Congress·In Committee

TSP: Penalty-Free Withdrawals for New Federal Retirees

Thrift Savings Plan Emergency Withdrawal Act of 2025

2 months ago·View on Congress.gov

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Key Points

This bill allows federal employees who leave their jobs to take up to $100,000 out of their Thrift Savings Plan (TSP) without paying the usual 10% early withdrawal penalty. This provides a financial safety net for workers transitioning out of the federal workforce.
The policy is designed to help retirees who are waiting for the government to finish processing their monthly pension checks. Because it can take months to finalize these payments, this change allows people to use their own savings to cover bills in the meantime.
Retirees who take this money can choose to spread their income tax payments over three years instead of paying everything at once. If they are able to pay the money back into a retirement account within three years, they can avoid paying taxes on the withdrawal entirely.
To qualify for these benefits, the money must be taken out during the gap between leaving the job and one year after the retiree receives their first full, finalized pension payment. This ensures the help is used specifically for the transition into retirement.

Milestones

2 milestones2 actions

Dec 23, 2025House

Referred to the House Committee on Ways and Means.

Dec 23, 2025

Introduced in House

Source Information

Document Type

Congressional Bill

Official Title

Thrift Savings Plan Emergency Withdrawal Act of 2025

Bill NumberHR 6929

Congress119th Congress

ChamberHouse of Representatives

Latest ActionReferred to the House Committee on Ways and Means.

Sponsor

Data Sources

Congress.gov

Official legislative information

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