[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6929 Introduced in House (IH)]

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119th CONGRESS
  1st Session
                                H. R. 6929

 To amend the Internal Revenue Code of 1986 to allow Federal employees 
      who are separated from Federal service to make penalty-free 
distributions from Thrift Savings Plans and include such distributions 
                     in gross income over 3 years.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 23, 2025

  Ms. Norton introduced the following bill; which was referred to the 
                      Committee on Ways and Means

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                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to allow Federal employees 
      who are separated from Federal service to make penalty-free 
distributions from Thrift Savings Plans and include such distributions 
                     in gross income over 3 years.

    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 ``Thrift Savings Plan Emergency 
Withdrawal Act of 2025''.

SEC. 2. TAX-FAVORED WITHDRAWALS FROM THRIFT SAVINGS PLAN FOLLOWING 
              SEPARATION FROM FEDERAL SERVICE.

    (a) In General.--In the case of a qualified civil service 
separation distribution--
            (1) section 72(t) of the Internal Revenue Code of 1986 
        shall not apply, and
            (2) unless the taxpayer elects not to have this paragraph 
        apply for any taxable year, the amount of any such distribution 
        otherwise required to be included in gross income for such 
        taxable year shall be included in gross income ratably over the 
        3-taxable-year period beginning with such taxable year.
    (b) Limitation.--The aggregate amount which may be treated as a 
qualified civil service separation distribution by any individual shall 
not exceed $100,000.
    (c) Amount Distributed May Be Repaid.--
            (1) In general.--Any individual who receives a qualified 
        civil service separation distribution may, at any time during 
        the 1-year period beginning on the day after the date on which 
        such distribution was received, elect to be treated as having 
        received the qualified civil service separation distribution in 
        an eligible rollover distribution (as defined in section 
        402(c)(4) of such Code).
            (2) Treatment of elected repayment.--In the case of an 
        election under the preceding sentence, the individual may, not 
        later than the 3-year period beginning on the day after the 
        date on which such distribution was received, make 1 or more 
        contributions in an aggregate amount not to exceed the amount 
        of such distribution to an eligible retirement plan of which 
        such individual is a beneficiary and to which a rollover 
        contribution of such distribution could be made under section 
        402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of such 
        Code, as the case may be, and such contributions shall be 
        treated as amounts transferred to the eligible retirement plan 
        in a direct trustee to trustee transfer made within 60 days of 
        the distribution.
    (d) Definition and Special Rules.--
            (1) Qualified civil service separation distribution.--For 
        purposes of this subparagraph, the term ``qualified civil 
        service separation distribution'' means any distribution to an 
        individual from the Thrift Savings Fund if such distribution is 
        made during the period--
                    (A) beginning on the date on which, after 
                separating from the civil service, the individual 
                elects an annuity payment under chapter 83 or 84 or 
                title 5, United States Code, and
                    (B) ending on the date that is 1 year after the 
                date on which, after the Office of Personnel Management 
                finalizes the individual's annuity claim, the 
                individual receives the first annuity payment (but not 
                including any interim annuity payments) under such 
                chapter 83 or 84, as the case may be.
            (2) Treatment of contributions to which 3-year averaging 
        applies.--For purposes of subsection (a)(2), rules similar to 
        the rules of section 408A(d)(3)(E) of the Internal Revenue Code 
        of 1986 shall apply.
            (3) Exemption of distributions from trustee to trustee 
        transfer and withholding rules.--For purposes of sections 
        401(a)(31), 402(f), and 3405 of such Code, a qualified civil 
        service separation distribution shall not be treated as an 
        eligible rollover distribution.
    (e) Effective Date.--This section shall apply to distributions made 
after January 20, 2025.
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