Govt mulls change in retirement account withdrawals
November 20, 2008 by Personal Liberty News Desk
As the economic downturn continues to challenge the savings plans of millions of retirees, the government is considering changing the rules governing retirement account withdrawals.
The Treasury has been mulling a temporary adjustment to the requirement that people aged 70 ½ and older withdraw a minimum amount from their account on an annual basis, the Wall Street Journal reports.
This requirement is currently problematic because the distribution amounts are calculated in line with the market value of the account as of the last day of the previous year.
In the current climate in which retirees have already seen the value of their accounts plunge, using December 2007 as a guide to withdrawal amounts does not seem to make sense, the publications states.
Potential changes include permitting people to delay their withdrawals, reducing the amount of required withdrawals and providing tax relief for people who have already been forced to withdraw this year.
Commenting on the losses faced by many retirees, AARP’s Bill Novelli told the publication that "older individuals have disproportionately experienced these losses – and many do not have the luxury to wait for a market rebound."
Recent research has suggested that some baby boomers are postponing retirement due to financial uncertainty.