401(k) rules may be eased
Storm victims may be able to tap their 401(k) accounts
Storm victims may be able to tap their 401(k) accounts.
Federal lawmakers considered a proposal to allow victims of Tropical Storms Irma and Harvey to withdraw money from their retirement accounts to rebuild their homes and lives without incurring penalties.
Rep. Kevin Brady, R-Texas, is one of several lawmakers considering introducing a bill that would tweak the tax code to aid victims of the storms’ widespread destruction. “It will include tax provisions, some of which will help people access their retirement funds without penalty for rebuilding activities,” he said Thursday.
“This won’t be boilerplate,” said Brady, chairman of the House Ways and Means Committee. “We’re going to tailor these to our communities and their needs going forward.”
People who withdraw funds from retirement accounts before they turn 591⁄ years old typically have to pay a 10% penalty and other state and federal taxes.
Brady’s office confirmed Monday that no specific bill had been introduced and declined to reveal more details.
Loosening tax rules on early retirement savings withdrawal is controversial because it could encourage people to use the accounts as a means to pay bills or buy items that are better off paid for through other financial sources.
Brady’s comments came days after retirement account lobbyists pitched a proposal to waive financial penalties for storm victims if they withdrew funds from their individual retirement accounts (IRAs) or work-sponsored 401(k) or 403( b) retirement saving accounts.
Similar retirement account-related relief provisions were granted by the Internal Revenue Service and other federal agencies to the victims of Hurricanes Katrina, Sandy and Rita.