Representatives Pete Olson (R-TX), Don Beyer (D-VA) and Ed Perlmutter (D-CO) Tuesday introduced legislation that would allow federal employees and contractors to withdraw funds from their retirement accounts without being penalized.
The Financial Relief for Feds Act (HR 545) would let furloughed federal employees — “essential” federal employees working without pay — and contractors whose sole source of earned income is their federal contract to make a withdrawal from their retirement savings accounts without the 10 percent penalty that normally applies.
“This continued shutdown is jeopardizing the livelihoods of the hardworking men and women who work for our country. Missing paychecks puts a terrible strain on households,” said Perlmutter. “Families should be able to dip into additional savings and retirement funds without penalty in order to keep up with regular bills and expenses during this difficult time.”
According to a statement on Perlmutter’s website, the proposal would allow cash-strapped employees to draw $4,000 from qualified retirement accounts every two weeks the shutdown stretches on without triggering the early withdrawal penalty. The temporary exemption would cover withdrawals from the Thrift Savings Plan (TSP) as well as personal 401(k)s and IRAs. The bill would also allow account holders to replenish their retirement funds over the next three years.
“Hardworking federal employees and contractors at federal facilities like Johnson Space Center shouldn’t suffer because the federal government can’t do its job,” Olson said. “Families of federal employees should not become casualties of partisan politics in Washington. This simple adjustment will allow them to access funds to provide financial stability during a stressful period they have no control over. I urge Congress to pass this bill quickly to provide needed relief to federal employees.”
“The only way to fully stop the damage being done by this shutdown is to reopen the government, but until that happens Congress should do everything in its power to help federal workers who are affected,” Beyer said. “This bipartisan legislation would give families flexibility to help manage bills that cannot wait, and I am proud to join my colleagues Congressmen Olson and Perlmutter in introducing it.”
The full text of the bill can be read here.