Emergency Relief for Federal Contractors Act of 2025

This bill would let certain workers affected by a federal government shutdown take money out of their retirement accounts without paying the usual early-withdrawal tax penalty. It covers federal contractors and their employees placed on unpaid leave or working without pay, some state and federal grantee employees paid with federal funds, and some District of Columbia government and court employees. The penalty-free amount is capped at $30,000 per year, adjusted for inflation after 2025, and applies only to shutdowns lasting at least 2 weeks. Workers could repay the money into a retirement plan within 3 years, and the taxable income from a withdrawal would be spread over 3 tax years unless the worker chooses otherwise.

Full text and official record on Congress.gov

Sponsors

• Suhas Subramanyam Democrat sponsor
• 9 cosponsors