The TSP has issued additional guidance on the new fixed-term loan guidelines created by one of the coronavirus relief laws (the CARES Act), including deadlines and procedures.
As with previous guidelines on specific temporary payout guidelines under the same law, the TSP noted that loan policy changes are only available if a participant, spouse, or dependent has been diagnosed with infection or “suffers adverse financial consequences” as a result of quarantine , Vacation, reduced working hours or incapacity for work due to lack of childcare.
For those who meet any of these standards, the maximum amount for a general purpose loan will be increased from $ 50,000 to $ 100,000 (or the full amount of the participant’s vested balance, whichever is lower). Applications must be made through the “My Account” section of www.tsp.gov under “Loans”. The TSP must receive a request no later than September 22nd.
Those with an ongoing loan who meet any of the standards can suspend payments through December 31st using a new Form TSP-46, also available on this website and due by November 30th. “If the participant has two loans, payments for both loans will be suspended. This suspension can also apply to undrawn loans as long as the loan and the request for suspension are processed on their respective due dates, ”the TSP said.
“Participants can make loan payments themselves during the suspension. If a TSP participant leaves before the blocking period has expired, the block will be lifted. The participant will then have to pay off the loan amount within 90 days or the outstanding balance will be declared a taxable distribution, ”he added.