Ask The Experts: Money Matters

By Mike Miles

TSP loan

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Q. Which account does my Thrift Savings Plan loan come out of? If I have enough in the G Fund, will TSP take the loan directly from the G Fund, or will it take the money out proportionally? For instance, I want to take a $35,000 loan, and I have enough in the G Fund to cover that loan, and I would prefer that the entire loan come out of the G Fund. But if the loan is taken out proportionally, does that mean 80 percent of the loan comes out of my stock funds, 5 percent out of the F Fund and 5 percent out of the G Fund if that is how my account is proportionally separated? If done proportionally, then am I better off shifting my entire account into the G Fund, taking the loan, and then buying back into the stock funds?

A. A loan reduces your invested balance without changing the existing asset allocation.

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Comments

  1. USPS Letter Carrier Says:
    May 7th, 2013 at 8:52 pm

    A loan is done proportionally.

    Assuming there is no wild gyration in the share prices of the 5 basic TSP funds, you can either move to 100% G and then take out the loan, or perform a InterFund Transfer to remove $35k out the G Fund after the loan is deducted from your account. Either option has the same result.