Title: Financial Relief for Feds Act of 2019
Policy area: Taxation

Summary:
Financial Relief for Feds Act of 2019
This bill allows certain employees who are not paid during a lapse in federal appropriations to make penalty-free withdrawals from retirement accounts. The bill applies to employees of the federal government, federal contractors, federal grantees, and the District of Columbia.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 545 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 545

  To allow penalty-free distributions from retirement accounts in the 
 case of Federal employees and certain Federal contractors impacted by 
                    the Federal Government shutdown.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 15, 2019

Mr. Olson (for himself, Mr. Beyer, Mr. Perlmutter, Mr. Weber of Texas, 
 Mr. McKinley, Mr. Trone, Ms. Kendra S. Horn of Oklahoma, Mr. Allred, 
    Mr. Brown of Maryland, Mr. Courtney, Mr. Babin, and Mr. Gaetz) 
 introduced the following bill; which was referred to the Committee on 
   Ways and Means, and in addition to the Committee on Oversight and 
 Reform, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
  To allow penalty-free distributions from retirement accounts in the 
 case of Federal employees and certain Federal contractors impacted by 
                    the Federal Government shutdown.

    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 ``Financial Relief for Feds Act of 
2019''.

SEC. 2. TAX-FAVORED WITHDRAWALS FROM RETIREMENT PLANS.

    (a) In General.--Section 72(t) of the Internal Revenue Code of 1986 
shall not apply to any Federal Government shutdown distribution.
    (b) Aggregate Dollar Limitation.--
            (1) In general.--For purposes of this subsection, the 
        aggregate amount of distributions received by an individual 
        which may be treated as Federal Government shutdown 
        distributions for any taxable year, and with respect to any 
        Federal appropriations lapse, shall not exceed the excess (if 
        any) of--
                    (A) the applicable amount, over
                    (B) the aggregate amounts treated as Federal 
                Government shutdown distributions received by such 
                individual with respect to such Federal appropriations 
                lapse.
            (2) Applicable amount.--For purposes of paragraph (1), the 
        applicable amount with respect to an individual is an amount 
        equal to--
                    (A) $4,000, multiplied by
                    (B) the number of 14-day periods beginning during 
                any Federal appropriations lapse with respect to such 
                individual.
            (3) Treatment of plan distributions.--
                    (A) In general.--If a distribution to an individual 
                would (without regard to paragraph (1)) be a Federal 
                Government shutdown distribution, a plan shall not be 
                treated as violating 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 individual exceeds 
                the applicable amount with respect to such individual.
                    (B) No tsp conditions on contributions or 
                distributions.--In the case of the Thrift Savings Fund, 
                no limit on the number of distributions made to an 
                individual, or on the amount of contributions which may 
                be made by such individual, shall be imposed solely by 
                reason of a distribution which is a Federal Government 
                shutdown distribution.
            (4) Controlled group.--For purposes of paragraph (3), the 
        term ``controlled group'' means any group treated as a single 
        employer under subsection (b), (c), (m), or (o) of section 414 
        of the Internal 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 
        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 rollover 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 distributions 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 
        eligible 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 distribution.
            (3) Treatment of repayments of distributions from 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 individual 
        retirement plan (as defined by section 7701(a)(37) of such 
        Code), then, to the extent of the amount of the contribution, 
        the Federal Government shutdown distribution shall be treated 
        as a distribution described in section 408(d)(3) of such Code 
        and as having been transferred to the eligible retirement plan 
        in a direct trustee to trustee transfer within 60 days of the 
        distribution.
    (d) Definitions.--For purposes of this section--
            (1) Federal government shutdown distribution.--The term 
        ``Federal Government shutdown distribution'' means any 
        distribution by an applicable individual from an eligible 
        retirement plan made during a Federal appropriations lapse with 
        respect to such individual.
            (2) Applicable individual.--The term ``applicable 
        individual'' means any individual--
                    (A) who is a Federal employee furloughed due to a 
                Federal appropriations lapse;
                    (B) who is placed on unpaid leave as a Federal 
                contractor, or as an employee of a Federal contractor, 
                due to a Federal appropriations lapse, and whose sole 
                source of earned income (as defined in section 32(c)(2) 
                of the Internal Revenue Code of 1986) would (but for 
                such lapse) be remuneration as such a contractor, or 
                employee thereof;
                    (C) who is an employee of a State or other Federal 
                grantee--
                            (i) whose compensation is advanced or 
                        reimbursed in whole or in part by the Federal 
                        Government; and
                            (ii) who is furloughed due to a Federal 
                        appropriations lapse; or
                    (D) who is furloughed due to a Federal 
                appropriations lapse as an employee of the District of 
                Columbia Courts, the Public Defender Service for the 
                District of Columbia, or the District of Columbia 
                government.
        Such term shall include any excepted employee or an employee 
        performing emergency work, as such terms are defined by the 
        Office of Personnel Management or the appropriate District of 
        Columbia public employer, as applicable, during a Federal 
        appropriations lapse.
            (3) Federal appropriation lapse.--
                    (A) In general.--The term ``Federal appropriations 
                lapse'' means any continuous period during which there 
                is a lapse in Federal appropriations.
                    (B) Period of lapse.--A period of lapse in Federal 
                appropriations shall not be a Federal appropriations 
                lapse with respect to an individual for longer than the 
                period during which the individual is furloughed (or on 
                unpaid leave in the case of an individual described in 
                paragraph (2)(B)) due to such lapse.
            (4) Eligible retirement plan.--The term ``eligible 
        retirement plan'' shall have 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 Period.--
            (1) In general.--In the case of any Federal Government 
        shutdown distribution, 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 shall be 
        so included ratably over the 3-taxable-year period beginning 
        with such taxable year.
            (2) Special rule.--For purposes of paragraph (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 withholding rules.--For purposes of sections 
        401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 
        1986, Federal Government shutdown distributions shall not be 
        treated as eligible rollover distributions.
            (2) Federal government shutdown distributions treated as 
        meeting plan distribution requirements.--For purposes the 
        Internal Revenue Code of 1986, a Federal Government shutdown 
        distribution shall be treated as meeting the requirements of 
        sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 
        457(d)(1)(A) of such Code.
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