Senators propose penalty-free emergency 401(k) taps

A bipartisan bill introduced last week in the Senate would allow participants in qualified workplace savings accounts and individual retirement accounts to withdraw funds penalty-free for emergencies under certain conditions.

The bill, sponsored by Sens. James Lankford, R-Okla., and Michael Bennet, D-Colo., both members of the Senate Finance Committee, would permit one emergency distribution per calendar year.

The distribution would be limited to vested amounts over $1,000, with an annual maximum withdrawal of $1,000. Individuals who took a distribution would have to repay the withdrawn amount before an additional emergency distribution from the same plan is allowed.

“Our commonsense bill provides Americans the flexibility to save for retirement now, knowing they have access to some of their money for an emergency,” Lankford said in a release.

[More: CARES Act distributions unlikely to be paid back, report finds]

The post Senators propose penalty-free emergency 401(k) taps appeared first on InvestmentNews.

As our second lead editor, Cindy Hamilton covers health, fitness and other wellness topics. She is also instrumental in making sure the content on the site is clear and accurate for our readers. Cindy received a BA and an MA from NYU.

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