Bill > HR5690

This bill, called the Emergency Relief for Federal Contractors Act of 2025, provides penalty-free early withdrawals from retirement accounts for certain federal workers and contractors during government shutdowns. Specifically, eligible individuals include federal contractors, employees of federal grantees, and workers for the District of Columbia who are placed on unpaid leave or working without pay during a federal appropriations lapse lasting at least two consecutive weeks. The bill allows these individuals to withdraw up to $30,000 from their retirement accounts without incurring the typical 10% early withdrawal penalty. The withdrawn amount can be repaid within three years, and the tax liability can be spread out over three years. The bill defines an "applicable individual" broadly to include not just contractors, but also employees working without pay or with reduced pay due to a government shutdown. The $30,000 limit will be adjusted annually for inflation, and the provision ensures that retirement plan administrators can process these distributions without violating existing retirement plan rules. This legislation aims to provide financial relief to workers who are economically impacted by government funding lapses.

Budget and Finance

https://www.congress.gov/bill/119th-congress/house-bill/5690/all-info