Tax Benefit from the HELPS Retirees Improvement Act Now in Effect

A new law will provide LEO federal retirees a larger tax benefit.

  • Signed into law in 2006, the “HELPS” Retirees Act allows for penalty-free withdrawals from the TSP each year. 
  • $3,000 was the annual limit and the money had to be for FEHB or LTC insurance premiums
  • In 2023, another law pushed the annual allowable amount to $6,000, effective in 2024.

Public Safety retirees, including some Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS) annuitants who occupied public safety positions that were physically demanding (like first responders), are now able to withdraw up to $6,000 every year from their traditional Thrift Savings Plan (TSP) account (or other qualified retirement plan) without the money being taxed, or taking a penalty if younger than 59½. This can only be done if the withdrawal is covering insurance premiums for the Federal Employees Health Benefit (FEHB) program and other health plans or a long-term care policy (whether it is the Federal Long Term Care Insurance Program (FLTCIP) or otherwise.)

What is the HELPS Act?

The Healthcare Enhancement for Local Public Safety (HELPS) Retirees Act is what allows for this exemption. For federal employees, it applies to mostly federal firefighters and law enforcement officers (LEOs) who retire with special provisions. The law was signed in 2006 and effective starting January 2007.

In order for the withdrawal to be counted as tax-free, the FEHB or long-term care premiums must be paid directly from the qualified retirement plan to the insurance company. 

To be eligible, you don’t need to be retired from the federal government, just a retired “public safety officer.” The law defines these positions as law enforcement officers (including corrections, parole, probation, and judicial officers), firefighters, members of a rescue squad or ambulance crew, or as chaplains to fire and police departments. 

The HELPS Improvement Act Passed

At the very beginning of last year, the president signed into law the appropriations bill for Fiscal Year 2023 – which included a provision that was based off the Wally Bunker HELPS Improvement Act.

Introduced in 2022 by Virginia Congresswoman Abigail Spanberger to combat rising healthcare costs, the bill sought to raise the tax benefit from $3,000 dollars to $6,000 dollars. The change took effect at the start of this calendar year.

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About the Author

Benjamin Derge is a Financial Planner and Chartered Federal Employee Benefits Consultant, (ChFEBC℠), as well as a Writer and Editor for Serving Those Who Serve, a financial firm that specializes in helping federal employees with their benefits.