Q. I am 57 with 20 years of service and don’t plan on retiring for at least 5 years. I would like to take out a TSP loan, then when I turn 59½ take an age-based disbursement for enough to pay back the balance of the loan and have some money left over. Can I do it that way? Or would I be required to pay off the loan before getting an age-based disbursement? I would think they would just deduct the amount of money I still owe from the disbursement. For example, say I took out a $50,000 loan now. In 2½ years I’d still owe about $25,000 to $30,000. Could I take my one-time, age-based disbursement of say $100,000 with the loan balance deducted from that amount?
A. Having a TSP loan outstanding does not preclude you from taking an age-based, in-service withdrawal.