TSP Withdrawals
 

Anyone out there made a withdrawal from their TSP? Looks like there are several conditions that allow you to, both for active and separated members. Unfortunately, there's not a condition of "I just want the money, yo." So, has anyone made a withdrawal based on negative cash flow or emergency funds? The TSP rep on the phone said they'd approve any withdrawal request that's made, the rest of it is between the member and the IRS. Any personal experiences out there?

yeah, needed the cash, five years to pay back, 1TP a month. took about a week to seal the deal

A Withdrawl (i.e. permanent) you'd have to see if your situation is covered by an exception to the IRS rules.

If you're just looking for cash now, you can get a TSP loan and then pay it back over a 5 year period. If it's for purchasing a home, you can pay it back over 15 years. While you have the money out, you are essentially paying (to yourself) whatever the G funds rate is (usually around 3%) over the course of the loan. The potential downside of taking a loan out is you miss out on any returns on the market makes while your money is out.

disregard ...........

I had the same idea, came to the conclusion I couldn't get my money back til I seperated, unless I wanted to take a loan out from myself, which seemed like more of a pain than it was worth.

I thought that if you took a loan against your TSP the interest rate went to the Fund. Not *your* fund.

Just re-read the TSP website about loans:

"he interest rate you pay for the life of the loan is the latest available interest rate for the G Fund at the time your application is processed. The interest you pay on the loan will go into your TSP account, along with repayments of the loan principal. Visit Current Information on this Web site or call the ThriftLine to find out the current interest rate for TSP loans. Also, if you use the Loan Calculator on this Web site, the calculator will use the current rate automatically."

So, the interest goes back into your account but it is taxed by the Fed.

I'm a Fed, and have made a TSP withdrawal. There are two types - loans and "I just want the money". I did a loan, the rate was reasonable and the principle and interest was paid back via payroll deduction to my TSP account.

If "you just want the money" beware. It will be taxed (since it went in pre-tax), plus there is a 10 or 20% penalty on top of the tax.

Also, you're not reaping the benefits of interest on the money that has been removed - of course the last 2 years wasn't gang-buster as far as earning in the TSP go :)