Federal employees get more time to fix missed loan payments from their retirement accounts

The US Federal Retirement Thrift Investment Board proposes new rules to give federal employees more time to fix missed loan payments from their retirement savings. This means people who borrow from their Thrift Savings Plan will have an extra three months to catch up on payments before their loan is considered a taxable distribution.

Before this change, a missed payment could quickly turn a loan into a taxable event, forcing people to pay taxes and penalties on money they thought was still a loan. This new rule gives federal employees a longer grace period, reducing the chance of an accidental tax hit. It also makes the rules clearer about exactly when a loan is considered defaulted.