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Retirement of the L 2020 Fund and the Launch of New L Funds

The Lifecycle (L) 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. One of the principal characteristics of the funds is that their investment mixes become progressively more conservative as they reach their target dates. Ultimately, each of the funds will “roll down” into the L Income Fund. When this happens, the fund will be retired and a new L Fund with a time horizon (target date) later than the existing funds will be established.

On July 1, 2020, the L 2020 Fund reached its time horizon and was retired. The TSP also added six new L Funds that have 5-year increments rather than the previous 10-year increments.

This bulletin describes the activities associated with the process of retiring the L 2020 Fund and implementing the new L Funds, and how these changes impact agencies, services, and payroll offices. It supersedes TSP Bulletin 10-11 and TSP Bulletin 10-U-8, Retirement of the L 2010 Fund and the Launch of the L 2050 Fund, dated October 21, 2010.

Retirement of the L 2020 Fund

On July 1, 2020, the L 2020 Fund was retired, as it reached its time horizon and attained an asset allocation identical to the L Income Fund. As a result, after all of the transactions for June 30, 2020, were processed, all shares of the L 2020 Fund were “sold” and shares of the L Income Fund were “purchased.” The number of shares of the L Income Fund that the participant received depended upon the June 30, 2020, share prices of the L 2020 Fund and the L Income Fund. Participants who have allocated some portion of their future contributions (and loan payments and transfers to the TSP) to the L 2020 Fund had that allocation automatically changed to the L Income Fund. Participants who were affected by the fund’s retirement were mailed a confirmation notice (or notices) similar to the interfund transfer and contribution allocation confirmations, and the transactions will be reflected on their quarterly and annual statements.

Since the L 2020 Fund has been retired, no new investments to that fund will be accepted. The TSP website, the ThriftLine, and our Participant Service Representatives will not permit anyone to request an allocation to the L 2020 Fund.

Establishment of the new 5-Year L Funds

As of July 1, 2020, participants have the option to invest in the following L funds:

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 six new L Funds opened on July 1, 2020, at the initial share price of $10. Participants were able to begin making contribution allocations and interfund transfers into the new L Funds beginning at 12 noon eastern time on June 30, 2020. These selections became effective on July 1, 2020.

Breakage and negative adjustment calculations involving the L 2020 Fund

In order to calculate breakage and the value of negative adjustments when the participant had money in the L 2020 Fund on the “as of” date of the transaction, the TSP will use a constructed share price for the L 2020 Fund. This approach is similar to the one that we use for breakage and negative adjustment calculations for “as of” dates prior to January 1, 2000.

The constructed share price of the L 2020 Fund is as follows:

Constructed L Fund Share Price =
June 30, 2020 L2020 Fund share price x current L Income Fund share price
June 30, 2020 L Income Fund share price

Otherwise, there is no change in the methodology used to calculate either breakage or negative adjustments.

Impact on the agencies, services, and payroll offices

The agencies, services, and their servicing payroll offices should not experience any major impact as a result of these changes. Aside from being able to explain that the L 2020 Fund was retired and that the new L Funds were introduced, the most significant change was on the format of some of the ad hoc reports the TSP provides to the payroll offices through the TSP’s web-based JV and Data Submission Application. Agencies should see TSP Bulletin 11-8 and services should see TSP Bulletin 11-U-10, Payroll Office Reports Produced by New Record Keeping System, dated June 12, 2002, for a more detailed explanation of the various reports.

We added columns for the new L Funds to the following ad hoc reports:

  • Report 31503, Report of Detail Negative Adjustment Records Processed
    This report shows the processing of an individual negative adjustment record and can be used to answer questions from participants regarding the effect of the negative adjustment on their accounts.

  • Report 5015, Breakage Report by Participant
    This report provides details for each participant for whom breakage was calculated. It can be used to answer most of the questions from participants regarding the breakage (or lost earnings) that they received as a result of a makeup or late contribution.

  • Report 5016 Detailed Breakage Report by Participant
    This report provides more details for each participant for whom breakage was calculated.

  • Report TSP 5001, Participant Transaction History Report
    This report shows transactions posted within the record keeping system history.

  • Benefits extract
    This electronic report provides information to agencies for their employee benefits statements.

None of the following routine reports were affected by the addition of the new 5-Year L Funds:

  • Report 1702, Payroll Office Recap of Journal Voucher Processing
  • Report 1701, Error Report
  • Report 1703, Analysis of Payroll Office Errors
  • Report 31504, Summary Report of Negative Adjustments Processed
  • Report 5014, Summary of Breakage Charges
  • Report 1802, Payroll Office Recap of Loan JV Reporting
  • Report 19401, Loan Status Report
  • Report 5501, Listing of Participants for Whom Financial Hardship In-Service Withdrawals Were Disbursed
  • Report 1902, Payroll Office Recap of Earnings Adjustment JV Processing
  • Report 35002, Payroll Office Recap of Recharacterization JV Processing
  • Report 35003, Recharacterization Record Rejected Report
  • Report 1700, Header/Trailer Error Report (optional)
  • Report 1603, SF-224 Abstract (Payroll Office Detail) report (optional)
  • EDTS Trailer Report (optional)

EDTS Data Record Formats

The routine reports available via EDTS were not affected by these changes.

Additional information about the L Funds can be found under the Fund Options section of tsp.gov.