A bill being rushed through Congress would waive the 10% penalty for early withdrawal of funds from individual retirement accounts for residents of a federally declared disaster area.[@@]
The House and Senate approved different versions of the bill today by voice vote. Those bills, H.R. 3768 and S.B. 1696, must be reconciled, but industry lobbyists and congressional staffers expect President Bush to sign the bill by Oct. 23.
Meanwhile, the Internal Revenue Service is moving to let workers affected by Hurricane Katrina and other disasters take penalty-free hardship withdrawal distributions or loans from 401(k) plans, 403(b) plans and 457 plans, even when plan rules do not allow for loans or hardship distributions, according to officials at the American Society of Pension Professionals & Actuaries, Arlington, Va.
S.B. 1696 was introduced Monday by Sens. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, and Max Baucus, D-Mont., the senior Democrat on the committee.
Rep. Jim McCrery, R-La., chairman of the Social Security Subcommittee of the House Ways and Means Committee, introduced H.R. 3768 Wednesday.
The hardship withdrawal measures will “make it easier for victims of Hurricane Katrina to withdraw desperately needed cash from their retirement accounts,” ASPPA officials say in a statement.