Rep. Maloney Supports Bill to Protect Retirement Savings During COVID-19 Economic Instability

NEWBURGH, New York, March 24 -- Rep. Sean Patrick Maloney, D-New York, issued the following news release:

Rep. Sean Patrick Maloney (NY-18) cosponsored the Retirement Protection Act, which will safeguard retirement savings during the economic turmoil caused by the global COVID-19, novel coronavirus pandemic. The bill was led by Rep. Jennifer Wexton (VA-10).

"As families and workers across the Hudson Valley deal with the immediate impact of the coronavirus, the last thing they should have to worry about is their long-term financial security. This commonsense bill will help folks avoid significant losses on the investments they've worked hard to build," said Rep. Sean Patrick Maloney.

The bill would suspend for the current year the required minimum distribution (RMD) for defined contribution retirement plans, including 401(k)s, Thrift Savings Plans (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 crisis and financial instability. Suspending the RMD penalty allows individuals to leave that money in their accounts and avoid a penalty and paying tax on the distribution.