How to get a Thrift Savings Plan Loan?
The TSP website outlines loans as follow: “As an active TSP participant (a current federal civilian worker or member of the uniformed services), you’re allowed to borrow money from your TSP account. You repay the loan with interest in regular payments—through payroll deduction if you’re still in federal service, or by direct debit, check, or money order if you’ve left federal service. The interest rate, which stays the same for the life of the loan, is the same as the G Fund interest rate for the month before you request the loan.”
There’s also a one-time fee that comes out of the loan amount and is never returned to the account:
- $50 for a general purpose loan
- $100 for a primary residence loan
Click here to learn more about TSP loans or to apply for a TSP loan.
How to withdrawal from the Thrift Savings Plan?
Thrift Savings Plan has several terms for withdrawal. There a serval types of withdrawl through TSP:
- Hardship or financial hardship withdrawals
- Age based withdrawals (59 1/2 years old)
Financial Hardship Withdrawals
To be eligible for a financial hardship withdrawal to you meet one of the following criteria:
- Recurring negative monthly cash flow
- Medical expenses (including household improvements needed for medical care) that you have not yet paid and that are not covered by insurance
- Personal casualty loss(es) that you have not yet paid and that are not covered by insurance
- Legal expenses (such as attorneys’ fees and court costs) that you have not yet paid for separation or divorce from your spouse
- Losses due to a major disaster declared by the Federal Emergency Management Agency
Traditional TSP withdrawals are subject to federal income tax and state tax (depending on your state tax rates). All withdrawals incur an additional 10% early withdrawal fee if you are under 59 1/2 years old.
Additional minor requirements can be found on the TSP Financial hardship withdrawal homepage.
In the next section we’ll review a few example Thrift Savings Plan investing strategies.