TSP Financial Hardship Withdrawal – Do you qualify?
There can be financial hardships for everyone. For Federal Employees – there is a special scenario in which you can make a TSP Financial Hardship Withdrawal from your TSP account to help offset these tough financial times. There are some requirements that you need to satisfy in order to be considered eligible for a TSP Financial Hardship Withdrawal though. Here are those requirements:
TSP Financial Hardship Withdrawal requirements:
The first requirement in this regard is a negative monthly cash flow that is ongoing for at-least some months now. Apart from this, the medical expenses (if you owe them still) that you need to pay are not covered by any insurance. If you are under a personal casualty loss, then again you should not be covered by any insurance. Finally all of your legal expenses that you have still not paid for the expected divorce or separation also come from your spouse.
There are some other requirements for a TSP Financial Hardship Withdrawal that also need to be mentioned:
- The minimum limit to withdraw is a thousand dollars.
- You can only withdraw the contributions (or the accrued earnings) that you yourself made.
- If you have two different TSP accounts, then you can only withdraw from the account that is related to your current employment (At the withdrawal time).
- You can only withdraw once in a tenure of 6 months.
There are some other things to remember in this regard. The withdrawal is also subject to the income tax of the federal government and at times, is also subject to the income tax. If you are under 59 and a half then you also have to pay a 10 percent withdrawal penalty.
While there are subtleties and complexities associated with the facility, it’s always comforting to know that you can actually make a withdrawal before time if you fall in the need for it.