hardship forces early withdrawal

[money_bags]

Hey everyone, new guy here. I was enrolled in a tsp (thrift savings plan) while on active duty. I am currently 26, and seperated and no longer federally employed. I am going through an economic hardship and would like to withdrawl at least 5k from my account (currently approx 10k invested). Im looking for a way to be able to use that money to pay bills, and at the same time trying minimalize the tax and penalties. Am I correct that once I make a withdrawl, 20% will be withheld, and then I will receive a 10% tax? Is there a smarter way to dip into that money other than a withdrawl? And how does that all figure out in the end, come tax time? Any advice will be helfpul, this is kind of a last resort as well.

 

[JTH]

Have you applied for a loan within the TSP website?

 

[Afishegg]

My friend, I am sorry about your hardship and all but let me be VERY clear here. This move if you do it, will haunt you for the rest of your life. If this is your attitude now about,your future, then why stop at 5k? Why not just take it all and after you blow the 5k just have yourself a good,time with the other 5k. This 10k in 30 yrs could well turn out to be a hundred thou or more but raiding it now to pay off some temp bills will cost you big time! In short, under no circumstance should you do this, sell your car, move back in with mommy and daddy, eat ramen noodles, or MAC and cheese , Whatever you have to do, do NOT dip into youR TSP!

 

[Show-me]

He is separated so no loan. Give TSP a call and get the facts from them on the tax, but I do think they with hold the Kings share right off the bat.

 

[Show-me]

Afishegg is absolutely right, what he said goes for me too.

 

[jpcavin]

Concur with Afishegg

 

[jpcavin]

Are you eligible for reenlistment? If so, have you considered joining the reserves for some extra cash?

 

[mayday]

If you truly are in a hardship. Get form TSP-76 to see if you qualify.

 

[mayday]

If you truly are in a hardship. Get form TSP-76 to see if you qualify.

Or call TSP service office national finance center at (504) 255-8777

I hope this helps. Sorry for your situation.

 

[alevin]

Hi, sorry to hear things are so rough right now. I hope it's not too late for you to find another way through the situation-I tend to agree with the others here on that one.

from what I understand, it would simply be a partial withdrawal-"hardship" withdrawals are only for people still in-service.

On the bright side-if you absolutely can't find another way to handle your situation-you may owe less tax than you'd expect, even with early withdrawal penalty. A portion of your TSP withdrawal would be taxfree withdrawal if you served in a combat zone. see the info at the link down below.

https://www.tsp.gov/planparticipation/withdrawals/withdrawingAccount.shtml

 

[money_bags]

My friend, I am sorry about your hardship and all but let me be VERY clear here. This move if you do it, will haunt you for the rest of your life. If this is your attitude now about,your future, then why stop at 5k? Why not just take it all and after you blow the 5k just have yourself a good,time with the other 5k. This 10k in 30 yrs could well turn out to be a hundred thou or more but raiding it now to pay off some temp bills will cost you big time! In short, under no circumstance should you do this, sell your car, move back in with mommy and daddy, eat ramen noodles, or MAC and cheese , Whatever you have to do, do NOT dip into youR TSP!

I hear what you're saying...believe me. I've always lived a somewhat frugal lifestyle. Just don't see any other options at this point, so its not a matter of whether to pull the money out or not, but the smartest way to pull it out. Also, as young as I am, and when I get this job from Lockheed, I should be able to catch back up in the market. 1yr deployment in afhanistan should help cut down on living costs and my earning potential should cancel out any "gains" I would've missed out on in the market. Also, if I fall behind on my bills, what is the implications of that? Late fees, credit reporting, higher interest rates). I would say -In all but a few cases should you not dip into your TSP. If i can find work here soon, should be able to keep my head above water, then no need to pull it out. Don't forget tuna, potatos, and chicken qtrs, (cheap and a lot healthier)

 

[money_bags]

Hi, sorry to hear things are so rough right now. I hope it's not too late for you to find another way through the situation-I tend to agree with the others here on that one.

from what I understand, it would simply be a partial withdrawal-"hardship" withdrawals are only for people still in-service.

On the bright side-if you absolutely can't find another way to handle your situation-you may owe less tax than you'd expect, even with early withdrawal penalty. A portion of your TSP withdrawal would be taxfree withdrawal if you served in a combat zone. see the info at the link down below.

https://www.tsp.gov/planparticipation/withdrawals/withdrawingAccount.shtml

Yea, I'm hoping too (wise man said something about hoping and shitting...hmm). Im stressing out right now, but I'm looking to find some quick cash pouring concrete for 2 weeks, and serving tables. Just hard to find work in AZ rt now. I think I have 2k tax exempt from combat zone, so that wouldn't be taxed? Just the early withdrawl penalty? My income lastyear was about 31k after adjustments. Know a good place to get free tax advice on this issue? Thanks for your input.

 

[Afishegg]

I hear what you're saying...believe me. I've always lived a somewhat frugal lifestyle. Just don't see any other options at this point, so its not a matter of whether to pull the money out or not, but the smartest way to pull it out. Also, as young as I am, and when I get this job from Lockheed, I should be able to catch back up in the market. 1yr deployment in afhanistan should help cut down on living costs and my earning potential should cancel out any "gains" I would've missed out on in the market. Also, if I fall behind on my bills, what is the implications of that? Late fees, credit reporting, higher interest rates). I would say -In all but a few cases should you not dip into your TSP. If i can find work here soon, should be able to keep my head above water, then no need to pull it out. Don't forget tuna, potatos, and chicken qtrs, (cheap and a lot healthier)

Well son, listen! I understand "things" are tough, but I assure you 95% of us on here have been there and "done that", and that is why I say what I say. Think it through, weigh your options and do this ONLY if it is absolutely necessary.......I would go one step further and just say this...Pretend you don't even have a TSP!

 

[money_bags]

Well son, listen! I understand "things" are tough, but I assure you 95% of us on here have been there and "done that", and that is why I say what I say. Think it through, weigh your options and do this ONLY if it is absolutely necessary.......I would go one step further and just say this...Pretend you don't even have a TSP!

Well, I dropped $500 on "dialed in" for the KY derby...so hopefully my problems will be solved. I appreciate your insight, and I agree with you. I'll scrounge up some cash somehow, thanks for talking me out of it..for now.

p.s.- and no, i did not bet on the derby, lol

 

[alevin]

All I know is what tsp.gov says. They are the official site-so I'd take what they say as gospel (that a portion of withdrawal would not be taxed). I'd call them to ask questions about how much of the withdrawal would NOT be subject to regular income tax-probably a percentage-2K/10K proportionate. as far as the early withdrawal penalty-prolly the same-same percentage of the withdrawal as subject to income tax would get hit with the 10% penalty.

 

[jpcavin]

I hear what you're saying...believe me. I've always lived a somewhat frugal lifestyle. Just don't see any other options at this point, so its not a matter of whether to pull the money out or not, but the smartest way to pull it out. Also, as young as I am, and when I get this job from Lockheed, I should be able to catch back up in the market. 1yr deployment in afhanistan should help cut down on living costs and my earning potential should cancel out any "gains" I would've missed out on in the market. Also, if I fall behind on my bills, what is the implications of that? Late fees, credit reporting, higher interest rates). I would say -In all but a few cases should you not dip into your TSP. If i can find work here soon, should be able to keep my head above water, then no need to pull it out. Don't forget tuna, potatos, and chicken qtrs, (cheap and a lot healthier)

Peanut butter and jelly works too.