Ok, here is the situation and the question.

Retired in April 2023 as a federal employee with $118,000 in my Thrift Savings Plan. At that time I also had a $30,000 outstanding loan against my TSP. When I retired I decided to liquidate my entire TSP and take all the cash with me for overseas retirement.

$118,000 in the account. I was required to take $30,000 of that and pay off the loan, which I did. That left $88,000. I then paid $24,000 in taxes and fees. I walked away with $64,000.

I received my 1099-R from TSP. It shows a gain of $88,000 gross distribution with $24,000 in taxes. I receive a 2nd 1099-R from TSP showing the $30,000 in gross distribution with $0 in taxes. It's as if TSP says they gave me $30,000, and I kept it as income. I didn't, I paid it back.

I completely understand that the loan I took from my TSP was a tax free loan to me, but it was a loan nonetheless. It was income that I returned.

Am I missing something here? Thanks for the information.