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Your loan in a nonpay status

If you’re in an approved nonpay status and you have provided the proper documentation to us, the Internal Revenue Service (IRS) regulations allow us to suspend loan payments for up to 1 year. Once you return to pay status, your payroll-deducted loan payments will resume. Your loan will be reamortized automatically when your agency or service notifies us that you have returned to pay status. For more information, please refer to the Fact Sheet, Effect of Nonpay Status on Your TSP Account.

Suspension of loan payments

If you’re a civilian who goes into nonpay status to perform military service:

If you’re in nonpay status for reasons other than active military service:

Notifying the TSP of your nonpay status

When you begin your period of nonpay status, you or your agency or service must submit one of the following forms to us:

Returning from nonpay status

When you return from nonpay status, you must notify us of your date of return. You can use any type of documentation described in the above section. Once your agency or service notifies us of your return, your loan will be reamortized to place it in good standing.

Note: If your agency reports you as separated from civilian service to perform military service, you must repay your loan in full within 90 days. If you don’t, the outstanding loan balance and any unpaid interest will be reported to the IRS as a taxable distribution.

Leaving federal service

When you leave federal service, you must repay your loan in full within 90 days after your separation is reported to us. Your repayment must include any accrued interest on the outstanding principal balance. If you do not repay your loan in full, a taxable distribution of the outstanding balance of your loan will be declared. If that happens, you may be able to roll the amount of the distribution into an IRA or eligible employer plan within 60 days to avoid taxes and penalties.

If any part of your loan is associated with tax-exempt contributions or qualified Roth contributions, those contributions will not be subject to tax; however, Roth earnings that are not qualified will be subject to tax.

If you’ve left federal service, you will not be able to withdraw your TSP account unless your loan is closed by either payment in full or taxable distribution. For more information about loan repayments after leaving federal service, refer to the Tax Notice, Important Tax Information about Payments from Your TSP Account.