I need a sanity check or slap in the face. Spouse and I (even before the economic downturn) have been planning on breaking up her Lifecycle 2040 into moving it into 75% C and 35% S. The L funds are not aggressive enough for her taste and want to better mirror an index fund.

Current allocation in the L 2040:

G Fund 20.57%
F Fund 7.68%
C Fund 35.88%
S Fund 10.76%
I Fund 25.11 %

I think it would be smart to do this now, basically move from the L 2040 fund, break it up and reallocate what was in the G, F, and I Funds into the C and S Fund. I would not really be locking in losses with the downturn, and if anything may be beneficial once the market rebounds.

Is this line of thinking correct? She has roughly 22 years until retirement, and currently has $150k in this account. Max allocation $19,500 per year.

Timing isn't great right now as the stock funds have been getting hammered.  If you like risk I'd put it in C, historically that fund gets the best returns but with the market bouncing around I hope her risk tolerance is high.  When the market rebounds (which it will) C investment will pay off bigger than S, the historical returns of these funds bears that out.    L funds are terrible, I have no clue why people put their money in those, they follow a program and alter distributions from a script with no attention to what is actually happening in the markets.  I'm deep into C fund until close to retirement, then start shifting over to the F fund to isolate yourself from market fluctuations.

I have been in the C & I fund (50/50) since Trump came on board. been doing phenomenal until recently.

I'm going to wait it out

I've been 70, 20, 10 in C, S, and I for quite a few years. I haven't moved anything yet, and don't plan on it, but I have been wondering if I can move things around to better position myself when we come out of this.

G fund is just wasting money of if you are planning to retire and are extremely risk averse.

I just L funds as my "safe" distributions while being heavy in S and C.