I 
119TH CONGRESS 
1ST SESSION H. R. 5690 
To allow penalty-free distributions from retirement accounts in the case of 
certain Federal contractors impacted by Federal Government shutdowns. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 3, 2025 
Mr. SUBRAMANYAM
(for himself, Mr. WALKINSHAW, Mr. BEYER, Ms. 
MCCLELLAN, Ms. ELFRETH, Ms. NORTON, Mr. SWALWELL, and Mr. 
HORSFORD) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To allow penalty-free distributions from retirement accounts 
in the case of certain Federal contractors impacted by 
Federal Government shutdowns. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Emergency Relief for 
Federal Contractors Act of 2025’’. 
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SEC. 2. TAX-FAVORED WITHDRAWALS FROM RETIREMENT 
PLANS. 
(a) IN GENERAL.—Section 72(t) of the Internal Rev-
enue Code of 1986 shall not apply to any Federal Govern-
ment shutdown distribution. 
(b) AGGREGATE DOLLAR LIMITATION.— 
(1) IN GENERAL.— 
(A) LIMITATION.—For purposes of this 
section, the aggregate amount of distributions 
received by an individual which may be treated 
as Federal Government shutdown distributions 
for any taxable year shall not exceed $30,000. 
(B) INFLATION ADJUSTMENT.—In the case 
of any taxable year beginning after 2025, the 
$30,000 amount under subparagraph (A) shall 
be increased by an amount equal to— 
(i) such dollar amount, multiplied by 
(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) of the In-
ternal Revenue Code of 1986 for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘‘calendar 
year 2024’’ for ‘‘calendar year 2016’’ in 
subparagraph (A)(ii) thereof. 
If any amount as adjusted under the preceding 
sentence is not a multiple of $500, such amount 
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shall be rounded to the nearest multiple of 
$500. 
(2) TREATMENT OF PLAN DISTRIBUTIONS.—If 
a distribution to an individual would (without regard 
to paragraph (1)) be a Federal Government shut-
down distribution, a plan shall not be treated as vio-
lating any provision of law merely because the plan 
treats such distribution as a Federal Government 
shutdown distribution, unless the aggregate amount 
of such distributions from all plans maintained by 
the employer (and any member of any controlled 
group which includes the employer) to such indi-
vidual for any taxable year exceeds the dollar 
amount in effect under paragraph (1)(A). 
(3) CONTROLLED
GROUP.—For purposes of 
paragraph (2), the term ‘‘controlled group’’ means 
any group treated as a single employer under sub-
section (b), (c), (m), or (o) of section 414 of the In-
ternal Revenue Code of 1986. 
(c) AMOUNT DISTRIBUTED MAY BE REPAID.— 
(1) IN GENERAL.—Any individual who receives 
a Federal Government shutdown distribution may, 
at any time during the 3-year period beginning on 
the day after the date on which such distribution 
was received, make 1 or more contributions in an 
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aggregate amount not to exceed the amount of such 
distribution to an eligible retirement plan of which 
such individual is a beneficiary and to which a roll-
over contribution of such distribution could be made 
under 
section 
402(c), 
403(a)(4), 
403(b)(8), 
408(d)(3), or 457(e)(16) of the Internal Revenue 
Code of 1986, as the case may be. 
(2) TREATMENT OF REPAYMENTS OF DISTRIBU-
TIONS FROM ELIGIBLE RETIREMENT PLANS OTHER 
THAN IRAS.—For purposes of the Internal Revenue 
Code of 1986, if a contribution is made pursuant to 
paragraph (1) with respect to a Federal Government 
shutdown distribution from an eligible retirement 
plan other than an individual retirement plan, then 
the taxpayer shall, to the extent of the amount of 
the contribution, be treated as having received the 
Federal Government shutdown distribution in an eli-
gible rollover distribution (as defined in section 
402(c)(4) of such Code) and as having transferred 
the amount to the eligible retirement plan in a direct 
trustee to trustee transfer within 60 days of the dis-
tribution. 
(3) TREATMENT OF REPAYMENTS OF DISTRIBU-
TIONS FROM IRAS.—For purposes of the Internal 
Revenue Code of 1986, if a contribution is made 
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riod of at least 2 weeks during which there is 
a lapse in Federal appropriations (including a 
partial lapse). 
(B) PERIOD OF LAPSE.—A period of lapse 
in Federal appropriations shall not be a Federal 
appropriations lapse with respect to an indi-
vidual for longer than the period during which 
the individual is furloughed, on unpaid leave, or 
performing work without pay (or working with 
a decrease in pay in the case of an applicable 
individual described in paragraph (2)(B)(iii)) 
due to such lapse. 
(4) ELIGIBLE RETIREMENT PLAN.—The term 
‘‘eligible retirement plan’’ has the meaning given 
such term by section 402(c)(8)(B) of the Internal 
Revenue Code of 1986. 
(e) INCOME INCLUSION SPREAD OVER 3-YEAR PE-
RIOD.— 
(1) IN GENERAL.—Unless the taxpayer elects 
not to have this paragraph apply for any taxable 
year, any amount required to be included in gross 
income for such taxable year with respect to any 
Federal Government shutdown distribution shall be 
so included ratably over the 3-taxable-year period 
beginning with such taxable year. 
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(2) SPECIAL
RULE.—For purposes of para-
graph (1), rules similar to the rules of subparagraph 
(E) of section 408A(d)(3) of the Internal Revenue 
Code of 1986 shall apply. 
(f) SPECIAL RULES.— 
(1) EXEMPTION
OF
DISTRIBUTIONS
FROM 
TRUSTEE
TO
TRUSTEE
TRANSFER
AND
WITH-
HOLDING
RULES.—For 
purposes 
of 
sections 
401(a)(31), 402(f), and 3405 of the Internal Rev-
enue Code of 1986, a Federal Government shutdown 
distribution shall not be treated as an eligible roll-
over distribution. 
(2) FEDERAL
GOVERNMENT
SHUTDOWN
DIS-
TRIBUTIONS TREATED AS MEETING PLAN DISTRIBU-
TION REQUIREMENTS.—For purposes of the Internal 
Revenue Code of 1986, a Federal Government shut-
down distribution shall be treated as meeting the re-
quirements 
of 
sections 
401(k)(2)(B)(i), 
403(b)(7)(A)(i), 403(b)(11), and 457(d)(1)(A) of 
such Code. 
Æ 
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