Thread: House set to vote on easing TSP early withdrawal penalty

Originally Posted by Itchn2retire

I'm hoping it's not limited to those specific career services and the legislation applies to "all similar" plans. I'm going to be checking with the retirement branch.

Please keep us updated if you find anything out.

Frank

Hey I've been retired for over 5 years, why can't I empty my TSP TAX FREE? I haven't touched it 20% is a big Federal hit!

This is for a specific set of Federal Employees.

Here is what Govexec.com says:

House Passes Bill Exempting Some Feds From Retirement Tax Penalty - Pay & Benefits Watch - Pay & Benefits - GovExec.com


House Passes Bill Exempting Some Feds From Retirement Tax Penalty
By Kellie Lunney May 12, 2015 31 Comments


"The House on Tuesday passed bipartisan legislation 407-5 that would allow federal law enforcement officers and firefighters to access money in their Thrift Savings Plan accounts without penalty when they are eligible to retire.
H.R. 2146 would reform the tax code so that federal law enforcement officers and firefighters, who are eligible to retire earlier than many other federal employees, aren’t subject to the 10 percent tax penalty on TSP retirement funds and other 401(k)-type plans tapped before the age of 59 and a half. Civilians who access their retirement investments, such as a 401(k), prior to turning 55 if they are retired, or 59.5 if they are still working, incur the IRS fine...."

Senate passed bill with minor changes. Back to the House it goes for vote. This bill should be passed and signed by the president soon. My opinion, this changes everything for the select few who qualify. Big question is how will TSP administer this change to our TSP accounts.

Time to start filling out my retirement papers and make an appointment with my financial planner.

Jeff

Originally Posted by ATCJeff

Senate passed bill with minor changes. Back to the House it goes for vote. This bill should be passed and signed by the president soon. My opinion, this changes everything for the select few who qualify. Big question is how will TSP administer this change to our TSP accounts.

Time to start filling out my retirement papers and make an appointment with my financial planner.

Jeff

Concur. This is great news for me too!

I think it's good!

House Republicans have just decided to use this bill to forward their "fast track trade" nonsense.
Republicans Considering New Path for Fast-Track Trade Vote - Bloomberg Politics

Originally Posted by waxmanak

House Republicans have just decided to use this bill to forward their "fast track trade" nonsense.
Republicans Considering New Path for Fast-Track Trade Vote - Bloomberg Politics

I didn't see any connection to H.R. 2146 in that article. Could you help us connect the dots to what you posted please?

Frank

Originally Posted by Lakebound

I didn't see any connection to H.R. 2146 in that article. Could you help us connect the dots to what you posted please?

Frank

From the article...
The legislation being eyed as the vehicle for the new strategy is a public-safety retirement measure, H.R. 2146, sponsored by Representative Dave Reichert, a Washington Republican.Reichert, in an interview Tuesday, confirmed that leaders were talking about using his bill, which passed the House 407-5 on May 12 and the Senate by voice vote on June 4. He said a final decision hadn’t been made.
“It’s a revenue bill and it’s already been passed by the Senate,” Reichert said. “They told me that’s the kind of legislation they are looking for.”
He said one reason is that such a bill couldn’t have other Senate amendments attached to it.

Thanks for pointing that out.

Frank

Update HR 2146:

GovTrack’s Bill Summary

This bill became the vehicle for passage of Trade Promotion Authority (TPA) for the Trans-Pacific Partnership (TPP) trade deal currently being negotiated. The bill was originally introduced as a bill to address issues with retirement funds of federal law enforcement officers and firefighters. On June 18, the House added TPA to the end of this bill and passed both components together, sending the bill to the Senate.
The addition of TPA to this bill followed a failed attempt to pass the Trade Act, H.R. 1314, a bill that combined TPA with Trade Adjustment Assistance (TAA). Although the Senate passed the Trade Act, the House only passed the TPA portion, while the TAA portion failed. This bill, H.R. 2146, includes only the TPA portion of the Trade Act. For more on TPA and TAA, see our summary of the Trade Act. (Note that H.R. 1314 was itself originally introduced regarding an unrelated matter and became the vehicle for the ultimately failed passage of the Trade Act.)
What follows is our original summary of this bill, H.R. 2146. The provisions that the summary below refers to remain in the bill.
The Defending Public Safety Employees' Retirement Act would allow retired federal law enforcement officers and firefighters over the age of 50 and with 20 years of service to withdraw money from their retirement funds without any tax penalty. Typically there is a 10 percent tax penalty on retirement funds withdrawn before the age of 59½. In his press release following the bill’s passage through the House, sponsor Rep. Dave Reichert (R-WA8) said that since law enforcement officers and firefighters are able to retire at the age of 50 after 20 years of service they should be exempt from the 10 percent tax penalty. The bill was passed by the Senate with an amendment changing the effective date from December 31, 2014 to December 31, 2015. It now awaits House approval of the amendment.