300 WORDS OR LESS
Many of us find ourselves counting down the years, months
and days until we are able to retire. Then the day comes when retirement is
within your grasp and you can’t be happier. As you are mentally preparing for
that day you can stop working and trying to figure out your perfect retirement
day, you realize you still have a TSP loan. On top of that, it will not be paid
off by the time you retire.
Plus, you have heard all about
the 10% penalty you face on the outstanding balance if you leave your job
before it is paid in full. Not only do you face a 10% penalty, but the
outstanding balance is treated as income and you are taxed at your tax rate. What
you don’t realize is that being a retiree puts you in a better position than
someone who has just decided to resign from their job. Now, what do I mean by
this? Once you are retired you will not get hit with the 10% penalty. You are
basically forgiven since you have worked so hard in your career and getting
ready to celebrate that momentous moment from employee to retiree. But, you are
still taxed because that outstanding balance is still considered income.
Ms. Smart
