TSP Loan Repayment

[Sensei]

I'm considering taking out a TSP loan to cover the downpayment on a house. Using the loan calculator on the tsp.gov website, my repayment amount would be $212 per pay period. Currently, the combined matching contribution (automatic 1% + agency 4%) I receive is about $130. So, can anyone tell me how much I would need to contribute each pay period in order to repay the loan and continue receiving the full 5% match? Is it simply $212 +$130 = $342?

I read through the loan handbook on the website, and couldn't find the answer to this, so please don't direct me to that document. Thanks!

 

[OBGibby]

Sensei,

I believe the loan repayment of $212 you mentioned is not considered a contribution that would count toward receiving matching contributions from your agency. Rather, the $212 would simply be a loan payment. An employee can take out a loan, make payments and continue to max out contributions to TSP without a conflict, further lending credence to the argument that it would not be considered a contribution. It appears you have already answered your original question - $342.

Are you buying a property in Japan or PCSing back to CONUS?

 

[Sensei]

Sensei,

I believe the loan repayment of $212 you mentioned is not considered a contribution that would count toward receiving matching contributions from your agency. Rather, the $212 would simply be a loan payment. An employee can take out a loan, make payments and continue to max out contributions to TSP without a conflict, further lending credence to the argument that it would not be considered a contribution. It appears you have already answered your original question - $342.

Are you buying a property in Japan or PCSing back to CONUS?

Page 3 of the loan handbook says: "If you are a FERS employee and you have to reduce
your contribution rate to below 5%, you will not receive the full
agency match."

So, I guess the repayment of the loan doesn't come from my contribution. What they're warning is that if I need to lower my contribution because I can't afford to contribute my usual amount while repaying my loan, I just need to be aware that lowering the contribution below 5% will nix my matching. OK, makes sense. Thanks!

To answer your question, I'm staying here in Japan. We are allowed to use our housing allowance toward the purchase of a home. Only problem is that a 10% downpayment is required up front. So I won't be able to get a house for free, but for very cheap.

 

[OBGibby]

Stay another ten years and the mortgage is paid off courtesy of Uncle Sam.

 

[Sensei]

Stay another ten years and the mortgage is paid off courtesy of Uncle Sam.

You bet!

 

[burrocrat]

just make sure the new place has shisa out front and you should be ok. it sounds like you got the financial part figured right.

 

[jbobj]

not sure if it's the same

I currently am repaying a General TSP Loan and the payments are separate from my monthly contribution.

I have no data on the FERS part.

 

[Sensei]

Dusting off an old thread that I started a couple years ago. I am nearing the pay-off of my loan. Along the way, I re-amortized to $550/mo to get it paid off sooner. I now have $3346.43 left, which will result in 6.08 more payments. When I have it paid off, I want to continue paying the same amount as a contribution. Any advice as to how I can make that transition seamless? I tried re-amortizing to the exact amount ($557.74), but it recalculates interest when you re-amortize, so I don't think there is any way to pay it off perfectly. What is going to happen? Will I have some tiny amount taken out on the 7th pay period? Should I plan to increase my regular contribution after the 6th payment, or wait until the 7th? At any rate, my contribution outside of the loan repayment is 5%, so I have been and will continue to receive full matching. Any tips appreciated.

 

[burrocrat]

up your last or second to last payments by a dollar. any extra on the last payment will just go as a regular contribution in excess of 5% and stay in tsp unless you exceed the maximum contributions which is not a problem in your case. if you make a full $550 payment with only pennies due on the change left over at the end then they will refund all your excess. let it ride. in fact, just reamoritize now to pay off in 5.90 payments and all the extra will stay in with no match. easy peasy. you're only talking $10 bucks or so if you do that. that is probably only what a dozen donuts cost is tokyo and you don't need donuts anyways. let it ride.

 

[JTH]

Dusting off an old thread that I started a couple years ago. I am nearing the pay-off of my loan. Along the way, I re-amortized to $550/mo to get it paid off sooner. I now have $3346.43 left, which will result in 6.08 more payments. When I have it paid off, I want to continue paying the same amount as a contribution. Any advice as to how I can make that transition seamless? I tried re-amortizing to the exact amount ($557.74), but it recalculates interest when you re-amortize, so I don't think there is any way to pay it off perfectly. What is going to happen? Will I have some tiny amount taken out on the 7th pay period? Should I plan to increase my regular contribution after the 6th payment, or wait until the 7th? At any rate, my contribution outside of the loan repayment is 5%, so I have been and will continue to receive full matching. Any tips appreciated.

Last month I paid mine off in full, but it was an overpayment, the excess payment was returned to me in DFAS.

 

[jpcavin]

Dusting off an old thread that I started a couple years ago. I am nearing the pay-off of my loan. Along the way, I re-amortized to $550/mo to get it paid off sooner. I now have $3346.43 left, which will result in 6.08 more payments. When I have it paid off, I want to continue paying the same amount as a contribution. Any advice as to how I can make that transition seamless? I tried re-amortizing to the exact amount ($557.74), but it recalculates interest when you re-amortize, so I don't think there is any way to pay it off perfectly. What is going to happen? Will I have some tiny amount taken out on the 7th pay period? Should I plan to increase my regular contribution after the 6th payment, or wait until the 7th? At any rate, my contribution outside of the loan repayment is 5%, so I have been and will continue to receive full matching. Any tips appreciated.

I believe the increased contribution will process earlier than your payoff so you could end up making a large payment and large contribution on the same pay period. You can modify the number of payments to 5, 6 or 7 (whatever you can stomach) and it will be taken out evenly, plus or minus a few bucks on the last payment and maybe change your contribution to a future date if it allows you (can't remember if it allows for future date). There are pay cutoffs so maybe it's just a matter of timing.

 

[Frixxxx]

Write a check for the difference of $X.XX. Mail it two weeks prior to allow receipt and processing. It's allowed. See if you can "tie" the payoff. All leftover is sent back.

Dusting off an old thread that I started a couple years ago. I am nearing the pay-off of my loan. Along the way, I re-amortized to $550/mo to get it paid off sooner. I now have $3346.43 left, which will result in 6.08 more payments. When I have it paid off, I want to continue paying the same amount as a contribution. Any advice as to how I can make that transition seamless? I tried re-amortizing to the exact amount ($557.74), but it recalculates interest when you re-amortize, so I don't think there is any way to pay it off perfectly. What is going to happen? Will I have some tiny amount taken out on the 7th pay period? Should I plan to increase my regular contribution after the 6th payment, or wait until the 7th? At any rate, my contribution outside of the loan repayment is 5%, so I have been and will continue to receive full matching. Any tips appreciated.

 

[Sensei]

Thanks for the advice, all. The way I'm going, it's bound to make very little difference in the end, anyway. :/