Question: Can I Still Contribute To My TSP If I Have A Loan?

What age can I withdraw from TSP?

55With the TSP, you are exempt from the early withdrawal penalty if you separate from federal service in the year in which you reach age 55 or later.

For IRAs, the early withdrawal penalty will apply on anything you take out up until you reach the age of 59 ½..

Does TSP loan affect credit score?

When borrowing from the TSP, you are borrowing your own money, there is only a $50 fee, it doesn’t impact your credit score, and you only pay interest equivalent to the G Fund’s returns (and you are repaying that interest to yourself).

Is TSP loan a good idea?

If you need a loan, but don’t have any options, then a TSP loan makes sense. However, the dangers of borrowing money to earn a better investment still exist. They’re actually even more substantial than if you used a more traditional means, such as a HELOC. First, you run the risk of losing money on your investment.

Can you withdraw from TSP if you have a loan?

There are currently two ways that an employee younger than age 59 ½ can get money out of the Thrift Savings Plan. They are by means of a loan or a hardship withdrawal. The interest on the loan is based on the G Fund’s return in the month in which the loan is approved. …

Can you pay off a TSP loan early?

You can make additional payments or prepay your TSP loan at any time by making a check payable to the TSP and submitting it along with a loan payment coupon (TSP-26). You can get the payoff amount via either the TSP website or the ThriftLine.

Why is TSP bad?

The TSP is possibly the most inefficient account to use for a down payment and to pay for college. Savings in an individual account or a Roth IRA would be much better for the down payment as well as paying for college. A 529 plan would also work well to pay for college.

How long does it take to withdraw money from TSP?

It generally takes between 7 to 10 business days to process your request once you’ve properly completed and submitted it. We disburse withdrawals each business day. You can check My Account at tsp.gov or call the ThriftLine to find out the status of your withdrawal request, including whether the payment has been made.

What happens to my TSP if I die?

A beneficiary who is not a surviving spouse cannot retain a TSP account. The death benefit payment will be made directly to the beneficiary or to an “inherited” IRA. … If a beneficiary participant dies, the new beneficiary(ies) cannot continue to maintain the account in the TSP.

Does a TSP loan count as income?

Double taxation: When repaying a TSP loan, you pay that interest back to yourself; however, you’ll do it with after-tax dollars. … ○ Your loan amount, including any accrued interest will become taxable income. That means you’ll have to pay income tax depending on which bracket you are currently in.

Do I have to report a TSP loan on my taxes?

No, everything that needs to be reported concerning a TSP (Thrift Savings Plan) account is reported on your W2. The loan re-payment does not involve deductible interest since you did not list your primary home as collateral.

How much of your TSP can you borrow?

To borrow from your TSP account, you must be a Federal employee in pay status. If you qualify for a TSP loan, the maximum amount you may be eligible to borrow is $50,000; the minimum amount is $1,000. To find out the amount you have available to borrow, visit TSP Loans in the My Account section.

Are TSP loans bad?

The most obvious reason why it is a bad idea to pull money out of your TSP is that you lose the gains the money would have generated had it remained diversified in the TSP. … The TSP charges you the G fund rate at the time of your loan, which remains fixed. You pay this rate back to yourself.

Should I use my TSP to buy a house?

Using Your Funds to Buy a House Borrowing against your TSP contributions can be an easy way to come up with a down payment and closing costs for your first home. … The loan amount must be between $1,000 and $50,000 and gets repaid at the interest rate for the G Fund at the time of processing.