I resigned from job to receive MH treatment from the VA this year.
Prior to my departure I had an active TSP loan that was previously being withdrawn from my biweekly pay.
I spoke with the TSP customer service team prior to my departure, at which they confirmed if the loan (my invested funds) was not repaid before upon separation or repayment continued, it would simply count as taxable earned income and reduce the amount of my available balance. I did not withdraw or transfer the remaining balance after separating from the agency.
Last week I received a letter stating my account is delinquent, requesting payment for a past amount due before March 2023 or it will be reported to the IRS and will affect my credit.
The TSP customer representative was not 100 % that they could simply go ahead and update the loan and reflect it as a withdrawal and simply send me the information to pay the 20% tax when 2022 taxes are filed.
Why does this have to affect my credit. Currently my income is minimal as I am still unemployed, under physician care. How will the IRS review this and why should it reflect my credit, when it is my money. I have no problem with the 20% tax for early withdrawal etc, but the circumstances are out of my control.
Please advise
