US SB2966

Waives the 10% early withdrawal penalty on Thrift Savings Plan (TSP) distributions up to $30,000 for federal employees who are furloughed or working without pay during a government shutdown lasting at least 2 weeks

Allows affected federal employees to repay withdrawn amounts to their TSP accounts within 120 days after the shutdown ends, with repayments treated as tax-free rollovers

Permits TSP loans to furloughed employees regardless of shutdown duration and requires missed loan payments during shutdowns to be automatically deducted from back pay once funding resumes

Prevents missed TSP loan payments during a shutdown from being treated as taxable distributions

Applies to distributions and missed loan payments occurring after September 30, 2025, with the $30,000 limit adjusted annually for inflation