Assuming the thrift savings plan has the standard provisions of money being deposited from pre-tax funds, the main issue is that the withdrawal will be taxed as regular income.
So, for example, if you are in the 25% tax bracket when all your income for the year is calculated. About 25% of the withdrawal would go for federal income taxes
. If you want to determine your tax bracket, you can view a preview of the 2008 tax brackets here:
You can also probably expect around 6% or so to go for NJ State income taxes, although again the exact percentage depends on your total annual income. You can view the State tax brackets here:
In addition, you will be subject to a 10% early withdrawal fee if you are under age 50 1/2. The plan does not charge this penalty. It is the federal government that takes it.
Therefore, depending on your total income for the year you could be looking at 1/3 to 1/2 of the total amount going to taxes and penalties.
As you can see, the taxes and penalties are specifically designed to dissuade people from taking this action. A much better option, if at all possible is to take out a loan from your TSP account. Although you will have to pay it back over several years, there will be no taxes or penalties, as long as you pay it back on time. If you fail to pay it back, you will only pay taxes and penalties on the portion that you fail to pay back.
I hope this answers your question.