Q. I am considering leaving my federal job but still owe approximately $10,000 back on my TSP loan. How can I figure out if it’s more beneficial to just have the balance count as taxable income vs. taking a bank loan to pay it back? A. There is no way to know, in advance, which will work out better in the end. You might want to have your tax preparer run pro-forma calculations to see what the impact will be on your tax returns, and make the decision based on that information.
Browsing: loan repayment
Q. I am still in government service but did need to take a lump-sum withdrawal of my TSP funds at 59-1/2 years old. My plan is to continue to work and to pay into my TSP account. What will my withdrawal options be when I retire at the planned age of 68?
Q. I understand that you have up to 90 days to repay your outstanding loan after retirement. Is there an option for the outstanding balance to be paid with funds in the TSP account prior to the 90 days? A. No.
Q. We are planning to buy a home and will use a Veterans Administration loan. We will pay all the closing costs and plan to use a TSP residential loan for those costs. We have to show the money in our bank account as we move forward with our loan proceedings. We are not sure of the exact amount that will be needed at closing, so could possibly end up with more than what is required. Can we use any excess? How do we report what is used for the purpose of closing and fees and possible down payment? If…
Q. I plan to retire prior to fully repaying my TSP loan balance. If the loan balance is eventually repaid in a lump sum from my TSP account balance, does that count as my one partial lump-sum distribution? A. No.
Q. I’ve decided that it would be financially advantageous for me to default on my current TSP loan, in order to pay off other, more pressing and expensive debts. My loan payment is currently deducted automatically from my biweekly civil-service paycheck by the Treasury Department. So I have three questions: 1) Is there a mechanism by which I can have Treasury stop making the loan payment/deduction? 2) If so, then if I do so as of Oct. 15, will I be liable for the taxes on the deemed disbursement in this tax year, or in the next tax year? (I…
Q. I am looking at retiring in the FERS LEO category next year. I have a $30,000 outstanding TSP loan, which we will not be able to pay back. I understand I will incur a 10 percent IRS penalty and the $30,000 will be looked at as a taxable disbursement. Am I still eligible to obtain life expectancy withdrawals when I retire? A. Yes.
Q. I have approximately $4,500 to repay on a TSP loan. I want to retire in five years, so I’m trying to build up my TSP. Am I better off to let the loan run it’s course, or am I better off putting the additional contributions toward the loan?
Q. I have a TSP residential loan. I sold the property associated with that loan and bought a new one. Am I obligated to pay back the loan all in one lump sum now, or may I simply continue making the payments, in effect switching out the primary property with which the loan is associated?
Q. From what I understand, I must repay a TSP loan within 90 days of the date my agency notifies TSP of my separation from service, otherwise my loan is taxable. When does the agency notify TSP of my separation, upon retirement? A. You’ll have to ask your agency’s benefits officer.