Retirement and loans owed

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Q: I have $110,000 in my TSP account. I took out $40,000 for a home loan,  and I still owe $25,000 on it. I want to retire in April 2012 at age 56. How will the unpaid loan be handled? How much will come out of the $110,000 I have in the account?

A: The unpaid loan balance, including interest, will be declared a taxable distribution from your account.

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