What do you guy's think of this....

**BULLonPARADE** · 07-23-2009, 04:53 PM

Borrow $10000 from TSP to fully fund Roth IRA's for my wife and myself and pay the money back in one year. Rinse...repeat...rinse...repeat...

That way I'm funding a Roth with pretax money while paying myself interest. Comments?

**Birchtree** · 07-23-2009, 05:14 PM

Could be a good idea depending on what you're doing inside the Roth IRA - not a money fund I hope.

**dell** · 07-26-2009, 03:41 AM

Hey Birch:

Glad to see you are still on board.

Dell

**nnuut** · 07-26-2009, 02:08 PM

Originally Posted by dell

Hey Birch:

Glad to see you are still on board.

Dell

Hi Dell nice to hear from you again.
NOrman

**Silverbird** · 07-26-2009, 07:01 PM

Hrmm...I think when you pay back a TSP loan it is *after* tax money, not before. So you don't get off tax free.

**alevin** · 07-27-2009, 12:48 AM

Originally Posted by Silverbird

Hrmm...I think when you pay back a TSP loan it is *after* tax money, not before. So you don't get off tax free.

Yup, double-taxation on that money when it gets withdrawn for good.

**bigpappap** · 07-27-2009, 01:10 AM

No taxation on the loan - I "borrowed" 25K last year before the big market downfall, so I didn't lose as much as I could have. Although I hated taking the funds, it worked out well. So from experience, I know that you are only charged a $50 service charge and pay yourself back interest - I still have two years to pay on the loan though!!!

**alevin** · 07-27-2009, 02:51 AM

guess I'll have to dig back into the nuts and bolts again. Thought one of the reasons they discourage people from taking loans is because the interest repayment is taken from after-tax part of the paycheck, or paid back from other savings already taxed...Pretty ocnfsing, must be why I've never taken out a TSP loan yet.

**Boghie** · 07-27-2009, 02:55 AM

BigPapPap,

You are paying back the loan with after-tax money. That is why you are billed for it. It doesn't come out of your paycheck pre-tax.

Regardless, that is $25K that didn't go down the rabbit hole last year!!!

**Boghie** · 07-27-2009, 02:57 AM

Originally Posted by BULLonPARADE

Borrow $10000 from TSP to fully fund Roth IRA's for my wife and myself and pay the money back in one year. Rinse...repeat...rinse...repeat...

That way I'm funding a Roth with pretax money while paying myself interest. Comments?

Sorry BigPapPap, the question was from BullOnParade.

Anyway, you will pay the loan back with take home money. That is after-tax money. Your Federal and State income tax will be taken out before you have the opportunity to pay back the loan.

**KevinD** · 07-27-2009, 03:04 AM

Originally Posted by Boghie

Sorry BigPapPap, the question was from BullOnParade.

Anyway, you will pay the loan back with take home money. That is after-tax money. Your Federal and State income tax will be taken out before you have the opportunity to pay back the loan.

And then you are taxed again when you withdraw it in retirement.

Oh...never mind.

**Frixxxx** · 07-27-2009, 04:06 PM

Can we lay this one to rest.....

You need $25,000.....

Go to bank, get home equity loan....tax deductible

Or Friend or Family you might get lucky.....

Other than that EVERY LOAN YOU TAKE IS AFTER TAXED MONEY!!

No home or no equity?

Get signature loan for 12%

Got decent rate on credit card....use them

If you don't ~ use TSP for a very low rate.........