There is a conundrum that federal law-enforcement officers find themselves faced with when they approach retirement.
The nature of the work involved in their specific career allows for many of them to be eligible for retirement by the time they are 50 years old. But because of the way most of their retirement accounts are set up – much the same as any standard retirement plan – most in federal law-enforcement are forced to wait as long as a full decade before they can access their accounts so as to avoid incurring any type of penalty for early withdrawal.<!- mfunc feat_school ->
A new bill introduced by the House of Representatives in early June, however, would give these officers an opportunity to unlock their retirement funds much more easily and without the threat of a substantial penalty hanging over their heads.
The bipartisan proposal, introduced by Representatives Bill Pascrell (D-NJ) and Dave Reichert (R-Wash) would essentially be a reformation of federal tax law that would allow both federal law-enforcement officers as well as firefighters to have access to their 401-(k) plans as soon as they reach retirement eligibility and without incurring any penalties.
As it stands now, federal law-enforcement personnel are eligible for retirement once they reach the age of 50 provided they have served for a minimum of 20 years. If they choose to withdraw funds from their Thrift Savings Plan accounts before they get within 6 months of their 60th birthday, however, they automatically are required to pay a penalty of 10 percent.
Retirees are already required to pay taxes when they withdraw funds from their accounts and any penalties for early withdrawal only compound formidable monetary losses officers incur.
According to the sponsors of the proposed bill, the legislation is receiving support from both Republicans as well as Democrats, which they believe could help get it passed into law much more quickly.