WASHINGTON, D.C. – U.S. Senator Sherrod Brown (D-OH) joined his colleagues this week in introducing the Emergency Relief for Federal Contractors Act of 2019, which ensures that federal contractors affected by a government shutdown can withdraw funds from their retirement savings without being penalized. Senators Catherine Cortez Masto (D-NV), Senate Finance Committee Ranking Member Ron Wyden (D-OR), and Senate HELP Committee Ranking Member Patty Murray (D-WA) are sponsoring the legislation.
“Every day President Trump refused to open the government, he was taking money out of the pockets of hardworking Americans,” said Brown. “This legislation will help provide federal contract workers with financial options that will allow them to continue paying their bills and take care of their families.”
The Emergency Relief for Federal Contractors Act would:
- Waive the 10 Percent Early Distribution Penalty. Under current law, retirement savers who are age 59 ½ or younger may be subject to an additional 10 percent early withdrawal penalty for taking a hardship withdrawal from their retirement account or an early distribution from their individual retirement account (IRA). The Emergency Relief for Federal Contractors Act would waive this additional 10 percent penalty. Government contractors who take a hardship withdrawal would still be responsible for paying any other taxes that are due on the amount of withdrawal.
- Allow for Recontribution of Qualified Shutdown Distribution. In order to restore workers’ retirement savings after the shutdown ends, the Emergency Relief for Federal Contractors Act would allow government contractors who take a hardship distribution from their retirement plans or an early distribution from their IRAs to recontribute some or all of the distribution (up to $30,000) within a three-year period.
- Allow for Income Inclusion to be Spread over a Three-Year Period. For government contractors who choose not to recontribute their qualified shutdown distribution, this bill would allow such individuals to include the amount of their qualified shutdown distributions ratably over a three-taxable-year period.
Brown has been fighting to protect federal workers and federal contractors harmed by the government shutdown. In January, he introduced the Fair Compensation for Low-Wage Contractor Employees Act, which would ensure federal contractors get reimbursed for providing back pay, up to 200% of the federal poverty level for a family of four and provide accountability in the equitable adjustment process by including ways for protection of taxpayers funds. Many of these contractors make too little to begin with and are paid hourly. Because they are unable to clock hours, these workers often do not receive back pay and are typically unable to recoup lost hours and wages during a shutdown.
Brown also joined his colleagues in calling on the three credit reporting agencies – Equifax, Experian, and TransUnion – to protect federal employees and contractors from any damage the Trump shutdown may have done to their credit. In a letter to the CEOs of Equifax, Experian, and TransUnion, Brown underscored how negative information on these workers’ credit reports due to financial difficulties during the shutdown could hurt their credit scores, potentially making it more difficult for them to access loans, employment, or housing.