Senator Warren Joins Colleagues in Introducing Bill to Eliminate Penalties for Federal Workers When Accessing Money from Retirement Savings During Shutdown
Washington, DC – United States Senator Elizabeth Warren (D-Mass.) joined Senators Tim Kaine (D-Va.), Ron Wyden (D-Ore.), Patty Murray (D-Wash.), and Susan Collins (R-Maine) in introducing the Emergency Relief for Federal Workers Act of 2019 to ensure that federal employees impacted by a government shutdown 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 this time.
The Emergency Relief for Federal Workers Act of 2019 would ensure federal workers are not penalized for making withdrawals from their retirement savings and give 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 TSP 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.
This Emergency Relief for Federal Workers Act of 2019 would allow federal workers who take money out of their retirement plan to recontribute the money once they receive back pay to preserve their long-term retirement savings.
Senators Doug Jones (D-Ala.), Michael Bennet (D-Colo.), Catherine Cortez Masto (D-Nev.), Debbie Stabenow (D-Mich.), Chris Van Hollen (D-Md.), Richard Blumenthal (D-Conn.), Tom Carper (D-Del.), Tammy Duckworth (D-Ill.), Chris Coons (D-Del.), Bernie Sanders (D-Vt.), Mark Warner (D-Va.), Maggie Hassan (D-N.H.), Bob Menendez (D-N.J.), Sherrod Brown (D-Ohio), Jeanne Shaheen (D-N.H.), Mazie Hirono (D-Hawaii), Cory Booker (D-N.J.), Dick Durbin (D-Ill), Tina Smith (D-Minn.), Martin Heinrich (D-N.M.), Brian Schatz (D-Hawaii), Amy Klobuchar (D-Minn.), Tom Udall (D-N.M.), Joe Manchin (D-W.Va.), and Rob Portman (R-Ohio) 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).
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