October 03, 2025

Wyden, Colleagues Introduce Bill to Support Federal Employees During Shutdown

Washington D.C.—U.S. Senator Ron Wyden said today he has joined Senate colleagues to introduce legislation that would support federal employees experiencing financial hardship during a government shutdown.

“This shutdown orchestrated by Donald Trump and congressional Republicans unfortunately leaves much pain to choose from when it comes to impact for Oregonians,” Wyden said. “The Emergency Relief for Federal Workers Act would help tens of thousands of federal workers throughout rural, urban and suburban Oregon bridge the gap to cover necessities like rent and groceries as they weather the consequences of this senseless shutdown.”

During past shutdowns, many federal employees turned to their Thrift Savings Plan (TSP) retirement accounts to make hardship withdrawals to cover bills. However, there are penalties for withdrawing these funds, and barriers to recontributing funds once the government reopens. The Emergency Relief for Federal Workers Act would allow federal employees to withdraw funds from their TSP without being penalized if the government shutdown is prolonged, while ensuring that funds could be recontributed later on.

Specifically, the Emergency Relief for Federal Workers Act would:

  • Establish government shutdowns are financial hardships. Current law allows TSP participants to withdraw funds due to financial hardship and requires them to certify under penalties of perjury they are facing a financial hardship and the amount of the request does not exceed the dollar amount of the financial hardship. By establishing government shutdowns that last two weeks or longer as financial hardships, it would eliminate the need for federal employees to make additional demonstrations of this hardship.

  • Waive the 10 percent Early Distribution Penalty for federal employees who withdraw funds under financial hardship. Under current law, federal employees who are younger than age 59 ½ are subject to an additional 10 percent early withdrawal penalty when they withdraw funds from their TSP. The bill would eliminate that penalty but still require them to pay taxes on the funds they withdraw.

  • Allow for recontribution of funds. The bill would allow federal employees who withdraw funds from their TSP to recontribute some or all of the funds they have withdrawn from their TSP in order to preserve retirement savings.

  • Ensure federal employees can access TSP loans. Under current law, TSP loans are not available if a shutdown is expected to last more than 30 days. This bill would ensure TSP loans will be available to affected federal employees who need to access those funds during a shutdown that causes such employees to miss a paycheck.

  • Suspend TSP loan payments during shutdowns and deduct outstanding loan payments from back pay provided after shutdowns. TSP loan repayments are made through payroll deductions. This bill would automatically suspend loan payments until the government reopens. Once the government reopens, the outstanding loan payments will be deducted from federal employees’ back pay.

  • Prohibit missed loan payments from becoming taxable distributions during shutdowns. The bill would prohibit any missed loan payments from becoming a taxable distribution that could be subject to the 10 percent withdrawal penalty.

The legislation was led by U.S. Senator Tim Kaine, D-Va. In addition to Wyden, the legislation was cosponsored by U.S. Senators Angela Alsobrooks, D-Md., Richard Blumenthal, D-Conn., Chris Coons, D-Del., Tammy Duckworth, D-Ill., John Hickenlooper, D-Colo., Mazie Hirono, D-Hawaii, Amy Klobuchar, D-Minn., Edward J. Markey, D-Mass., Brian Schatz, D-Hawaii, Jeanne Shaheen, D-N.H., Chris Van Hollen, D-Md., and Mark Warner, D-Va.

The text of the bill is here.