Snowe Legislation to Aid Retirees Facing Mandatory Retirement Account Withdrawals
Criticizes Congress for leaving for Thanksgiving without passing legislation providing a one-year waiver
December 3, 2008
Washington, D.C. - Seeking to help retirees forced by law to withdrawal money from their retirement accounts during these devastating economic times, U.S Senator Olympia J. Snowe (R-Maine) will introduce legislation on Monday to delay the mandatory withdrawal of savings through 2010. Such a suspension will potentially give retirement accounts, such as IRAs and 401(k)s, an opportunity to recoup financial losses suffered in the last year. Furthermore, the legislation would allow retirees to recontribute to their retirement accounts the amount they were required to withdrawal in 2008. Senator Snowe had cosponsored legislation -- The Worker, Retiree and Employer Recovery Act of 2008 -- that would have provided a one-year waiver, but the bill has not yet passed. Moreover, Snowe believes that we should do even more to help retirees who face tremendous financial hardship, uncertainty and concern.
Furthermore, Senator Snowe criticized Congress for leaving town for Thanksgiving without passing The Worker, Retiree and Employer Recovery Act of 2008. Senator Snowe called on Congress to pass this legislation when it reconvenes next week, adding "a one-year delay must only be the beginning -- it must go further. This is why the legislation I’m introducing will delay this for two years."
"It’s absolutely critical that we do everything we can to help those struggling during these devastating economic times and it’s unconscionable that Congress left town for the holidays without taking even minimal steps to address this situation," said Senator Snowe, a senior member of the Senate Finance Committee. "Any suspension would certainly be welcomed, but a one-year waiver insufficiently addresses the pending disaster facing retirees. Some of the losses suffered in these accounts might take years to recoup making it essential that we extend the proposal for multiple years as my legislation would do."
Under current law, individuals who have reached age 70.5 must generally begin to withdraw funds from their IRAs or defined contribution retirement plans, including 401(k), 403(b), and 457 plans. The withdrawals must begin by April 1 of the year in which an individual attains age 70.5. A failure to take a required minimum distribution may result in a 50 percent excise tax on the difference between what must be withdrawn and the amount actually distributed.
Senator Snowe added, "Retirees are counting on the money they’ve saved during a lifetime in these retirement accounts only to see much of it evaporate this year. We must give individuals time to recover their losses."
|
