Shaheen & Hassan Introduce Bipartisan Legislation to Eliminate Penalties for Federal Workers When Accessing Money From Retirement Savings During ShutdownJanuary 24, 2019
(Washington, DC) – Today, U.S. Senators Jeanne Shaheen (D-NH) and Maggie Hassan (D-NH) joined Senator Tim Kaine (D-VA) to introduce the Emergency Relief for Federal Workers Act of 2019 to ensure that federal employees can access money from their Thrift Savings Plan (TSP) without penalty. The bill would waive penalties and contribution prohibitions as a result of financial hardship during the government shutdown. Shaheen and Hassan previously cosponsored legislation that was signed into law to ensure that federal workers affected by the shutdown receive retroactive pay.
“Federal workers in New Hampshire and across the country are struggling to put food on the table and pay their mortgages because of the President’s reckless shutdown,” said Shaheen. “This legislation will allow these workers to access an emergency source of funding as they face a second missed payday. Every effort should be made to provide relief to these men and women who serve the American people as they continue to be held hostage by the President’s shutdown.”
“The President’s senseless government shutdown has hurt far too many Granite Staters and Americans, and we must ensure that protections are in place during this time so that they can continue to pay their bills and provide for their families,” said Hassan. “This bill waives any penalties for federal workers who make withdrawals from their retirement savings and allows them to recontribute funds to their retirement accounts after the shutdown ends. I’ll keep fighting to protect the financial well-being of our dedicated federal workers.”
The Emergency Relief for Federal Workers Act of 2019 would ensure federal workers are not penalized for making withdrawals from their retirement savings and gives them the opportunity to recontribute funds to their TSP accounts after the shutdown ends. The bill:
- Defines government shutdowns as a financial hardship. This bill would ease the process for making withdrawals of up to $30,000, eliminating the need for federal employees to provide additional evidence of financial hardship.
- Waives 10 percent early distribution penalty. This bill would waive the 10 percent penalty for early withdrawal from Thrift Savings Plans for participants who are 59 ½ years old or younger. The bill still makes individuals responsible for paying taxes on the amount of the withdrawal.
- Allows re-contribution of qualified shutdown distribution. In order to preserve long-term retirement savings, this bill would allow federal workers who take a qualified shutdown distribution to re-contribute some or all of the distribution within 120 days of the end of the shutdown.
The bill would also alleviate additional financial burdens for federal workers who want to take out a loan or have difficulty making payments for a current TSP loan as a result of the shutdown:
- Ensures TSP loans are available during shutdowns. Currently TSP loans are not available if a shutdown is expected to last more than 30 days. This bill would ensure that participants can access TSP loans during a shutdown that causes employees to miss a paycheck.
- Suspends TSP Loan payments during shutdowns. TSP loan repayments are made through payroll deductions. This bill would suspend loan payments until the government reopens.
Senators Ron Wyden (D-OR), Patty Murray (D-WA), Susan Collins (R-ME), Doug Jones (D-AL), Michael Bennet (D-CO), Catherine Cortez Masto (D-NV), Debbie Stabenow (D-MI), Chris Van Hollen (D-MD), Richard Blumenthal (D-CT), Tom Carper (D-DE), Elizabeth Warren (D-MA), Tammy Duckworth (D-IL), Chris Coons (D-DE), Bernie Sanders (D-VT), Mark Warner (D-VA), Bob Menendez (D-NJ), Sherrod Brown (D-OH), Mazie Hirono (D-HI), Cory Booker (D-NJ), Dick Durbin (D-IL), Tina Smith (D-MN), Martin Heinrich (D-NM), Brian Schatz (D-HI), Amy Klobuchar (D-MN), Tom Udall (D-NM), Joe Manchin (D-WV), and Rob Portman (R-OH) are cosponsors of the legislation.
The bill is also supported by National Treasury Employees Union (NTEU), American Federation of Government Employees (AFGE), AFL-CIO, Professional Aviation Safety Specialists (PASS), International Federation of Professional and Technical Engineers (IFPTE) and the Federal Law Enforcement Officers Association (FLEOA).
To read a fact sheet on the Emergency Relief for Federal Workers Act of 2019, click here.
To read the bill text of the Emergency Relief for Federal Workers Act of 2019, click here.
Next Article Previous Article