Q: I must withdraw (roll over) my TSP account beginning Feb. 25. Can I withdraw the funds to refinance my home? Would this use of my funds result in a higher tax liability than if I rolled over the funds into an investment fund?
A: All funds distributions from the TSP are taxable unless they are considered a loan, or rolled over to another tax-deferred retirement account, such as an IRA. It doesn’t matter what you use the funds for. A Required Minimum Distribution may not be rolled over and must be included in your taxable income for the year. If the distribution is rolled over to an IRA, it does not increase your tax liability for the year.
