Posted on Feb 22, 2016
How do I close my TSP account? Or is it faster to do a hardship withdrawal?
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Why do you want to close it? After I closed mine, I learned it had the lowest fees of any retirement account I had. Crap. If you can possibly afford to leave it in there...I recommend you consider leaving it.
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SPC (Join to see)
Thank you sir, but I do not have to close it nessarily. They have a hardship withdrawal that can be done. I'm still reading up on all of it.
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MSG (Join to see)
Log into TSP and apply for a loan or withdraw not sure how it is stated. Just realize you will have to pay taxes on the money.
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I wouldn't close it. I did a withdrawal on mine once. It can be done pretty easily and I had the money pretty quick. I still have my TSP and the loan was a very low interest rate. You will have to set up an allotment that they will set up for you. It was easy.
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SGT(P) (Join to see)
CPT (Join to see) Sir, does that interest adds to your account? I mean, will I have more money after paying off the loan? Not fixing to make any loan any time soon but just out of curiosity.
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SPC Paul Jennings, J.D.
Loan interest is not paid back into your account. Principal is, however, this means during the repayment period you account balance is lower resulting in less gains during the period.
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It can be quicker to do a TSP loan, if you qualify. With a hardship withdrawal your likely going to face a 10% early withdrawal penalty as well. I'd never recommend that someone withdraw from any retirement account early if it could be avoided. Depending on your circumstances, other avenues such as a short term loan (from a bank not a payday vendor!) can provide necessary funds. Without knowing specifics though I can't really comment further.
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SPC (Join to see)
Well without putting to much personal info out there, just got through with a move to another state and in between jobs. Thank you for your advice.
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SPC Paul Jennings, J.D.
I would definitely use the TSP loan option instead. Interest rates are currently 1.85% and it's essentially you paying back yourself. For comparison if you want to withdraw $5,000 from your TSP and also cover taxes plus early withdrawal fees you would need to withdrawal about $6,600.
https://www.tsp.gov/PlanningTools/Calculators/loanPayments.html
https://www.tsp.gov/PlanningTools/Calculators/loanPayments.html
The Loan Calculator estimates loan payments based on the amount you want to borrow from your TSP account, the current loan interest rate, and other factors. To borrow from your TSP account, you must be a Federal employee in pay status. If you qualify for a TSP loan, the maximum amount you may be eligible to borrow is $50,000; the minimum amount is $1,000. To find out the amount you have available to borrow, visit TSP Loans in the My Account...
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