To allow penalty-free distributions from retirement accounts in the case of certain Federal contractors impacted by Federal Government shutdowns.
Analysis under review: This bill has generated analysis that may be too generic or incomplete. Clause-level evidence remains available below.
Summary
What This Bill Does
Creates tax-favored retirement-plan distributions of up to $30,000 for federal contractors, certain federally funded workers, and D.C. workers affected by at least two-week federal appropriations lapses.
Who Benefits and How
Affected federal contractors, grantee workers, state workers, and D.C. workers could access retirement savings without the 10 percent early-distribution tax, spread income over three years, and recontribute within three years.
Who Bears the Burden and How
Retirement plan administrators and tax administrators would need to apply special distribution, cap, inflation-adjustment, income-inclusion, and recontribution rules; workers may reduce retirement balances if they do not repay.
Key Provisions
- Exempts Federal Government shutdown distributions from the section 72(t) additional tax.
- Caps eligible distributions at $30,000 per taxable year, indexed after 2025.
- Protects plans that treat distributions as shutdown distributions within the cap.
- Allows recontribution within three years with rollover-style treatment.
- Defines applicable individuals to include federal contractors, federally funded grantee or state workers, and certain D.C. workers affected by appropriations lapses.
- Allows ratable gross income inclusion over three years unless the taxpayer elects out.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers.
At a Glance
What This Bill Does
Creates tax-favored retirement-plan distributions of up to $30,000 for federal contractors, certain federally funded workers, and D.C. workers affected by at least two-week federal appropriations lapses.
Key Policy Areas
Tax, Labor, Retirement, Government Operations
Primary Purpose
Creates tax-favored retirement-plan distributions of up to $30,000 for federal contractors, certain federally funded workers, and D.C. workers affected by at least two-week federal appropriations lapses.
Policy Domains
Main Provisions
Identified Gains
Contextual inference, no direct clause citation- Federal contractors and other federally funded workers affected by appropriations lapses
Contextual inference, no direct clause citation
Identified Costs
Contextual inference, no direct clause citation- Retirement plan administrators and tax administrators applying shutdown distribution rules
Contextual inference, no direct clause citation
Sponsors
Legislative Progress
IntroducedMs. Cortez Masto (for herself, Mr. Kaine, Mr. Wyden, Ms. …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Retirement plan administrators processing Federal Government shutdown distributions
Tax administrators applying penalty exemption, income spreading, and recontribution rules
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology