Can a TSP be used as a savings account?

A Thrift Savings Plan cannot be used like a traditional savings account because withdrawals from the plan come with strict guidelines and penalties, such as inability to repay the withdrawn amount, according to the Thrift Savings Plan website. The plan is designed to be used as a retirement account.

Account holders may take out loan a from their Thrift Savings Plan account, reports the Thrift Savings Plan website. The loan must be repaid to the plan, along with set amount of interest. Borrowers, however, are restricted in how they may use a loan from their plan. The loan may not be used to refinance a mortgage, to build an extension onto an existing property or for the purchase of undeveloped land.