TSP Loans: Borrowing from Your Retirement, Costs to Consider, Repaying with Interest | Now You Know

Hi, I’m Lazetta from the TSP We know life happens, and you might be tempted to take a loan from your TSP account

If you do, be aware that taking a TSP loan might cost a lot more than you think When you take out a loan from your TSP account there are some costs to consider: There’s a loan fee of $50 for administrative expenses deducted from your loan check, you temporarily deplete your balance, and you must repay your loan with interest And there are some other costs that you might not realize Because your account balance is depleted, you'll lose the compound interest you would’ve earned on that amount had you not taken out the loan And while it's true you’ll be paying yourself back with interest, that interest will come from your hard-earned pay rather than from investment performance

Remember, the purpose of contributing to the TSP is to provide you with retirement income, not to build up a balance to borrow from So think twice before you take a TSP loan And now you know