Loan

[CapeChem]

Hello everyone....been a long time!!

Random thought hit me and wondered what this community thought.

TSP Loans are at such a low interest rate. Would you be more likely to take a loan from your TSP in times like these if you could name your interest. for example, thank you TSP for offering to let me borrow my money at 1.65% but i would like to borrow my money and pay 10%.

why would they care what % i pay myself back...as long of course it is higher than what they say.

comments?

[Frixxxx]

Please read this thread:
http://www.tsptalk.com/mb/showthread.php?6760-TSP-Loan-and-repayment-with-taxed-income&highlight=loans

It really comes down to where your money is. If you put money into TSP, you expect a return on it.
If you take money out of TSP, it is no longer working for you in that capacity.
If you repay your loan at the rate of the "G Fund" then you are returning that money at under inflation rates. Also, it's your money you are repaying the interest which most people don't like.

[nasa1974]

CapeChem, I moved your question here becuse it is a better fit than the "Members Account" area. Good Luck.

[Boghie]

I took a loan in July to help cover an upgrade to my windows and sliding glass door.

The Good:

The Interest Rate.
The Bad:

You are locked to your employer
The Ugly:

You pay it back with taxed money - say 30%.


Is your idea simply a way to get more money into TSP. If so, maybe it is smart. I just don't really like the idea of filling a hole created by borrowing untaxed money with taxed money.

[Elgallo]

Boghi I don't beleive you are "locked to your employeer" like you stated.

If you leave govt. and don't repay or intend to repay the loan the remaining balance converts to income and you receive a 1099 in the year of that occurance. If under 591/2 y/o you also get penelized 20% more.

I retire in 47 days with a small outstanding balance which I intend not to repay prior. I will pay the tax on this amount when I file my Fed/State taxes for 2012 in April 2013.

You are correct with the other two, however the saving grace is that all the money goes to YOU and not a third party.

You used you money wisely and invested in your home, and if the market was down the money borrowed was not a market risk which is a good thing too. It is what one does with the loan amount that is key.