Browsing: debt

Using TSP withdrawal to pay off debt

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Q. I am soon to be 65 and plan to retire within the year and have debt in the amount of $67,000. This is not including my home, car, etc. I have been considering withdrawing a large amount from my Thrift Savings Plan to pay this debt. With my pension and Social Security benefits, if I figured correctly, I would be bringing home about what I do now after taxes. I know it’s personal preference, but is it a wise decision? A. I can’t say if it’s the best course of action, but the debt needs to be paid. The…

Using TSP to pay off home debt

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Q. I am a federal employee under CSRS and I plan to retire at age 55½. To minimize my debt, I plan to sell my current residence and relocate to a place where my income goes further. Unfortunately, my current residence is underwater by about $80,000. Would a good strategy be to withdraw the funds from TSP? A. I can’t tell you without knowing what other alternatives are available to you. If the $80,000 is a big part of your net worth, you should do what you can to avoid it and proceed very carefully.

TSP and debt

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Q. I have power of attorney for my military retired son who is not employed and only receiving retirement benefits, as well as undergoing a divorce. There is just not enough money to go around. I am paying what I can with his funds, but there is one large debt that there is no way to make payments on (they’ve refused what little is available) since he is only getting half of his retirement income due to the pending divorce. He has an IRA and a Thrift Savings Plan account. Would the creditor be able to take the TSP monies?…

TSP early withdrawal and debt

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Q. I left federal service in 1998 after almost seven years. I left the Thrift Savings Plan intact and have seen it grow quite nicely. It is approximately $95,000.  My husband has been in federal service since 1995 and will most likely stay in until retirement age (we are both 49 yrs old). My husband’s TSP has also grown nicely. However, being a stay-at-home mother of five, we are seriously struggling. Our oldest child is two years away from college and our next oldest will be starting at a very expensive parochial high school in September. Our other children are 11, 9 and 3. Our biggest…

Using TSP funds to cover debt

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Q: I am a Civil Service Retirement System 50-year-old employee. I’d like to withdraw $80,000 from my Thrift Savings Plan to cover unsecured debt. Is this smart? My debt is strangling me. What is the tax hit and how can I avoid it? A: You don’t have the option to make a withdrawal unless you can demonstrate financial hardship under the TSP’s definition. If you take a financial hardship withdrawal, you will owe tax on the amount you take and you will be subject to the 10 percent early-withdrawal penalty. You can, and should, consider taking a loan instead. Taking…