Q: I left federal service in 1998 and left my thrift in place. It is up to $80,000. I am married with five children and my husband and I file joint returns. He is in federal service and I stay at home. Our credit card debt has become staggering and I would like to withdraw all my funds, which after considering the 20 percent withheld by thrift and 10 percent penalty, I would have about $56,000, which would be more than enough to wipe our credit card debt slate clean. What else should I take into account before making this decision?
A: Consider using a TSP loan instead. You might also consider spreading the withdrawal out over multiple years to reduce the tax load.