Text: S.204 — 116th Congress (2019-2020)All Information (Except Text)

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Introduced in Senate (01/24/2019)


116th CONGRESS
1st Session
S. 204


To amend the Internal Revenue Code of 1986 to waive certain penalties for affected Federal employees receiving a distribution from the Thrift Savings Plan during a lapse in appropriations, and for other purposes.


IN THE SENATE OF THE UNITED STATES

January 24, 2019

Mr. Kaine (for himself, Ms. Collins, Mr. Wyden, Mrs. Murray, Mr. Jones, Mr. Bennet, Ms. Cortez Masto, Ms. Stabenow, Mr. Van Hollen, Mr. Blumenthal, Mr. Carper, Ms. Warren, Ms. Duckworth, Mr. Coons, Mr. Sanders, Mr. Warner, Ms. Hassan, Mr. Menendez, Mr. Brown, Mrs. Shaheen, Ms. Hirono, Mr. Booker, Mr. Durbin, Ms. Smith, Mr. Heinrich, Mr. Schatz, Ms. Klobuchar, Mr. Portman, Mr. Udall, Mr. Manchin, and Mrs. Feinstein) introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To amend the Internal Revenue Code of 1986 to waive certain penalties for affected Federal employees receiving a distribution from the Thrift Savings Plan during a lapse in appropriations, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title.

This Act may be cited as the “Emergency Relief for Federal Workers Act of 2019”.

SEC. 2. Waiver of 10-percent additional tax on certain financial hardship distributions from Thrift Savings Plan.

(a) In general.—Paragraph (2) of section 72(t) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

“(H) DISTRIBUTIONS TO FEDERAL EMPLOYEES AFFECTED BY A QUALIFIED LAPSE IN APPROPRIATIONS.—

“(i) IN GENERAL.—Distributions made from the Thrift Savings Plan under subchapter III of chapter 84 of title 5, United States Code, upon financial hardship of an individual who is a Federal employee and who is on furlough or who is working without pay due to a qualified lapse in appropriations, if such distributions are made during the period of such qualified lapse in appropriations (including distributions which are in process as of the end of such lapse).

“(ii) LIMITATION.—Subclause (i) shall apply to any distributions only to the extent the aggregate of such distributions does not exceed $30,000 with respect to any qualified lapse in appropriations.

“(iii) QUALIFIED LAPSE IN APPROPRIATIONS.—For purposes of this subparagraph, the term ‘qualified lapse in appropriations’ means a period of continuous lapse in Federal appropriations (including a partial lapse) of at least 2 weeks.

“(iv) OTHER TERMS.—For purposes of this subparagraph, the terms ‘furlough’ and ‘pay’ have the respective meanings given such terms by section 7511 of title 5, United States Code.”.

(b) Effective date.—The amendment made by this section shall apply to distributions made after December 21, 2018.

SEC. 3. Thrift Savings Plan provisions.

(a) In-Service withdrawals.—Section 8433(h) of title 5, United States Code, is amended by adding at the end the following:

“(6) (A) In this paragraph—

“(i) the term ‘applicable date’, with respect to a covered age-based withdrawal or covered hardship withdrawal made during a qualified lapse in appropriations, means the date that is 120 days after the last day of the qualified lapse in appropriations;

“(ii) the term ‘covered age-based withdrawal’ means a withdrawal under paragraph (1)(A) made during the period of a qualified lapse in appropriations;

“(iii) the term ‘covered hardship withdrawal’ means a withdrawal described in subparagraph (B); and

“(iv) the term ‘qualified lapse in appropriations’ has the meaning given the term in section 72(t)(2)(H)(iii) of the Internal Revenue Code of 1986.

“(B) The Board shall permit an employee whose pay has been suspended due to a qualified lapse in appropriations to make a withdrawal based upon financial hardship under paragraph (1)(B) if—

“(i) the withdrawal is made during the period of such qualified lapse in appropriations (including withdrawals which are in process as of the end of such lapse); and

“(ii) the aggregate amount of any such withdrawals during the period described in clause (i) does not exceed $30,000.

“(C) The Board may not limit the number of covered hardship withdrawals that an employee may make during the period of a qualified lapse in appropriations, subject to the dollar limitation under subparagraph (B)(ii).

“(D) A covered hardship withdrawal made by an employee shall not affect the ability of the employee to contribute to the Thrift Savings Fund on and after the date on which the applicable qualified lapse in appropriations ends.

“(E) (i) An individual who makes 1 or more covered age-based withdrawals during the period of a qualified lapse in appropriations may, before the applicable date, contribute to the Thrift Savings Fund an amount not to exceed the lower of—

“(I) the aggregate amount of the withdrawals; or

“(II) $30,000.

“(ii) An individual who makes 1 or more covered hardship withdrawals during the period of a qualified lapse in appropriations may, before the applicable date, contribute to the Thrift Savings Fund an amount not to exceed the aggregate amount of the withdrawals.

“(iii) The dollar limitations otherwise applicable to employee contributions under this title or the Internal Revenue Code of 1986 shall not apply to any contribution made under this subparagraph. Any such contribution shall be disregarded for purposes of section 8432(d) of this title and section 415(c)(2) of such Code.”.

(b) Loans.—Section 8433(g) of title 5, United States Code, is amended by adding at the end the following:

“(5) The Board shall prescribe rules providing for the secure distribution of the proceeds of a loan under this subsection through an electronic funds transfer, if such a transfer is requested by the employee or Member receiving the loan.

“(6) The Board shall prescribe rules allowing loans to be made under this subsection to employees during a lapse in appropriations, without regard to the period of the lapse in appropriations.

“(7) (A) In this paragraph—

“(i) the term ‘payment missed because of a shutdown’ means a payment—

“(I) on a loan under this subsection made to an employee whose pay has been suspended due to a qualified lapse in appropriations;

“(II) that is due during the qualified lapse in appropriations; and

“(III) that was not paid by the employee; and

“(ii) the term ‘qualified lapse in appropriations’ has the meaning given the term in section 72(t)(2)(H)(iii) of the Internal Revenue Code of 1986.

“(B) The Board shall prescribe rules providing that the full amount due for any payments missed because of a shutdown by an employee shall be deducted and withheld from the pay provided to the employee for the period of the qualified lapse in appropriations.”.

SEC. 4. Missed loan payments not to be treated as taxable distribution during a qualified lapse in appropriations.

(a) In general.—Paragraph (2) of section 72(p) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

“(E) SPECIAL RULE FOR MISSED LOAN REPAYMENT DURING A QUALIFIED LAPSE IN APPROPRIATIONS.—Subparagraph (A) shall not fail to apply to any loan from the Thrift Savings Plan under subchapter III of chapter 84 of title 5, United States Code, solely because there is a payment missed because of a shutdown (as defined in section 8433(g)(7)(A) of title 5, United States Code) with respect to such loan, and such loan (or any portion of such loan) shall not be treated as a taxable distribution solely because of such missed payment.”.

(b) Effective date.—The amendment made by this section shall apply to missed loan payments the due date for which is after December 21, 2018.