Loan Repayment Question

[Vatspguy23]

Say I borrow $30k from my tsp account for a tsp loan.

With each paycheck, they take out $500 to repay that loan. Does that $500 go into the same fund as my normal 5% contribution (lets say C for example?)

What about when I repay the entire amount? Say I need to pay back $25k to pay it off, 6 months after taking out the loan, does it go into C at that time? In other words, if I want to payoff a tsp loan, would it actually be wise to wait until C is at a low price to "buy back in"? Does that make sense?

[Eliaj]

Where Your Loan Comes from and is Repaid To
When you borrow from your TSP account, the loan is disbursed proportionally
from any traditional (non-Roth) and Roth balances in your
account. Similarly, if you are a uniformed services member with taxexempt
contributions in your traditional balance, your loan will contain
a proportional amount of tax-exempt contributions as well. If your TSP
account is invested in more than one fund, your loan is deducted proportionally
from the employee contributions (and earnings on those contributions)
that you have in each fund.
When you repay your loan, your payments (including interest) are deposited
back into the traditional (non-Roth) and Roth balances of your
account in the same proportion used for your loan disbursement. Repayments
are invested in TSP funds according to your existing contribution
allocation.

https://www.tsp.gov/PDF/formspubs/tspbk04.pdf

[Vatspguy23]

Got it, so

"When you repay your loan, your payments (including interest) are deposited
back into the traditional (non-Roth) and Roth balances of your
account in the same proportion used for your loan disbursement. Repayments
are invested in TSP funds according to your existing contribution
allocation."

Answers my first question. And as to my second, technically, this is a buy and sell when it comes to the payoff. So it would be smart to borrow "high" [IE sell high] and payback the loan "low" [IE buy low]. IE, you would be turning 100 shares into 125 shares by doing that. Not sure that would amount to a lot of profit or whatever, that math is over my head, but I think it might?

[Ruystar]

https://www.tsp.gov/PlanParticipation/L ... index.html

[ArrieS]

Answers my first question. And as to my second, technically, this is a buy and sell when it comes to the payoff. So it would be smart to borrow "high" [IE sell high] and payback the loan "low" [IE buy low]. IE, you would be turning 100 shares into 125 shares by doing that. Not sure that would amount to a lot of profit or whatever, that math is over my head, but I think it might?

Yea of course, but when you figure out how to know when you are buying low or selling high let me know. Because that means you know where the market is going.

Your question relies on the unspoken assumption you know what the market will do.

[Vatspguy23]

So I took out my loan with C at 32.7692, and today it's 37.3192, so I did the opposite of what I should've done anyway. Oh well, nice in theory. At least it's better to get the $25k back into my tsp to earn more. Shrug.

[Carmen909]

Answers my first question. And as to my second, technically, this is a buy and sell when it comes to the payoff. So it would be smart to borrow "high" [IE sell high] and payback the loan "low" [IE buy low]. IE, you would be turning 100 shares into 125 shares by doing that. Not sure that would amount to a lot of profit or whatever, that math is over my head, but I think it might?

Maybe the way to do it would be to IFT to G from whatever fund you're in when your fund is high and you're taking a profit. Then take the loan from G. That way you'd know that you'd be selling high the day your loan funds are disbursed since G is always going to be a little higher and there's no telling what the other funds will be. As you pay back your loan, contribute to whatever funds you want. It would be as if you are just buying them again. Of course, the share price may be higher than what you sold/IFT to G. But at least you would know that you locked in a profit when you went to G before taking out the loan. If the price is lower than what you sold, you're buying more share at a discount.

This makes sense in my head. It could be totally wrong.