Virginia lawmaker introduces bill allowing federal workers to withdraw from retirement savings during government shutdown

ARLINGTON, Va. (DC News Now) — As every day Americans worry about their next paycheck during the government shutdown, a Virginia Congressman is pushing to make it easier for them to get much-needed funds.

Rep. Don Beyer (D-Va.) is introducing a bill that would allow federal workers to tap into their Thrift Savings Plans without a penalty.

This comes as House Speaker Mike Johnson cancelled previously scheduled votes this week—keeping the House in recess until Oct. 13th.

The Emergency Relief for Federal Workers Act would remove the early distribution penalty for federal workers who wish to make hardship withdrawals from their retirement accounts and make cash available to them now. 

The penalty is typically 10%.

The bill would also allow federal workers who withdraw funds to recontribute some or all of the funds later to restore their retirement savings.

“It also makes sure that any loan forgiveness that goes on in the short run, where they won’t have to make a car payment now, doesn’t get treated as income that they’re going to get taxed on because they’re going to have to make their car payment later,” Beyer said. “It’s just basically holds them harmless.” 

Sen. Tim Kaine (D-Va.) and Rep. Suhas Bubramanyam (D-Va.) introduced similar bills that would make changes to retirement account withdrawal available for federal contractors during the shutdown.