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Show May 9, 1996 "1tt KOi!!!D.iiE2ra 100 1ttiU ZWt" CicUu 621-- TSP loan program lets you uurruw muney lruiu yuurbeii 1 PROTEGE 5 Speed Dual Air Bags Air Conditioning AMFM Stereo Cass. Tilt Steering Column Child Safety Rear Door Locks $169 4. i ROCK ISLAND ARSENAL, 111. If you need a loan, and you meet certain criteria, you can borrow money from yourself through the Thrift Savings Plan loan program. The TSP loan program allows federal employees to borrow against their individual Thrift Savings Plan accounts. Last year, about $380 million was lent to federal employees through the program. Borrowing against your TSP account can be an attractive option for several reasons. The primary attraction is prob ably the low interest rate available on TSP loans. The interest on all TSP loans is based on the latest available G Fund rate, which was 6.69 percent as of February 1996. In all months, the G Fund rate is almost certain to be well below the interest rate which banks and other financial institutions charge to individual borrowers. The cost of TSP loans is also kept lower by the lack of origination fees and other administrative expenses. All you pay is the interest. Finally, the interest and principal paid on a TSP loan goes directly back into the individual borrower's TSP account. You pay interest to yourself, not to a bank. By law, there are tight restrictions on who can get a TSP loan, what they can get it for, and how they can pay it back. Here's a rundown. TSP loans are granted only to individuals who intend to use the money for one of four specific reasons: To purchase a primary residence. TSP (AFNS) 51407 'gflZ, ill' .,., m per mo. 4x4 TRUCK 2300 SBSl 51294 . J.iiiiif.JjaiM!8 LOADED WITH THE 4X4 STUFF YOU WANT! 5 Speed '96 526 I 51395 Dual Air Bags Tilt Steering Column Child Safety Rear Door Locks $189 1 per mo. 3 YEAR $14,888 ' LEASE '96 MIATA Convertible $1 8.888 1 MM 1 REMAINING mo j. 3perYEAR 1 LEASE REMAINING '95 '95MX-- 3 MX-- 6 in 51301 SAVE f 51109 $30DKD II 'JMDUJENIA Loaded Loaded Loaded 51453 3 YEAR LEASE t-- k k tt A tr nftar mhrrtolrVWihVfl If 0T;V. ... , Inckxft 843 W. RIVERDALE RD., OGPEN n !0downtrcrf9 - t 621-- 1 I residential loans can be used to finance the purchase of any type of living space, including a condominium, a houseboat or a cabin, provided that it will serve as the place you live for most of the year. You cannot borrow TSP money to buy a vacation home, refinance an existing mortgage or invest in land or commercial property; home improvements are also forbidden, with one exception as outlined below. To pay education expenses. TSP education loans can be used to help pay for any educational expenses incurred by you, your spouse, your children and anyone else you can claim as a dependent on your federal income tax form. To pay for medical costs. TSP medical loans can be used to pay for any medical costs which were not covered by your health insurance and which are deductible on your income taxes. These loans can be foryour spouse or dependents as well. To help compensate for a financial hardship. TSP financial hardship loans are granted in cases where your monthly expenses exceed your monthly net income, and you do not have enough savings or other assets to cover them. Hardship loans can also be granted to individuals who incur extraordinary expenses such as uninsured personal casualty losses; unpaid legal costs associated with a divorce or separation; or costs linked to home improvements or household help required because of an illness or accident to you, your spouse or one of your dependents. You must borrow at least $1,000, and you can borrow up to $50,000. However, the amount of your loan cannot exceed the amount of your own contributions plus total earnings in your account; any government contributions you received don't count. you're covered by the FERS retirement system, you must get spousal consent for a loan; if you're covered by CSRS, spousal consent is not required, but your spouse will be notified of the loan in writ- ing. You can apply for a TSP loan at any time. It usually takes about two months for borrowers to receive their money. The money you borrow is, in effect, deducted from your TSP account total, and so earns no interest. As soon as the money is paid back into your account, however, it begins earning interest again. You can have two outstanding TSP loans at one time, provided that the second loan falls within the restrictions listed above and that timely payments are being made on your first loan. Further, you cannot have two residential loans or two hardship loans outstanding at once. You may reamortize once during the life of your loan, either to pay it back more quickly or to extend the period of repayment. Education, medical and hardship loans must be paid back in a time period that falls between one and four years. Residential loans can be paid back in a period of up to 15 years. Loan payments can be made only by payroll allotments in substantially equal amounts. The allotments will continue if you transfer to another site or agency, though you are advised to check with your new payroll office to make certain that this is being done. staIf you are in an approved non-patus for less than 90 days, and you properly inform the office servicing your TSP loan, your payments can be suspended and then extended upon your return. If status extends beyond 90 your non-pa- y days, you must either reamortize your loan or pay it in full. You can prepay your loan, but only by y paying off the entire outstanding balance using a certified check, a cash- ier's check or a money order. Partial payments and uncertified personal checks are forbidden. As soon as you retire or leave federal service for any reason, any outstanding TSP loan must be paid in full within 90 days. If payment is not received, a taxable distribution of your account can be declared. This means that your account balance will be used to pay off your loan, and the payment will be reported to the Internal Revenue Service as taxable income. Depending on your age and employment status, you can then be liable for a 10 percent early withdrawal penalty on top of the taxes you owe. And there's one final blow: Processing such an action will probably cause a delay in the processing of the withdrawal Documentation is required, and no ex- of any money remaining in your account. ceptions to the four restrictions will be To avoid this unpleasant circumstance, borrow only what you think you can pay granted. TSP loans are available only to current back before you end your federal career. News Service ) employees in an active pay status. If (Courtesy of Army Deferred from page 1 6 be matched dollar for dollar by agency cent of basic pay each pay period to their contributions, and the next 2 percent an TSP account. Although CSRS and Offemployee contributes will be matched 50 set employees receive no matching agencents on the dollar. Contributions above cy contributions, they still benefit from earnbefore-ta5 percent do not receive matching agensavings and of basic pay until they withdraw the does constitute it but ings contributions, cy extra money invested toward retirement. account. The agency's matching contributions arThe TSP Open Season begins May 15 en't taken out of the employee's salary they're an extra benefit to the em- and ends July 31. During that time employee. Therefore, if an employee contribployees have the chance to come into the utes the maximum 10 percent to his or Entitlements and Benefits Office, Bldg. her TSP account, he or she receives a 10 1245, Room 12, and start or change their percent tax deferment and, considering contributions to their TSP account. Durthe piaf'fiing agency contributions, he or ing the Open Season employees can also she also get a 5 percent "raise." change the way their future payroll contributions are invested in the three TSP Civil Service Retirement System funds. For more information call Adele or the Entitlements CSRS or Offset employees Parker, Ext (CSRSFERS) can contribute up to 5 per- - and Benefits Office, Ext. x per mo t lease pmJ. pljj tax, feboteKentt may not appty. Iscaa Ail leases is poyrnem. ic tees ui secuwy twpuai 17 Hilltop Times equity. 100 tax-deferr- |