I almost am afraid to answer this question because I hate having to be the messenger.
Please understand that I share everything I know here in an effort to give you all the facts, so that hopefully you can "see around some corners," if you will, in the future.
First, the TSP's being taken into consideration, as an asset, (asset meaning something that has a value, or a balance
... rather than an income
, such as a regular flow of money, like a salary or a monthly pension) isn't really related to how you might have to access it ..... they're just using a checklist of the things they are supposed to count and plugging it into a formula.
The basic financial statements are the income statement and the balance sheet (for both businesses and people), although the balance sheet is usually called a net worth statement on the personal side.
Income statement is income minus expenses
( a measure of net income coming to you) and the balance sheet is just a current snapshot of what you own (assets minus debts
And the formula they use simply says, in this case, that
(1) although you may NOT have the income coming in
to pay it back but that ...
(2) (in sum total, and retirement plans - including a TSP - is just one of the assets that the law
says that goes into that formula) you DO have enough overall assets
that you should be able to pay it back over time, somehow
It has more to do with your overall financial health, that exactly where the money might come from, to pay it back.
And just, again, to give you all the facts hopefully to know what you have to be watching for, here's a recent (I'll post a link so you can read the whole thing) memo from the Justice department about whether the TSP, specifically, can be levied:
Here's the summary, at the top of the Memo:
Your office has asked whether Thrift Savings Plan (“TSP”) accounts, which permit tax
-deferred retirement savings for certain federal employees, are subject to federal tax
levies under sections 6331 and 6334 of the Internal Revenue Code
, ...We believe that TSP accounts are subject to federal tax levies under the applicable statutes.
Here's the whole Memorandum: http://www.justice.gov/olc/2010/tax-levy.pdf
So although the qualification formula only looks, generally, at your overall ability to pay the money back over time (and I would certainly ask them to work out a long payback plan, which I believe they will), the memo shows a WORST CASE scenario...
That if you simply refused to pay it back, and after after what would probably be a fairly long process of their trying to collect, they COULD (at least we know that the justice department would support it) levy the TSP, (and take some of that money to pay it back).
I apologize for the data dump here, but I wanted to give you enough information to see things in context, and again, be able to think through what your options might be and what the possibilities are.
My recommendation would be that you work out an EXTENDED payment plan with them.
You certainly have evidence (by their own admission that your income isn't the strong part of your total financial situation) that you would need an extended amount of time to pay it back.
Hope this helps,
I hope you'll rate my answer based on it's thoroughness and accuracy, rather than on any good news/bad news content. AND be cure to come back here, if you have further questions on this so you won't be charged for another question, (and feel free to bookmark for future reference)