Many federal employees who need money right away may be tempted to dip into their Thrift Savings Plan (TSP) account. If you have decided to do this, the next question is most likely “How do I get access to my TSP savings?” Typically, the most common option is a TSP withdrawal.

However, this also means that under certain circumstances you would accept a 10% TSP early withdrawal penalty. A more prudent option may be to take a TSP loan. In that case, you just lose is a $50 administrative fee that gets deducted out of the loan amount you are provided. There is also the potential loss of earnings on the amount you take out of the account, but that’s temporary until you repay back the loan.

You must be in pay status to be eligible for this loan, and you need to have at least $1,000 of your contributions and earnings in the account. The minimum loan amount you can apply for is $1,000.

The maximum amount you can apply for changes on a daily basis since it is dependent on your account balance. It cannot be greater than the total of your contributions and earnings in the account. It cannot be more than 50% of your vested account balance minus any outstanding loan balance. It cannot be more than $50,000 minus your highest outstanding loan balance, if any, during the last 12 months.

The interest rate you pay on your TSP loan is based on the G Fund rate at the time your application is processed. The interest rate is fixed for the entire term of the loan.

Types of TSP Loan

You can apply for tsp loan under one of two categories – general or residential. The former can be used for anything and needs no documentation. You can repay it back in 1-5 years.

Residential loans, on the other hand, can only be used for buying or building your primary residence, and you have to provide the required documentation. Terms may extend for up to 15 years.