Q: I’m an Air National Guard technician under FERS with 34 years service. My first nine years were active-duty Air Force service, which I have bought back. I have a personal loan through TSP that will still have a balance of about $6,000 when I intend to retire next July at my MRA of 56. I intend to depend significantly upon TSP, $2,500 a month, until I reach the age of 59 3/4, when my military Guard retirement will start paying out. At that point, I’ll minimize my TSP annuity. Will the outstanding loan balance have any effect on my planned TSP retirement annuity? Will TSP allow a $2,500-a-month annuity, $30,000 a year, for four years even though my civilian TSP balance is about $260,000?
A: Your unpaid loan balance will be declared a distribution from your account shortly after you separate from service, if not fully repaid by that time. The unpaid loan will be a permanent reduction to the value of your TSP account. An annuity must be based on your life expectancy and once purchased, is irrevocable and unchangeable in the manner you’ve suggested. You may set monthly withdrawals against your account in any amount you wish, and may change those withdrawals once each year, or terminate them entirely by withdrawing the balance of your account assets.