Title: Emergency Relief for Federal Workers Act of 2019
Policy area: Taxation

Summary:
Emergency Relief for Federal Workers Act of 2019
This bill allows federal employees who are affected by a government shutdown to make certain penalty-free withdrawals from their Thrift Savings Plan (TSP) accounts. The bill waives various penalties and requirements that would otherwise apply to TSP distributions and loans during a government shutdown.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 204 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                 S. 204

 To amend the Internal Revenue Code of 1986 to waive certain penalties 
for affected Federal employees receiving a distribution from the Thrift 
 Savings Plan during a lapse in appropriations, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 24, 2019

Mr. Kaine (for himself, Ms. Collins, Mr. Wyden, Mrs. Murray, Mr. Jones, 
    Mr. Bennet, Ms. Cortez Masto, Ms. Stabenow, Mr. Van Hollen, Mr. 
   Blumenthal, Mr. Carper, Ms. Warren, Ms. Duckworth, Mr. Coons, Mr. 
Sanders, Mr. Warner, Ms. Hassan, Mr. Menendez, Mr. Brown, Mrs. Shaheen, 
   Ms. Hirono, Mr. Booker, Mr. Durbin, Ms. Smith, Mr. Heinrich, Mr. 
 Schatz, Ms. Klobuchar, Mr. Portman, Mr. Udall, Mr. Manchin, and Mrs. 
  Feinstein) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to waive certain penalties 
for affected Federal employees receiving a distribution from the Thrift 
 Savings Plan during a lapse in appropriations, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Emergency Relief for Federal Workers 
Act of 2019''.

SEC. 2. WAIVER OF 10-PERCENT ADDITIONAL TAX ON CERTAIN FINANCIAL 
              HARDSHIP DISTRIBUTIONS FROM THRIFT SAVINGS PLAN.

    (a) In General.--Paragraph (2) of section 72(t) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(H) Distributions to federal employees affected 
                by a qualified lapse in appropriations.--
                            ``(i) In general.--Distributions made from 
                        the Thrift Savings Plan under subchapter III of 
                        chapter 84 of title 5, United States Code, upon 
                        financial hardship of an individual who is a 
                        Federal employee and who is on furlough or who 
                        is working without pay due to a qualified lapse 
                        in appropriations, if such distributions are 
                        made during the period of such qualified lapse 
                        in appropriations (including distributions 
                        which are in process as of the end of such 
                        lapse).
                            ``(ii) Limitation.--Subclause (i) shall 
                        apply to any distributions only to the extent 
                        the aggregate of such distributions does not 
                        exceed $30,000 with respect to any qualified 
                        lapse in appropriations.
                            ``(iii) Qualified lapse in 
                        appropriations.--For purposes of this 
                        subparagraph, the term `qualified lapse in 
                        appropriations' means a period of continuous 
                        lapse in Federal appropriations (including a 
                        partial lapse) of at least 2 weeks.
                            ``(iv) Other terms.--For purposes of this 
                        subparagraph, the terms `furlough' and `pay' 
                        have the respective meanings given such terms 
                        by section 7511 of title 5, United States 
                        Code.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions made after December 21, 2018.

SEC. 3. THRIFT SAVINGS PLAN PROVISIONS.

