A new bill will allow federal employees to withdraw funds from their retirement accounts without being penalized.
Introduced last week by Rep. Pete Olson, R-Texas, Rep. Don Beyer (D-Virginia) and Rep. Ed Perlmutter (D-Colorado), the Financial Relief for Feds Act aims to help those affected by the government shutdown.
The Financial Relief for Feds Act allows 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.
That includes not only Thrift Savings Plans (TSP) but also accounts such as IRAs. Individuals will be able to make multiple withdrawals from their TSP without penalty and will be allowed to recontribute the money to their accounts once the government reopens.
“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 in a statement. “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 added. “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.”
“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,” Perlmutter concluded. “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.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
