TSP Loans

TSP Loans, good way to borrow money!

The TSP loan program is a vital benefit that enables the participants to access the money in their accounts. However, taking a TSP loan would result in less money when you retire, so before you borrow from your account you should be knowledgeable, on the pros and cons of TSP loans. You would be able to find TSP loan info to the thrift savings plan web site.

Before participants engage in TSP loans, they take into consideration first the potential effect of these loans to their retirement income and then decide whether it would be more appropriate to borrow from other sources.

The TSP Loan info that would be found on the websites, would inform the participants on different TSP loan rules and regulations about TSP loan payments. TSP loan rules for borrowing include that a participant should have at least $1,000USD in their contributions and associated earnings in their account. A participant should be presently employed as a Federal civilian employee or a member of the uniformed services, because separated and retired TSP participants are not allowed to borrow. Other rules can be found on the website.

There are two types of loans available. One is the general purpose loan with a repayment period of one to five years. Another type is the residential loan with a repayment period of one to fifteen years. A residential loan can only be used for purchasing or constructing a primary residence. The residence could be a house, condominium, townhouse, mobile home recreational vehicle or a boat but it should be used as the primary home of the borrower.

The minimum amount a participant could borrow is $1000USD and the maximum amount is determined by the thrifty savings plan and the Internal Revenue Services. A participant should also be aware that when they borrow from their TSP account, their account balance would be decreased by the amount of their loan. When they repay their loan, their repayments are invested in their TSP account according to their most recent contribution allocations.

TSP loan payments are made through payroll deductions. When their loan is disbursed, the TSP will notify their payroll office immediately to start deduction loan payments from their salaries. The TSP will also report their loan transactions on their quarterly participant statement. Borrowers may not suspend their loan payments. When they agree to the loan terms, they agree to repay the loan in full thus allowing the payroll to deduct it form their salaries.