    (a) In-Service Withdrawals.--Section 8433(h) of title 5, United 
States Code, is amended by adding at the end the following:
    ``(6)(A) In this paragraph--
            ``(i) the term `applicable date', with respect to a covered 
        age-based withdrawal or covered hardship withdrawal made during 
        a qualified lapse in appropriations, means the date that is 120 
        days after the last day of the qualified lapse in 
        appropriations;
            ``(ii) the term `covered age-based withdrawal' means a 
        withdrawal under paragraph (1)(A) made during the period of a 
        qualified lapse in appropriations;
            ``(iii) the term `covered hardship withdrawal' means a 
        withdrawal described in subparagraph (B); and
            ``(iv) the term `qualified lapse in appropriations' has the 
        meaning given the term in section 72(t)(2)(H)(iii) of the 
        Internal Revenue Code of 1986.
    ``(B) The Board shall permit an employee whose pay has been 
suspended due to a qualified lapse in appropriations to make a 
withdrawal based upon financial hardship under paragraph (1)(B) if--
            ``(i) the withdrawal is made during the period of such 
        qualified lapse in appropriations (including withdrawals which 
        are in process as of the end of such lapse); and
            ``(ii) the aggregate amount of any such withdrawals during 
        the period described in clause (i) does not exceed $30,000.
    ``(C) The Board may not limit the number of covered hardship 
withdrawals that an employee may make during the period of a qualified 
lapse in appropriations, subject to the dollar limitation under 
subparagraph (B)(ii).
    ``(D) A covered hardship withdrawal made by an employee shall not 
affect the ability of the employee to contribute to the Thrift Savings 
Fund on and after the date on which the applicable qualified lapse in 
appropriations ends.
    ``(E)(i) An individual who makes 1 or more covered age-based 
withdrawals during the period of a qualified lapse in appropriations 
may, before the applicable date, contribute to the Thrift Savings Fund 
an amount not to exceed the lower of--
            ``(I) the aggregate amount of the withdrawals; or
            ``(II) $30,000.
    ``(ii) An individual who makes 1 or more covered hardship 
withdrawals during the period of a qualified lapse in appropriations 
may, before the applicable date, contribute to the Thrift Savings Fund 
an amount not to exceed the aggregate amount of the withdrawals.
    ``(iii) The dollar limitations otherwise applicable to employee 
contributions under this title or the Internal Revenue Code of 1986 
shall not apply to any contribution made under this subparagraph. Any 
such contribution shall be disregarded for purposes of section 8432(d) 
of this title and section 415(c)(2) of such Code.''.
    (b) Loans.--Section 8433(g) of title 5, United States Code, is 
amended by adding at the end the following:
    ``(5) The Board shall prescribe rules providing for the secure 
distribution of the proceeds of a loan under this subsection through an 
electronic funds transfer, if such a transfer is requested by the 
employee or Member receiving the loan.
    ``(6) The Board shall prescribe rules allowing loans to be made 
under this subsection to employees during a lapse in appropriations, 
without regard to the period of the lapse in appropriations.
    ``(7)(A) In this paragraph--
            ``(i) the term `payment missed because of a shutdown' means 
        a payment--
                    ``(I) on a loan under this subsection made to an 
                employee whose pay has been suspended due to a 
                qualified lapse in appropriations;
                    ``(II) that is due during the qualified lapse in 
                appropriations; and
                    ``(III) that was not paid by the employee; and
            ``(ii) the term `qualified lapse in appropriations' has the 
        meaning given the term in section 72(t)(2)(H)(iii) of the 
        Internal Revenue Code of 1986.
    ``(B) The Board shall prescribe rules providing that the full 
amount due for any payments missed because of a shutdown by an employee 
shall be deducted and withheld from the pay provided to the employee 
for the period of the qualified lapse in appropriations.''.

SEC. 4. MISSED LOAN PAYMENTS NOT TO BE TREATED AS TAXABLE DISTRIBUTION 
              DURING A QUALIFIED LAPSE IN APPROPRIATIONS.

    (a) In General.--Paragraph (2) of section 72(p) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(E) Special rule for missed loan repayment during 
                a qualified lapse in appropriations.--Subparagraph (A) 
                shall not fail to apply to any loan from the Thrift 
                Savings Plan under subchapter III of chapter 84 of 
                title 5, United States Code, solely because there is a 
                payment missed because of a shutdown (as defined in 
                section 8433(g)(7)(A) of title 5, United States Code) 
                with respect to such loan, and such loan (or any 
                portion of such loan) shall not be treated as a taxable 
                distribution solely because of such missed payment.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to missed loan payments the due date for which is after December 21, 
2018.
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