askFW » Thrift Savings Plan (TSP) » TSP Loans and In-Service Withdrawals
There are two types of TSP loans — general purpose and residential. The former can be repaid over one to five years and the latter over one to 15 years. No documentation is required for a general purpose loan but you must submit documentation to support the amount of a residential loan request. You can have a maximum of two loans outstanding at any one time, and only one of them may be a residential loan. There is a $50 processing fee per loan, which is deducted from the loan amount.
When you take a TSP loan, you are borrowing from yourself. The minimum amount is $1,000 and the maximum depends on various factors, including the amount you have contributed and IRS rules. The loan interest rate is the G Fund rate at the time you apply.
Loans are repaid through payroll allotments over the payment period specified in the loan agreement. You may not take out a new loan for 60 days after paying off a loan.
There are two types of allowable withdrawals while in service—age-based and financial hardship.
Age-based withdrawals are available to those age 59 1⁄2 or older. They can make up to four such withdrawals annuallyfrom their accounts of at least $1,000, up to the vested amount of the account. Continued contributions to the TSP after making such a withdrawal are allowed while still employed.
Financial hardship withdrawals must be at least $1,000, up to the amount of your own contributions and their associated earnings or the amount of your demonstrated need, whichever is smaller. You must provide information on family income and expenses and supply documentation supporting the amount of your request (note: simplified procedures may be used temporarily for those affected by a natural disaster).
See also, TSP Early Withdrawal Penalty Myth at www.FEDweek.com
