Washington, DC – U.S. Representative Judy Biggert (R-IL-13) today sent a letter to House and Senate leaders requesting that any upcoming stimulus legislation include provisions aimed at helping seniors to ride out the recent economic downturn.  Currently, retirees with 401(k) or IRA plans are forced to regularly withdraw assets from those accounts once they reach the age of 70 and a half.  As a result, many seniors who have recently seen sharp declines in their retirement portfolios are being forced to choose between facing a steep tax penalty or converting assets before the market has had a chance to recover.  In her letter, Biggert advocates giving seniors the option of retaining their retirement investments until it makes prudent economic sense.  She asked Congressional leaders to include her bill, H.R. 7279, the Seniors’ Investment Security Act of 2008 (SISA), in legislation expected to be considered as early as December 8th.
 
             “If Congress is going to invest billions of dollars into an economic recovery plan, then struggling American retirees should at least be given the opportunity to benefit from any upswing in the market,” said Biggert, Ranking Member of the House Financial Services Financial Institutions and Consumer Credit Subcommittee.  “Instead of forcing them to sell or convert stocks and mutual funds at the worst possible time, let’s let seniors manage their assets in a way that makes the most financial sense for them.”
 
             To learn more about SISA, click here. 
 
             The full text of the letter can be found below:

November 25, 2008

Dear Speaker Pelosi, Republican Leader Boehner, Majority Leader Reid, and Minority Leader McConnell:
 
I write to request the inclusion of H.R. 7279, the Seniors’ Investment Security Act of 2008 (SISA), in any economic stimulus package to be considered by Congress in the weeks and months ahead.  Reports indicate that the House and Senate may convene as early as December 8, 2008 to consider stimulus legislation, and I believe that American retirees who have been among those hardest hit by recent economic turmoil should be allowed to fully benefit from any market recovery resulting from the investment of taxpayer funds.  By enacting SISA and temporarily suspending certain rules governing IRA’s and 401(k)’s, we can better insulate American retirees from dramatic stock market swings and give seniors the flexibility necessary to expediently manage their assets in today’s distressed marketplace.
 
As you are probably aware, current law requires that 401(k) or IRA holders annually withdraw assets from those accounts once they reach the age of 70 and a half.  These withdrawals, referred to as Required Minimum Distributions (RMDs), are calculated based on the balance of the account and the average life expectancy of the retiree.  If not withdrawn, the amount that would otherwise be disbursed from the retirement account is subject to a 50% tax penalty.  Although the law provides a mechanism through which seniors may opt to move stocks and certain other investments into conventional brokerage accounts, the assets would still be subject to income taxes upon removal from the retirement plan, and the process can be both difficult and costly. 
 
As a result, the U.S. Census Bureau estimates that seniors in approximately 5.5 million American households with at least one IRA- or 401(k)-holder over 70 may be required to sell or convert stocks and mutual funds in their retirement portfolios at a time when many investments are near record lows.  Given the volatility of today’s marketplace and the unprecedented government interventions underway to restore economic stability, it is both reasonable and necessary that American seniors be given greater flexibility to manage their retirement savings in a way that best preserves their long-term financial security.
 
That is why I ask that you strongly consider the inclusion of SISA or similar measures in any economic recovery legislation currently under development.  This bill would place a three-year moratorium on RMDs, thereby allowing seniors the option of leaving their most important retirement investments in place while the markets are given a chance to recover.  Without this flexibility, too many older Americans already facing uncertain economic times will face the unenviable prospect of liquidating or converting once-solid investments at fire-sale prices.
 
Retirees who rely on their savings to meet day-to-day needs are especially vulnerable during periods of economic instability.  This is a simple, cost-effective way to provide seniors with a much-needed buffer against market volatility and ensure that American retirees are given a fair opportunity to participate in any recovery resulting from legislation enacted by Congress.
 
Thank you for your consideration, and I look forward to your response.
 
Sincerely,
 
Judy Biggert (R-IL), Ranking Member, House Financial Services Subcommittee on Financial Institutions and Consumer Credit

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