H.R. 6929 — Thrift Savings Plan Emergency Withdrawal Act of 2025

This section establishes tax-favored treatment for qualified civil service separation distributions from the Thrift Savings Plan (TSP)—the defined contribution retirement savings plan for federal civilian employees and uniformed service members—made after January 20, 2025. A qualified distribution is any TSP amount received by an individual who has separated from civil service, during the period beginning on the date the individual elects an annuity under the Federal Employees Retirement System (FERS, chapter 84 of title 5, U.S. Code) or Civil Service Retirement System (CSRS, chapter 83) and ending one year after the Office of Personnel Management finalizes the annuity claim and issues the first annuity payment (excluding interim payments), with an aggregate limit of $100,000 per individual. Such distributions are exempt from the 10% early withdrawal penalty under IRC §72(t); are includible in gross income ratably over the three-taxable-year period beginning with the year received (unless the taxpayer elects out); may be repaid, within three years via contributions to an eligible retirement plan, by electing rollover treatment within one year; and are exempt from eligible rollover distribution, trustee-to-trustee transfer, and withholding requirements under IRC §§401(a)(31), 402(f), and 3405. (Thus, the provision eases the immediate tax burden for federal retirees taking a TSP lump sum while awaiting annuity commencement.)