US SB2964

Federal contractors, their employees, federal grantee employees, and D.C. government workers affected by government shutdowns lasting at least 2 weeks may withdraw up to $30,000 per year from retirement accounts without paying the standard 10% early withdrawal penalty

The $30,000 annual limit will be adjusted for inflation beginning in 2026, rounded to the nearest $500

Withdrawn funds may be repaid to an eligible retirement plan within 3 years of the distribution, with repayments treated as direct trustee-to-trustee transfers for tax purposes

Taxable income from these distributions may be spread ratably over a 3-year period unless the taxpayer elects otherwise

Eligible individuals include those who are furloughed, placed on unpaid leave, working without pay, or experiencing reduced pay due to a federal appropriations lapse