Retiring next year, but have an outstanding loan

[hyper609]

Planning on retirement next year, but have an outstanding loan remaining
of 2 more years of payment....What happens....will they just take away the loan
balance from my tsp account? Thanks for the replies

 

[OBGibby]

I think it gets treated as an early distribution, subject to tax, etc., if it's not paid back prior to separation.

 

[Bquat]

Planning on retirement next year, but have an outstanding loan remaining
of 2 more years of payment....What happens....will they just take away the loan
balance from my tsp account? Thanks for the replies

They will take it first and it will count toward earned income and be taxed. Should see if you can double your payment and drop your contributions to 5% for the matching funds. The tax on the amout owed may be greater than the 5% matching and the double payments are paying yourself back anyway. It returns to your TSP. I had dropped my contributions from 20% to 5% the last year and took the extra funds and all overtime to pay all my bills off except for the house. I denighed myself the overtime money to get used to a fixed income. Being used to missing the 20% through the years made my retirement funds seem better.