As of September 5, 2015 the Thrift Savings Plan (TSP) will use Life Cycle Funds as the default investment — for new civil service enrollees who do not specify an investment fund.
The Thrift Savings Plan gives all new enrollees several choices for investment options (including short term U.S. Treasury securities, a bond fund that mirrors the U.S. bond market, various stock funds and Lifecycle funds. The Lifecycle funds include mixtures of other TSP funds.
Everyone enrolling in the Thrift Savings Plan has the opportunity to pick from one or more of the TSP’s investment options. When someone did not specify an investment option, the TSP automatically chose the Government Securities (“G Fund”) for the new enrollee.
However, the Smart Savings Act (Public Law 113-255) mandated a change in TSP practice. So, as of September 15, when a new civil service employee does not specify an investment fund, the TSP will pick a Lifecycle (L) Fund for the employee.
The TSP offers a number of Lifecycle Funds. The investments in each fund vary. Some funds include a mix of investments appropriate for people who plan to retire relatively soon. Other funds’ investments are more appropriate for those who anticipate retiring far into the future. For a new civil service enrollee who does not specify an investment option, the TSP will pick the most appropriate L fund, based on the enrollee’s age.
The new law does not apply to uniformed service members who participate in the TSP. Their default remains the G Fund.
The TSP explained these changes in its Bulletin 15-12, dated August 21, 2015.
The TSP directs questions about this Bulletin to the Federal Retirement Thrift Investment Board at 202-942-1450.
— by John Zottoli. John retired as Human Resources Specialist from the U.S. Office of Personnel Management, and he invests in a TSP Lifecycle Fund.