Certain Federal Workers Get Relief from Withdrawal Penalty

President Obama signed a law lowering the age at which federal public safety officers can tap retirement accounts without penalty.

The Defending Public Safety Employees’ Retirement Act (H.R. 2146), introduced by U.S. Congressman Dave Reichert (R-Washington) and Bill Pascrell, Jr. (D-New Jersey), allows federal public safety officials to access retirement savings at the age of 50 after 20 years of service without the application of the 10% tax on early withdrawals.

Generally, the Internal Revenue Service (IRS) requires a 10% penalty to be added on top of normal tax amounts for distributions taken out of retirement accounts before the age of 59½. According to an announcement on Reichert’s website, in 2006, Congress recognized that state and local public safety officials should be able to access their accounts without penalty at age 50 due to the fact that many of these officials are eligible to retire at earlier ages due to the unique and hazardous nature of the work they perform.

“This legislation will finally place federal public safety officers on par with their state and local counterparts, allowing them to fairly access their earned benefits,” says Pascrell. “The physical demands placed on our public safety officers as they protect our communities often require retirement at an earlier age than other professions, and it’s our duty to ensure the tax code treats these brave men and women fairly.”

H.R. 2146 was signed by the President on June 29.