Early withdrawal from thrift


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.


About Author

Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com.

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