Wexton’s Bill to Protect Retirement Savings Included in Major Congressional Stimulus Package
Washington, March 27, 2020
Washington, DC -- The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed unanimously by the Senate this week and currently up for a vote in the House of Representatives, includes provisions from Congresswoman Jennifer Wexton’s Retirement Protection Act to safeguard Americans’ retirement savings from the financial crisis brought on by the COVID-19 pandemic. Wexton introduced the legislation earlier this week and successfully advocated for its inclusion in the final version of the relief package.
“The economic fallout of this pandemic has taken a devastating toll on the retirement savings of millions across America,” said Congresswoman Jennifer Wexton. “The provisions that I fought for will suspend the required minimum distribution, allowing retirees to leave their money in tax-deferred accounts without facing a penalty and give time for the markets to recover. This will help protect the financial security of every American household that has planned their future around hard-earned retirement savings.”
The CARES Act includes a provision to 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). Suspending the RMD means that individuals 72 years and older with these plans will no longer be forced to withdraw a percentage of their tax-deferred retirement plan or face a penalty of 50% of the amount that should have been distributed.
As the financial markets face a historic downturn due to COVID-19, tax-deferred retirement plans have faced a significant drop in value, meaning that individuals who are made to withdraw funds at this time will take serious losses on their investment.