Oregon senator’s legislation would eliminate penalties for federal workers wanting access to retirement savings money during shutdown
Washington, D.C. – U.S. Sen. Ron Wyden todayintroduced legislation that would ensure federal employees can have access to money from their Thrift Savings Plan (TSP) without penalty during the government shutdown.
The Emergency Relief for Federal Workers Act of 2019 would waive penalties and contribution prohibitions as a result of financial hardship during the shutdown.
“This Trump shutdown was wrong from the get-go, and the hundreds of thousands of workers going without paychecks shouldn’t be penalized for drawing temporarily from their retirement savings to get by,” Wyden said. “We are all hearing heartbreaking stories about people selling off possessions and scrambling to find gigs on the side to pay for groceries, gas and rent. This bill is all about finding an immediate solution for the many workers suffering financially as a result of Trump’s shutdown. I’m going to work hard to get this bill across the finish line ASAP.”
“Federal workers and their families are suffering through very real financial hardship as a result of the budget standoff,” said Oregon State Treasurer Tobias Read. “Mortgage payments and rent are still due; groceries still have to be purchased. I’m grateful for leadership that Senator Wyden has brought forward that will give these families some additional tools to make ends meet.”
In addition to Wyden, the bill was introduced by U.S. Senators Tim Kaine (D-VA), Patty Murray (D-WA) and Susan Collins (R-ME).
The Emergency Relief for Federal Workers Act of 2019 would ensure federal workers are not penalized for making withdrawals from theirretirement 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 would 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 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), Maggie Hassan (D-NH), Bob Menendez (D-NJ), Sherrod Brown (D-OH), Jeanne Shaheen (D-NH), 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 the National Treasury Employees Union (NTEU), American Federation of Government Employees (AFGE), AFL-CIO, Professional Aviation Safety Specialists (PASS), and International Federation of Professional and Technical Engineers (IFPTE).
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.