topherjhon
New Poster
Cash: $ 0.40
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Joined: 25 Feb 2012
Location: usa
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| hi |
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How can you take money out of your TSP and close the account?
I've been in the military for about seven years now and I've set up a Thrift Savings Plan (TSP). I have accumulated roughly 19,000 in it over the years.
Is it at all possible to withdraw this money and close my account? I know the government will tax this heavily if I choose to.
But I am in a bit of a financial crisis right now and that money would be of great use.
What are my options? Some legal help would be GREATLY appreciated
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Sat Feb 25, 2012 5:47 am |
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Pro48
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Joined: 08 Mar 2012
Location: Midwest
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Don't cash out and pay the tax! Seeing you are a career potential, take a loan against the TSP account! Yes you will be using after taxed money to pay back the loan but you will get the dollar cost averaging in putting the money back in. I'm guessing but you should be able to get about a $9,000 general purpose loan.
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Thu May 10, 2012 2:53 pm |
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clydewolf
Senior Member
Cash: $ 50.25
Posts: 248
Joined: 27 May 2012
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| Re: hi |
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Topherjhon,
You can only cash the TSP account if you are separating from your employer.
And as you indicated, the taxes will take about 30% of the account balance.
Pro48 has given you a good suggestion.
The loam is not ideal but much better than a cashout.
Here is a link to learn more about loans from the TSP.
https://www.tsp.gov/planparticipation/loans/loanBasics.shtml
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Mon May 28, 2012 1:14 am |
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bolainmarsh4
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Joined: 15 Nov 2012
Location: bristol
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Straight from the TSP website (keep in mind there are some expections for military folks)
Additional 10% penalty tax if you are under age 59�.
If you receive a TSP distribution before you reach age
59�, in addition to the regular income tax, you may have
to pay an early withdrawal penalty tax equal to 10% of
any portion of the distribution not transferred or rolled
over. The additional 10% tax generally does not apply to
payments that are:
� Paid after you separate from service during or after
the year you reach age 55;
� Annuity payments;
� Automatic enrollment refunds;
� Made as a result of total and permanent disability;*
� Made because of death;
� Made from a beneficiary participant account;
� Made in a year you have deductible medical expenses
that exceed 7.5% of your adjusted gross income;*
� Ordered by a domestic relations court; or
� Paid as substantially equal payments over your life
expectancy.
Long story short, if you leave federal service before you're 55 and plan on withdrawing your money from tsp you'll most likely get hit with this 10% penalty on top of the federal tax TSP will take out. If you're underage and don't meet any of those above qualifications the easiest way to avoid the 10% penalty would be to roll all of your money over to an IRA. If you just plain simply want a full-withdrawal check in your hand asap you're going to get hit with 20% federal tax and a 10% penalty fee. This fee is going to be the same no matter if you have been in the government for 2 years or 20 years as long as you're under the age(s) above.
2 additional important things that you need to look into if you're making a (partial or) full withdrawal, vesting requirements and spouses' rights. Page 13 - do a little bit of reading if you're married and/or only been with your agency for a couple of years.
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Thu Nov 15, 2012 10:38 am |
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Radix3d
Preferred Member
Cash: $ 21.60
Posts: 105
Joined: 20 Mar 2013
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You have to log into your account, answer the questions. Print the form and get a notarized signature for it (banks do this) and mail it for processing. Someone said you can't access your TSP on active duty but I believe that to be false. Then pay a big tax the following year.
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Fri Mar 22, 2013 3:22 am |
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