The New York State Society of Certified Public Accountants is pushing Congress to consider legislation that would allow taxpayers to make early withdrawals from retirement accounts penalty-free.
The group said temporarily waiving the 10 percent tax penalty on early withdrawals from 401(k)’s and other qualified retirement plans would help ease the financial burden for taxpayers, many of whom are already facing dire financial situations.
“The current economic downturn has caused extraordinarily high levels of unemployment and caused severe and negative impacts that have forced many to withdraw assets from these accounts to meet basic living expenses,” said Gail Kinsella, president of the 28,000-member organization, in a letter to Senator Charles Schumer, D-N.Y. “[The withdrawals] have become the last resort for many taxpayers looking to avoid foreclosure, tax liens and bankruptcy.”
The law already allows waiving the penalty for certain situations, including to pay certain medical expenses, tuition and purchasing a home. The society is seeking legislation to add new categories, including preventing foreclosure, paying student loans for onself, a spouse or child, covering expenses during lon-term unemployment and paying tax liens, among other situations.
The group is requesting that any legislation be retroactive to Jan. 1 2010 and continue through Dec. 31, 2014.
Hat tip: Accountingtoday.com