Welcome Guest! To enable all features please Login or Register.

Notification

Icon
Error

TSP

Administered by the Federal Retirement Thrift Investment Board, this defined contribution plan for federal employees has roughly 4,614,874 participants, and over $358 billion in assets under management. Ask your TSP questions and post related topics here.

Options
Go to last post Go to first unread
teej  
#1 Posted : Tuesday, September 21, 2021 5:54:34 AM(UTC)
teej

Rank: Rookie

Groups: Registered
Joined: 11/11/2017(UTC)
Posts: 41

Thanks: 5 times
Was thanked: 1 time(s) in 1 post(s)
I am a CIV employee. I have a CIV TSP loan. I was in a non-pay status for military leave. Either I or the payroll office never submitted my TSP-41 NON PAY Status form. Past that. I now owe those missing payments ($750). The balance of the loan is $6000. The only letter I received was a week or so ago saying that if I didn’t make the $750 payment by 23 SEP, the balance of $6000 will be treated as dispersed income and taxed as such.

The TSP rep made it sound like even overnighting the $750 today, it wouldn’t make it and be processed in time.
What rate is that going to be taxed at and is it a statement of balanced owed?
-OR-
Is it just rolled up into 2021 tax season (Jan-May 2022) as income when I file, from an investment and the math is done at that point…added as income then money owed deducted from my normal return (we always get money back)?
Navy Bubblehead  
#2 Posted : Tuesday, September 21, 2021 10:48:41 AM(UTC)
Navy Bubblehead

Rank: Senior Member

Groups: Registered
Joined: 1/19/2012(UTC)
Posts: 1,327

Thanks: 25 times
Was thanked: 120 time(s) in 98 post(s)
Originally Posted by: teej Go to Quoted Post
I am a CIV employee. I have a CIV TSP loan. I was in a non-pay status for military leave. Either I or the payroll office never submitted my TSP-41 NON PAY Status form. Past that. I now owe those missing payments ($750). The balance of the loan is $6000. The only letter I received was a week or so ago saying that if I didn’t make the $750 payment by 23 SEP, the balance of $6000 will be treated as dispersed income and taxed as such.

The TSP rep made it sound like even overnighting the $750 today, it wouldn’t make it and be processed in time.
What rate is that going to be taxed at and is it a statement of balanced owed?
-OR-
Is it just rolled up into 2021 tax season (Jan-May 2022) as income when I file, from an investment and the math is done at that point…added as income then money owed deducted from my normal return (we always get money back)?


If its deemed a distribution, you will report it as income on your tax return. You will be taxed at whatever rate you fall into, AND you will get hit with a 10% penalty. So expect to pay $600 (penalty) plus the taxes. That could wipe out your normal refund and still have you writing a check.
GRITS  
#3 Posted : Tuesday, September 21, 2021 11:02:12 AM(UTC)
GRITS

Rank: Member

Groups: Registered
Joined: 7/5/2021(UTC)
Posts: 21
United States

Was thanked: 2 time(s) in 2 post(s)
I agree with Navy Bubblehead. Now all that left to do is sit back and wait on that 1099-R for 2021 and it will have all the information needed to file it as income during next year.
teej  
#4 Posted : Tuesday, September 21, 2021 11:03:08 AM(UTC)
teej

Rank: Rookie

Groups: Registered
Joined: 11/11/2017(UTC)
Posts: 41

Thanks: 5 times
Was thanked: 1 time(s) in 1 post(s)
Originally Posted by: Navy Bubblehead Go to Quoted Post
Originally Posted by: teej Go to Quoted Post
I am a CIV employee. I have a CIV TSP loan. I was in a non-pay status for military leave. Either I or the payroll office never submitted my TSP-41 NON PAY Status form. Past that. I now owe those missing payments ($750). The balance of the loan is $6000. The only letter I received was a week or so ago saying that if I didn’t make the $750 payment by 23 SEP, the balance of $6000 will be treated as dispersed income and taxed as such.

The TSP rep made it sound like even overnighting the $750 today, it wouldn’t make it and be processed in time.
What rate is that going to be taxed at and is it a statement of balanced owed?
-OR-
Is it just rolled up into 2021 tax season (Jan-May 2022) as income when I file, from an investment and the math is done at that point…added as income then money owed deducted from my normal return (we always get money back)?


If its deemed a distribution, you will report it as income on your tax return. You will be taxed at whatever rate you fall into, AND you will get hit with a 10% penalty. So expect to pay $600 (penalty) plus the taxes. That could wipe out your normal refund and still have you writing a check.


Thanks. We usually get back $6000-7000 a year. I dont think the additional $6000 of income moves me into a higher tax bracket from the regular 22%. With that....if my math is correct, $6000 loan balance converted as dispersed (income), then 22% tax + 10% penalty = $1980 owed so whatever the return is, minus the $1980, correct? ($6000 return - $1980 = $4020 return)

Edited by user Tuesday, September 21, 2021 11:06:04 AM(UTC)  | Reason: Not specified

teej  
#5 Posted : Monday, October 4, 2021 8:54:21 AM(UTC)
teej

Rank: Rookie

Groups: Registered
Joined: 11/11/2017(UTC)
Posts: 41

Thanks: 5 times
Was thanked: 1 time(s) in 1 post(s)
Follow up.....So I rolled the dice and overnighted the overdue payments, they signed for it on the day it was due (23 SEP). It cleared on 27 SEP. When i called on 28 SEP to confirm that it made the 30 SEP deadline and it wouldnt be reported as income, they said they cant guarantee it, even after having deposited my check and it clearing, that the remaining balance wouldn't be sent as dispersed income. Frustrating. So i waited a few days to call back and yes, the payment was accepted and the account was NOT sent or reported to the IRS as dispersed income, so crisis averted. I think, until i file taxes, right???!!! LOL.
roger.d  
#6 Posted : Tuesday, October 5, 2021 5:06:12 AM(UTC)
roger.d

Rank: Senior Member

Groups: Registered
Joined: 8/25/2016(UTC)
Posts: 5,614
United States
Location: Midwest

Thanks: 150 times
Was thanked: 1071 time(s) in 863 post(s)
Originally Posted by: teej Go to Quoted Post
Follow up.....So I rolled the dice and overnighted the overdue payments, they signed for it on the day it was due (23 SEP). It cleared on 27 SEP. When i called on 28 SEP to confirm that it made the 30 SEP deadline and it wouldnt be reported as income, they said they cant guarantee it, even after having deposited my check and it clearing, that the remaining balance wouldn't be sent as dispersed income. Frustrating. So i waited a few days to call back and yes, the payment was accepted and the account was NOT sent or reported to the IRS as dispersed income, so crisis averted. I think, until i file taxes, right???!!! LOL.


If what you were told is correct, there will be no crisis when you file your taxes.
Socialist governments traditionally do make a financial mess. They always run out of other people’s money. --Margaret Thatcher
Rss Feed  Atom Feed
Users browsing this topic
Guest
Forum Jump  
You cannot post new topics in this forum.
You cannot reply to topics in this forum.
You cannot delete your posts in this forum.
You cannot edit your posts in this forum.
You cannot create polls in this forum.
You cannot vote in polls in this forum.

Powered by YAF 2.1.1 | YAF © 2003-2021, Yet Another Forum.NET
This page was generated in 0.334 seconds.