S. 2966: Emergency Relief for Federal Workers Act of 2025 (119th Congress) Bill Summary

The "Emergency Relief for Federal Workers Act of 2025" is a legislative proposal aimed at providing financial assistance to federal employees during periods when the government is shut down due to lapses in appropriations. Here’s a breakdown of the main provisions of the bill:

Purpose of the Bill

The primary objective of this bill is to alleviate financial hardships faced by federal employees who are either furloughed or working without pay during a government shutdown. This includes enabling them to access their Thrift Savings Plan (TSP) funds without incurring additional penalties.

Waiving Penalties for Thrift Savings Plan Withdrawals

Federal employees affected by a qualified lapse in appropriations (a shutdown lasting at least two weeks) will be allowed to withdraw funds from their TSP accounts without incurring the usual 10% additional tax on early withdrawals.
These withdrawals can only total up to $30,000 during each qualified lapse in appropriations.
For taxable years starting in 2026 and later, the $30,000 limit will be adjusted for inflation, ensuring that the limit keeps pace with economic changes.

Provisions for Withdrawal and Contribution

The bill allows for "in-service" withdrawals, meaning employees can take funds from their TSP accounts while still working, if they are impacted by a shutdown.
Employees can make multiple withdrawals during a shutdown, as long as the combined total does not exceed $30,000.
Employees who withdraw from their TSP accounts may also reinvest some or all of that amount in the future, akin to a "rollover," without treating the initial withdrawal as a taxable distribution.

Loans from the Thrift Savings Plan

The bill mandates that rules be established to allow federal employees who are furloughed or not receiving pay to obtain loans from their TSP accounts without concern for the duration of the lapse in appropriations.
It also states that missed payments for loans during a shutdown will not be classified as taxable distributions.

Effective Date

The provisions in the bill will apply to withdrawals made after September 30, 2025, ensuring that the changes will only affect future lapses in appropriations.