TSP loan overpayment

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Q. I just finished paying off a Thrift Savings Plan loan, and the last loan payment was greater than the necessary last payment. Apparently, the difference will be sent to me by check. Does this count as a disbursement? Will I have to pay a penalty on this money? How can I just put it back into the TSP where it belongs?

A. It doesn’t belong in the TSP. It’s an overpayment and will be refunded to you with no distribution or tax liability accruing.

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