U.S. Reps. Brad Wenstrup (R-OH) and Tom Suozzi (D-NY) introduced legislation in the House that seeks to allow Americans to tap their retirement plans to cover unexpected financial emergencies.
Specifically, the Enhancing Emergency and Retirement Savings Act of 2022 (H.R. 7146) would allow penalty-free “emergency” distributions, up to $1,000, from tax-exempt retirement plans – including IRAs and employer-sponsored plans — for emergency expenses.
“I know that many Americans struggle to save for retirement and are unsure about their financial futures,” Wenstrup said. “By providing some flexibility in case an emergency expense arises, this bipartisan legislation can reduce some of that short-term financial burden while still enabling Americans to save for themselves, their families, and their long-term futures.”
The emergency distributions would be limited to one per calendar year. Further, the withdrawn amount would have to be paid back into the plan before an additional distribution from that same plan is allowed.
“Most Americans don’t have $400 in their bank accounts in case of emergency. By allowing penalty-free emergency distributions, this bipartisan legislation will ensure hardworking Americans have access to their retirement money should they be faced with emergency expenses,” Suozzi said.
A companion bill, S. 1870, was introduced in the Senate last year by U.S. Sens. James Lankford (R-OK) and Michael Bennet (D-CO).