Letter to Paul Hodes re: IRA Withdrawls
Dear Mr. Hodes,
I’m writing to describe a problem the federal government is causing in the current economic environment, and to offer a suggested solution.
As you know, due to tough economic times, many are un- or under-employed, even if they’ve had very good jobs in the past. Those who fall into this category are likely to have amassed substantial 401(k), 403(b), or IRA savings. However, making a withdrawal against these savings can incur a 40% tax hit, that is, a penalty paid to the federal government for accessing one’s money.
Taking this kind of money from people who are struggling to meet monthly bills, keep their houses, and even buy food is immoral. What’s worse is it’s putting an additional burden on social welfare programs for people who otherwise would not need to partake. This causes a further hit to local, federal, and state budgets. The money to avoid these problems exists, but is inaccessible by federal regulation.
I’d like to see you introduce legislation that would allow individuals in this kind of situation to withdraw a portion of their retirement savings each year without penalty. By setting limits (e.g. taxable income under 2x the federal poverty limit, $20,000 per year maximum, etc.) abuse can be avoided.
Thank you for your consideration of this pressing matter.