A bipartisan group of lawmakers introduced a bill Tuesday to allow federal workers at shuttered agencies to temporarily tap into their 401(k)-style retirement accounts to help cope with missed paychecks during the partial government shutdown.
The Financial Relief for Feds Act (H.R. 545), introduced by Reps. Pete Olson, R-Texas; Don Beyer, D-Va.; Ed Perlmutter, D-Colo.; Randy Weber, R-Texas; David McKinley, R-W.Va.; David Trone, D-Md.; Kendra Horn, D-Okla.; Colin Allred, D-Texas; and Anthony Brown, D-Md., would allow federal workers who have been furloughed or who are excepted and working without pay to make withdrawals from their Thrift Savings Plan accounts without the taxes and penalties—roughly 10 percent—that usually are withheld.
The bill also would allow contractors whose sole income comes from federal contracts that have been suspended because of a shutdown to similarly withdraw funds without penalty from their own retirement investment accounts like IRAs. And it allows those who make withdrawals to pay the money back into their accounts once the government reopens.
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Although TSP rules allow federal employees furloughed as part of a shutdown to take out loans against their accounts, that provision only applies when a furlough is expected to last fewer than 30 days. With no end to the partial government shutdown in sight, it soon will no longer apply.
“Hardworking federal employees and contractors at federal facilities . . . 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.”
Beyer added: “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.”
Meanwhile the Defense Department on Monday said the opt-in period for the Blended Retirement System was a success. Blended retirement allows military service members to contribute to the TSP with an employer match.
In the one-year period in which existing service members could opt into the program, more than 400,000 people chose to enroll in the new program in exchange for a less generous pension benefit if they reach 20 years of service. The opt-in period ended last month. Additionally, more than 150,000 new recruits were automatically enrolled when they entered the armed services.
“We are immensely proud of the incredible efforts it took to design and implement the policy and educate and train our forces on the Blended Retirement System,” said James Stewart, acting undersecretary of Defense for personnel and readiness. “We see [blended retirement] as an important change that will set America’s service members on the path toward greater financial flexibility, responsibility and security.”