Q. I am 63 years old, in FERS, have 25 years of service, and have worked for the same agency my entire government career. Because of medical conditions, I need to retire within the next two months. I have an outstanding $20,000 loan and will not be able to repay it before retirement. I have read a lot of what might happen: 10 percent penalty, etc. But could you explain what would be the best course of action and how the outstanding loan will be treated. I would like to use part of my Thrift Savings Plan for medical bills. A. If…
Browsing: loan repayment
Q. I am 60½ years old, under FERS and plan to continue to work until 66. I took out a loan from the Thrift Savings Plan and currently have payments for two more years. I am wondering if I could not pay this loan off and have it counted as a disbursement since I am old enough to withdraw from my account. I would not do this until 2013. A. Yes, if you default on your loan repayment, the TSP will declare your unpaid balance, including interest, a taxable distribution and the usual rules will apply.
Q. I have a loan of $6,000 on my Thrift Savings Plan with 20 payments left. I am 60. If I make an age-based in-service complete withdrawal of my TSP, what happens to my loan and the payments I am making? Do I have to keep making the payments and then wait until I separate from service to receive it, or will it become a taxable disbursement and end my payments? A. Your loan repayment obligation continues until the loan is repaid or you fail to make the required payments and the balance due is declared a taxable distribution.
Q. I am planning on retiring in December, but I will still have outstanding balances owed on my Thrift Savings Plan loans. Will they take that remainder out of my TSP money when I withdraw it? A. If you retire with an outstanding loan balance, the unpaid balance, plus interest, will be declared a taxable distribution. This money has already been deducted from your TSP balance, so it won’t be available for withdrawal if it has not been repaid.
Q. I am 60 years old and plan on working until I’m 66. Can I take a first-time homebuyer loan from my Thrift Savings Plan as a down payment? If so, what form would I fill out? Do you happen to know how long it takes to get the money? Would I have to pay it back to the fund? Is there a penalty? I would not be taking any other payments out at this time. A. You may take a loan from your TSP, which must be repaid, or it will be declared a taxable distribution. You’ll find the…
Q. I have worked for the Postal Service for 24 years as postmaster. I would be able to take an early-out offer. I want to borrow on my Thrift Savings Plan for a residential loan. If I do a 10-year loan from my part of the TSP next month and then they offer early retirement and I take it, will I still have to continue making the payments? Also, when I retire, will I be able to pull out all my savings in TSP? A. If you retire, your outstanding TSP loan will become due. If you don’t repay it…
Q: I plan on withdrawing money from my Thrift Savings Plan account for a residential loan. Can I continue my contributions and receive matching funds during the repayment period? Also, is it required that repayment is done through payroll deduction? As I intend to pay back the loan in 20 months from my wife’s income, I prefer to pay directly by check each month. A: You may continue to contribute and receive matching contributions while repaying your loan. Your loan must be repaid through payroll deduction.