Is It A Good Idea To Take Out A TSP Loan?

Are TSP loans bad?

The Downside of Borrowing From Your Thrift Savings Plan You won’t earn any interest on the outstanding loan amount, which will affect your long-term retirement savings.

Instead of earning interest on your retirement savings, you’ll have to pay interest as you replace the funds you’ve borrowed..

Can a TSP loan be denied?

keeper, together with any documentation required to be submitted, the loan will be initially approved or denied by the TSP record keeper based upon the requirements of this part, including the following conditions: (1) The participant has signed the promise to repay the loan.

How much TSP loan can I take out?

To borrow from your TSP account, you must be a Federal employee in pay status. If you qualify for a TSP loan, the maximum amount you may be eligible to borrow is $50,000; the minimum amount is $1,000. To find out the amount you have available to borrow, visit TSP Loans in the My Account section.

Does TSP loan affect credit score?

When borrowing from the TSP, you are borrowing your own money, there is only a $50 fee, it doesn’t impact your credit score, and you only pay interest equivalent to the G Fund’s returns (and you are repaying that interest to yourself).

Can I pay off a TSP loan early?

You can make additional payments or prepay your TSP loan at any time by making a check payable to the TSP and submitting it along with a loan payment coupon (TSP-26). You can get the payoff amount via either the TSP website or the ThriftLine.

Can I use my TSP to pay off debt?

When you use the TSP to pay down debt, you need to consider what account(s) you are going to pull money from and what tax status those accounts are in. The only tax-free withdrawal options that you have from the TSP are: Roth contributions (on which taxes have already been paid)

Does a TSP loan count as income?

Double taxation: When repaying a TSP loan, you pay that interest back to yourself; however, you’ll do it with after-tax dollars. … ○ Your loan amount, including any accrued interest will become taxable income. That means you’ll have to pay income tax depending on which bracket you are currently in.

Is TSP loan a good idea?

If you need a loan, but don’t have any options, then a TSP loan makes sense. However, the dangers of borrowing money to earn a better investment still exist. They’re actually even more substantial than if you used a more traditional means, such as a HELOC. First, you run the risk of losing money on your investment.

Should I borrow from my TSP to buy a house?

Should I take out a TSP loan? A TSP loan may be right for you if you have at least $1,000 of TSP contributions in your account, you need money to pay for a primary home or for other needs, and you expect to have room in your budget to cover repayment over the term of the loan.