TSP updates loan, withdrawal options -- FederalSoup.com

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TSP updates loan, withdrawal options

By FederalSoup Staff
May 19, 2020

The Thrift Savings Plan announced updates for temporary loans and withdrawals for TSP participants affected by COVID-19.

To get CARES Act-enabled loans or withdraw funds, participants, their spouses or dependents must have been diagnosed with COVID-19 by a test approved by the Centers for Disease Control and Prevention or be experiencing financial hardship as a result of the fallout of the pandemic, such as a lost job or lack of child care.

The maximum loan amount has been increased from $50,000 to $100,000, and TSP participants can now borrow 100% of their available balance. The deadline for applying for a loan with this increased maximum will be in September, TSP officials said. Additionally, loan payments may be suspended for 12 months, extending the term of the loan by 12 months. The deadline for suspending payments will be Dec. 31.

A one-time withdrawal of up to $100,000 from a civilian or uniformed services account is now permitted. For those still in federal service, earlier requirements that they must be at least 59 ½ years old or meet specific financial hardship criteria have now been waived. The deadline for applying for this withdrawal will be in December 2020.

More information is available here.

Reader comments

Thu, May 21, 2020

If I select to withdraw one-time for $100,000 from a civilian service, I am still in Federal service, and I am younger than 59.5 (I am 54 - 19 years of service). Do I have to pay 10% penalty for withdrawal now or will that be waived? And will I pay taxes in 2021 for $100,000 withdrawal, and what percent tax rate would I have to pay?

Thu, May 21, 2020

Although it says the in service early withdrawal option is available, there is no option for this on the website and in discussion with the TSP reps, it won't be until sometime late June.