WASHINGTON — Following the federal government shutdown Tuesday night, Virginia Sen. Tim Kaine (D) has introduced a bill to support federal workers impacted financially.
The Emergency Relief for Federal Workers Act is intended to help federal workers who may experience financial hardship by being out of work during the shutdown.
“Government shutdowns inflict senseless pain on federal workers. While I successfully passed my bill to guarantee back pay for federal employees during a shutdown, paychecks can still be delayed,” said Kaine.
In a release, Kaine said federal employees who use their Thrift Savings Plan (TSP) retirement accounts during shutdowns are penalized for withdrawing funds.
“If workers need to withdraw funds from their retirement accounts during a shutdown, this bill would ensure they don’t face penalties, that they can access TSP loans, and will address other problems a shutdown can create for TSP account holders," Kaine said.
The legislation would do the following, according to Kaine's release:
- Establish government shutdowns are financial hardships. Current law allows TSP participants to withdraw funds due to financial hardship and requires them to certify under penalties of perjury that they are facing a financial hardship and the amount of the request is not greater than the dollar amount of the financial hardship. By establishing government shutdowns that last two weeks or longer as financial hardships, it would eliminate the need for federal employees to make additional demonstrations of this hardship.
- Waive the 10 percent Early Distribution Penalty for federal employees who withdraw funds under financial hardship. Under current law, federal employees who are 59 years old or younger are subject to an additional 10 percent early withdrawal penalty when they withdraw funds from their TSP. The bill would eliminate that penalty but still require them to pay taxes on the funds they withdraw.
- Allow for recontribution of funds. The bill would allow federal employees who withdraw funds from their TSP to recontribute some or all of the funds they have withdrawn from their TSP in order to preserve retirement savings.
- Ensure federal employees can access TSP loans. Under current law, TSP loans are not available if a shutdown is expected to last more than 30 days. This bill would ensure TSP loans will be available to affected federal employees who need to access those funds during a shutdown that causes such employees to miss a paycheck.
- Suspend TSP loan payments during shutdowns and deduct outstanding loan payments from back pay provided after shutdowns. TSP loan repayments are made through payroll deductions. This bill would automatically suspend loan payments until the government reopens. Once the government reopens, the outstanding loan payments will be deducted from federal employees’ back pay.
- Prohibit missed loan payments from becoming taxable distributions during shutdowns. The bill would prohibit any missed loan payments from becoming a taxable distribution that could be subject to the 10 percent withdrawal penalty.
The legislation is cosponsored by U.S. Senators Catherine Cortez Masto (D-NV), Angela Alsobrooks (D-MD), Richard Blumenthal (D-CT), Chris Coons (D-DE), Tammy Duckworth (D-IL), John Hickenlooper (D-CO), Mazie Hirono (D-HI), Amy Klobuchar (D-MN), Edward J. Markey (D-MA), Brian Schatz (D-HI), Jeanne Shaheen (D-NH), Chris Van Hollen (D-MD), Mark R. Warner (D-VA), and Ron Wyden (D-OR).
