“Every Montanan has been hit in one way or another by our struggling economy,” said Rehberg, a member of the House Appropriations Committee.  “With all of the talk about more bailouts, we’re overlooking key solutions that could provide relief and increased flexibility for some folks without costing billions of dollars.  My bill would protect senior citizens from getting the short end of the stick when it comes to their retirement savings.” 

Suspending the mandatory withdrawal would allow retirees to keep the money in their account if they choose, and possibly recover some of their losses.  Seniors have spent years saving for their retirement and forcing them to take out artificially large amounts now could be devastating in later years.

Currently, an investor must make the required withdrawal based on the size of their account and their age every year after age 70-½.  This rule is intended to prevent wealthy investors from using retirement accounts as a tax shelter.  If an individual fails to take a required minimum distribution (RMD), they are heavily penalized by the IRS, which taxes the amount not withdrawn at 50%.

Rehberg’s bill would waive any penalties for not taking the RMD for 2008 and 2009.  Additionally, the bill would allow seniors that have already taken their RMD for 2008 to re-contribute those amounts to their savings accounts without penalty. 

          “This is a serious problem with a simple solution,” said Rehberg.  “With a likely December session of Congress on the horizon and a lot of talk about the economy, this legislation is a quick and cost-effective solution to give seniors a boost.”