civilian and Beneficiary TSP Participants, dated August 21, 2015.