Federal RuleAug 21
62
DOL Rewrites Disability Rules for 'Merit-Based Opportunity' Push
RuleLabor DepartmentFederal Contract Compliance Programs OfficeSignificant Wallet
119-s-2964119th CongressWALLET
Emergency Relief for Federal Contractors Act of 2025
Sponsored By: Senator Cortez Masto, Catherine [D-NV]
Introduced
Summary
Penalty-free retirement withdrawals during federal shutdowns for affected workers. The bill would let certain workers take up to $30,000 from eligible retirement plans without the 10% early-withdrawal tax, permit repayment to a retirement plan or IRA within 3 years, and allow taxpayers to spread the income over three tax years.
Show full summary
- Federal contractors, employees of federal grantees with reduced pay, and certain District of Columbia employees could tap retirement accounts during a qualifying shutdown. The cap is $30,000 per individual per year and is indexed for inflation after 2025.
- Recipients would include the distribution in income ratably over 3 tax years unless they opt out. They may repay the amount to an eligible retirement plan or IRA within 3 years to treat it as a rollover under specified Internal Revenue Code rules.
- Plan sponsors can designate distributions as shutdown distributions without automatically causing plan violations unless total employer-wide payouts to an individual exceed the cap. The bill also sets special rollover and withholding rules and treats these distributions as meeting several plan distribution requirements.
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Bill Overview
Analyzed Economic Effects
1 provisions identified: 1 benefits, 0 costs, 0 mixed.
Tax relief for shutdown-affected workers
If enacted, this bill would let certain workers take retirement payouts during a Federal funding lapse without the 10% early-withdrawal penalty. You would be able to spread the payout's income over three years or report it all in the year received. The special treatment would be limited to $30,000 per person per year, with annual inflation increases after 2025 and $500 rounding. You would have three years to roll the money back into an eligible retirement plan and, if repaid correctly, the repayment would be treated like a rollover. The rules would apply to federal contractors, certain grantee or state-paid workers, and some D.C. employees when a lapse lasts at least two weeks; plans also get a safe harbor, and some rollover/withholding rules would be changed.
Sponsors & CoSponsors
Sponsor
Cortez Masto, Catherine [D-NV]
NV • D
Cosponsors
Sen. Kaine, Tim [D-VA]
VA • D
Sponsored 10/1/2025
Sen. Wyden, Ron [D-OR]
OR • D
Sponsored 10/1/2025
Sen. Alsobrooks, Angela D. [D-MD]
MD • D
Sponsored 10/1/2025
Sen. Klobuchar, Amy [D-MN]
MN • D
Sponsored 10/1/2025
Sen. Markey, Edward J. [D-MA]
MA • D
Sponsored 10/1/2025
Sen. Shaheen, Jeanne [D-NH]
NH • D
Sponsored 10/1/2025
Sen. Van Hollen, Chris [D-MD]
MD • D
Sponsored 10/1/2025
Sen. Warner, Mark R. [D-VA]
VA • D
Sponsored 10/1/2025
Sen. Blumenthal, Richard [D-CT]
CT • D
Sponsored 10/1/2025
Sen. Rosen, Jacky [D-NV]
NV • D
Sponsored 10/1/2025
Sen. Hirono, Mazie K. [D-HI]
HI • D
Sponsored 10/1/2025
Sen. Durbin, Richard J. [D-IL]
IL • D
Sponsored 10/1/2025
Sen. Padilla, Alex [D-CA]
CA • D
Sponsored 10/1/2025
Sen. Booker, Cory A. [D-NJ]
NJ • D
Sponsored 10/1/2025
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov