With the new year comes changes to your Thrift Savings Plan L Funds. These are the funds where you determine when you’re going to tap the money — You set it and forget it.
On Dec. 31, 2010, the L-2010 Fund was closed and those funds were rolled into the L Income Fund, said Tom Trabucco, director of external affairs at the Federal Retirement Thrift Investment Board, in an interview with the DorobekINSIDER.
The new L-2050 Fund begins Jan. 31. Participants can begin allocating funds to the L-2050 starting at noon on Jan. 28, by going to www.tsp.gov.
The L Funds are life cycle funds that “cobble together” the appropriate investment allocations for all of the five core funds — the G, F, C, S and I Funds, Trabucco said.
The introduction of the L-2050 Fund has no effect on the five core funds, Trabucco said.
The L Funds are automatically maintained for the participant at a particular allocation and reallocated everyday based on market performance, he said.
“Each quarter, [the L funds] adjust allocation to become more conservative as they approach the draw down date,” Trabucco said.
Trabucco noted that the draw down date is not always the retirement date. Some people may put off drawing their TSP funds for years or even decades after retirement because they continue working outside of government or have other retirement benefits, he said.
Participants must begin drawing down at age 70 1/2 but do not have to exhaust their funds, Trabucco said.