Q. I’m eligible to retire March 2018. I will have FERS, 35-plus years and I’m age 56. Also, I will have an outstanding TSP loan (two years to pay it off). Would I have to pay it off or will it be a write-off with a penalty tax?
A. If your loan payments are not received for 90 days, the outstanding balance will be declared a taxable distribution, but as long as you separate from civilian service during or after the calendar year in which you reach age 55, any subsequent distributions will be exempt from the early withdrawal penalty.
