Q. My husband and I owe back taxes to the IRS, and I would like to know if the IRS can deduct what we owe from my TSP. I have a residential and personal loan out through TSP, so I am unable to do that. We owe around $24,000 and would like it deduct from what is in my TSP. They keep telling me they can’t, but I am not sure of that. I would like to get this paid off so in around 7 years I can retire without owing them. If I was able to get them paid off I could up my TSP to around 15 percent and have a good, sizable amount when I retire, but I cannot go that high because we owe IRS. Any help you can give me would be greatly appreciated.
A. If the IRS says they can’t or won’t invade your TSP account to collect, then you have your answer. I’m not sure I understand your logic here, anyway. You want to take a big withdrawal now so you can pay it back to your TSP a little at a time. Why not leave the lump sum in your TSP and pay the IRS a little at a time? You should come out about the same in the end.