Bill > S2964

This bill provides emergency financial relief for federal contractors and certain government employees during federal government shutdowns by allowing them to make penalty-free withdrawals from their retirement accounts. Specifically, the bill allows eligible individuals, such as federal contractors on unpaid leave, employees of federal grantees, or government workers furloughed during a federal appropriations lapse of at least two consecutive weeks, to withdraw up to $30,000 from their retirement plans without incurring the typical 10% early withdrawal penalty. The bill also provides additional flexibility by allowing individuals to repay these distributions within three years without tax consequences and spread the income tax impact of the withdrawal over a three-year period. The $30,000 limit will be adjusted annually for inflation, and the distribution is permitted for retirement plans like 401(k)s, 403(b)s, and IRAs. To be considered an eligible individual, a person must be directly impacted by a federal appropriations lapse, such as being placed on unpaid leave, working without pay, or experiencing a decrease in compensation. This legislation aims to provide financial relief and protect the economic stability of federal contractors and government employees during uncertain periods of government funding interruptions.

Budget and Finance

https://www.congress.gov/bill/119th-congress/senate-bill/2964/all-info