Emergency Relief for Federal Contractors Act of 2025
Summary
The Emergency Relief for Federal Contractors Act of 2025 aims to provide financial relief to federal contractors and certain other individuals affected by federal government shutdowns. It allows penalty-free withdrawals from retirement accounts during these periods. The bill also outlines provisions for repaying these distributions and spreads the income inclusion over a three-year period.
Expected Effects
This act would allow affected individuals to access their retirement funds without penalty during government shutdowns. It also provides a mechanism for repaying these funds to restore their retirement savings. The Act could reduce the financial strain on federal contractors and related employees during lapses in federal appropriations.
Potential Benefits
- Provides immediate financial relief to federal contractors and employees during government shutdowns.
- Allows access to retirement funds without incurring penalties.
- Offers a mechanism to repay withdrawn funds, minimizing long-term impact on retirement savings.
- Spreads income inclusion over three years, easing the tax burden.
- Could stabilize the financial situations of affected families and communities.
Potential Disadvantages
- Could reduce retirement savings if funds are not repaid.
- May encourage reliance on retirement funds as a short-term solution.
- The $30,000 limit might not be sufficient for all affected individuals.
- Potential for increased complexity in tax filings and retirement planning.
- Could incentivize contractors to factor in shutdown risk into their pricing, increasing costs to the government.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble). Congress has the power to enact laws that promote the general welfare of the citizens. The bill addresses a specific economic hardship faced by a subset of the population due to government shutdowns. It does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).