Effect of retiring on outstanding loan balance


Q. I am retiring from federal service after 27 years. I am going to roll my TSP account over into an IRA account. I will have an outstanding TSP loan balance of far less than the value of my account, unless I pay it off. If I decide not to pay it off and take a partial distribution next year for tax purposes, will that delay the processing of my rollover at retirement?

A. I can’t say for sure, since I don’t process those transactions. It should not delay the rollover, however, since the outstanding loan balance will be declared a taxable distribution in association with the rollover.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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