Wexton Introduces Legislation to Protect Retirement Savings During COVID-19 Crisis
Washington, March 23, 2020
Washington, D.C. -- Today, Congresswoman Jennifer Wexton (D-VA) introduced the Retirement Protection Act to safeguard Americans’ retirement savings in the midst of the financial crisis brought on by the coronavirus disease 2019 (COVID-19).
“Americans’ hard-earned retirement savings plans are being devastated by the economic fallout from the COVID-19 pandemic,” said Congresswoman Jennifer Wexton. “For households whose account balances have lost value due to the pandemic, withdrawing funds now when the stock market is down forces them to take significant losses on their investments. By temporarily suspending the RMD, families will be allowed to leave money in tax-deferred accounts without incurring a tax penalty, providing time for the markets to recover.”
Wexton’s legislation would suspend for the current year the required minimum distribution (RMD) for defined contribution retirement plans, including 401(k)s, TSPs, and Individual Retirement Accounts (IRAs). Right now, individuals with these plans are required to begin withdrawing a percentage of their tax-deferred retirement plan when they turn 72 or face a penalty of 50% of the amount that should have been distributed.
As the markets face a historic downturn due to the global COVID-19 outbreak, tax-deferred retirement plans have faced a significant drop in value. Withdrawing funds under these conditions would force individuals on these plans to take serious losses on their investment and jeopardize their economic security in the midst of this health and financial crisis. Suspending the RMD penalty allows individuals to leave that money in their accounts and avoid a penalty and paying tax on the distribution.
A similar measure to temporarily suspend RMDs was included as part of the Worker, Retiree, and Employer Recovery Act of 2008.
Original cosponsors: Don Beyer (VA), Gerald Connolly (VA), Jim Cooper (TN), Joe Courtney (CT), Peter DeFazio (OR), Eleanor Holmes Norton (DC), Chrissy Houlahan (PA), Dan Kildee (MI), Stephen Lynch (MA), Sean Patrick Maloney (NY), Gregory Meeks (NY), Jamie Raskin (MD), Harley Rouda (CA).