The TSP has issued further guidance on the new temporary loan policies created by one of the Coronavirus relief laws (the CARES Act), including deadlines and procedures.
As with earlier guidance on special temporary withdrawal policies under the same law, the TSP noted that the loan policy changes are available only if a participant, spouse or dependent has been diagnosed as infected, or “is experiencing adverse financial consequences” as a result of quarantine, furlough, reduction in work hours or being unable to work due to lack of child care.
For those who meet one of those standards, the maximum for a general purpose loan is increased from $50,000 to $100,000 (or the full amount of the participant’s vested balance, if less). 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 22.
Those with a current loan who meet one of the standards may suspend payments through December 31 using a new form TSP-46, also available at that site, which must be received by November 30. “If the participant has two loans, payments will be suspended for both loans. This suspension can also apply to loans not yet taken as long as the loan and the request for suspension are processed by their respective due dates,” the TSP said.
“Participants may submit loan payments on their own during the suspension. If a TSP participant separates before the suspension period ends, the suspension will be removed. The participant must then pay the loan amount off within 90 days, or the outstanding balance will be declared a taxable distribution,” it added.