TSP Withdrawals Upon Seperation

**Intrepid_Timer** · 12-11-2009, 03:15 PM

I'll be leaving the government on 01\02\2010 and will be transferring part of my TSP to a rollover IRA with USAA. It appears that I can't request a transfer until 30 days AFTER my separation. Has anyone been through this yet and if so, about how long does it take to receive your money? I also have a loan out which I do not plan on paying off so I realize this may slow down the process a bit.

TIA

**idpadan** · 01-13-2010, 02:46 AM

Hey Intrepid - did you ever get an answer to your question? I am thinking about retiring later this year and have an outstanding TSP loan. I thought you had to pay off the loan before you retire. If you choose to pay off the loan from your TSP account balance does that trigger a taxable event (10% penalty)?
Dan

**Intrepid_Timer** · 01-13-2010, 06:36 PM

Originally Posted by idpadan

Hey Intrepid - did you ever get an answer to your question? I am thinking about retiring later this year and have an outstanding TSP loan. I thought you had to pay off the loan before you retire. If you choose to pay off the loan from your TSP account balance does that trigger a taxable event (10% penalty)?
Dan

Hey Dan,

You don't have to pay the loan off before you retire but you do have to send TSP a form saying that you want to close out the loan and have it put as a taxable withdrawal from your account for that year. I won't have to worry about paying the taxes on it until 2011 since I'm doing it now. I called them Monday and they faxed the form to me. I signed it and faxed it back and just looked and my loaned has been closed. Good thing since I'm employed with the government anymore and they wouldn't be getting any payments anyway.

As far as you paying off your loan with your TSP money, that's not possible is it? After all, it's all your money.