The Emergency Relief for Federal Contractors Act allows federal contractors, federal grantees, and certain District of Columbia employees who are furloughed or forced to work without pay during a government shutdown to withdraw up to $30,000 from their retirement accounts without facing the usual 10% early withdrawal penalty. The bill covers federal contractors and their employees, employees of organizations receiving federal grants whose pay is affected, and D.C. government workers impacted by appropriations lapses lasting at least two weeks. Individuals who withdraw funds have three years to repay the money back into their retirement accounts, and they can spread any tax liability from the withdrawal over a three-year period rather than paying it all at once. The $30,000 limit will increase annually based on inflation after 2025, and the bill takes effect immediately upon passage.
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