Federal law enforcement officers and firefighters will be able to access retirement funds earlier without penalty, under legislation passed by the House May 12.
The bill would amend the tax code to allow federal law enforcement officers, firefighters and certain border protection and customs officers to withdraw funds from their Thrift Savings Plan (TSP) after the age of 50 without a tax penalty.
Under current law, federal law enforcement officers are eligible to retire after 20 years of service at age 50 and must retire in many cases by age 57. Usually the earliest possible withdrawal date without penalty is 59.5 years old.
That means that many federal employees are forced to suffer a 10 percent tax penalty for up to 10 years or wait a long time to withdraw the money to use for retirement.
Colleen Kelley, president of the National Treasury Employees union, said the amendment to the tax code is a “welcome development” for front-line federal workers who risk their lives every day.
“Without this expansion of the “separation of service” exception to this group of employees, they would continue to suffer a 10-percent additional tax for accessing their money before turning 59½ years old,” Kelley said.
She urged the Senate to take swift action to approve the legislation.
The bill was sponsored by Reps. Tom Reed, R-N.Y., Michael Fitzpatrick, R-Pa., Bill Pascrell, D-N.J., Charles Rangel, D-N.Y., and Richard Nugent, R-Fla.
