The Thrift Savings Plan Emergency Withdrawal Act of 2025 allows federal employees who leave government service to withdraw up to $100,000 from their Thrift Savings Plan accounts without the usual 10 percent early withdrawal penalty. The withdrawals must be spread equally across three tax years rather than counted as immediate income, reducing the tax burden in the year of separation. Federal employees affected by this change have a one-year window after beginning their retirement annuity payments to take advantage of this provision, and they can repay the withdrawn funds within three years if they choose to restore the money to a retirement account. The bill also exempts these emergency withdrawals from standard rollover and withholding requirements. The provisions take effect for distributions made after January 20, 2025.
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