TSP Loan, where does the interest go?

[Pill]

Ok so I know its not usually a very good idea to ever take out a loan for several reasons. There may even be a few good reason to do so given different invest reasons(real estate). But for me its some thing I dont ever plan on doing again. However I pulled out a small loan to pay the reamaining cost of a wedding. Is the 4% interest paid to our account or does the tsp(gov) get it? I wasnt for sure so I thought I would ask. Thanks and many props to this site and those that participate. I am learning allot.

 

[EW_ret]

You pay the interest on the loan back into your account. You are borrowing from yourself, and your paying it back plus the interest. I believe the current rate is about 4.65%.

 

[EW_ret]

The TSP gets a $50 processing fee. They do not get the interest on the loan. Your paying yourself back.

 

[Gilligan]

You pay the interest on the loan back into your account. You are borrowing from yourself, and your paying it back plus the interest. I believe the current rate is about 4.65%.

4.625% is the current rate. If you borrowed the money at 4.0% then the rate would stay the same through out the life of the loan. TSP adjust the loan rate once a month, we MAY see it changed to 4.75% in April. One thing that was pointed out earlier on this board is that the intrest that you pay back to your account is post-tax verses our pre-tax contributions.

http://tsp.gov/features/chapter11.html#sub5
http://tsp.gov/curinfo/data.html