Are TSP Losses Tax Deductible?

Printer-Friendly Format

Many My Federal Retirement readers have been contacting us with concerns of losses in their Thrift Savings Plan (TSP) balances in light of the falling stock market.

This week we wanted to address one of the more common questions we've received.

Question:   In about 5 years, I will retire and will be withdrawing from my TSP balance.  In the last year my balance has declined significantly due to the stock market declines.  I know that money was tax free when it went in, but when I take the money out, can I claim a loss on my income tax?

We consulted with federal benefits expert, Ed Zurndorfer. 

Ed's Answer:  "All contributions to the TSP are made on a pre-tax basis. Any earnings in the TSP grow tax-deferred. That means that all withdrawals from the TSP are fully taxable. Also, because the TSP is a retirement plan, any losses incurred in the TSP are not deductible."