Q. I am a single/divorced female, 58 years old, and I have 38 years of federal civilian service. I retired December 30, 2017, with a small outstanding TSP loan balance – less than $900. I have about $55,000 in my TSP. I had previously left the federal service (eight years ago) and used my TSP balance earlier in my career. When I reentered the federal civil service I reinvested in TSP and currently have a balance amount of $55,000.
I’m considering requesting the full amount of my balance. Will I be penalized if I do not pay this small loan back individually and instead request the full amount of my TSP balance all in one payment – less the loan amount owed and taxes that they withdraw? Will I be penalized in requesting the full loan at age 58?
A. Your future TSP distributions will be exempt from the early withdrawal penalty.