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AARP calls for retirement account withdrawals rule change

November 4, 2008 by  

AARP has called for a freeze on mandatory withdrawalsOlder Americans could be financially penalized unless the rules governing mandatory retirement account withdrawals are amended, the AARP has warned.

The retiree advocacy group has called for a temporary freeze on these withdrawals, due to the recent state of the U.S. economy.

Under current rules, those who are aged 70 ½ and older must take distributions from their account based on the fair market value of this account on the final day of the previous year.

In a letter to treasury secretary Henry Paulson, AARP CEO Bill Novelli said that many people would find themselves choosing between taking a withdrawal based on higher values than those currently seen or paying a tax penalty of 50 percent for not taking a withdrawal.

"The sudden decline in the economy and plunging stock markets has jeopardized the retirement savings of millions of retired workers," Novelli wrote.

"In addition to steps that are already being taken to stabilize the financial markets, we believe it is also critical to help stabilize individual finances."

Last month, the AARP released a statement supporting Paulson’s proposal of a second economic stimulus package, aimed at providing a boost to Main Street instead of Wall Street.

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  • Dennis Miller

    I can’t believe I’m actually agreeing with AARP. It makes good sense. I wrote my Congressman(John Sullivan) and asked him not to vote for any of the bailouts. He said that he didn’t want to but compromised by raising the limit the FDIC would insure to $250,000. Big whoop. That probably doesn’t affect 99% of the investors. This would help more. I also believe that not taxing social security(like it was originally done) would make an even bigger impact to retirees. Thanks

    • Pat Case

      I agree wholeheartedly with the statement on taxing social security. I have been terribly disappointed with AARP too on their stance with this corrupt healthcare bill. Politics as usual not the concern for the citizens of this country.

  • Cecilia

    This is a deceiving move by AARP! The organization has lately seen hundreds of older Americans withdrawing their assets from the organization due to the AARP support to Obama’s national health care plan. This idea of freezing withdrawals is not done out of love for seniors, but to prevent them from continuing taking their money out from their retirement program. The AARP has a huge stake on the national health care plan and is putting tremendous amounts of money on TV adds and others, supporting Obama’s campaign for nationalized medicine.

  • Pam

    AArp is a disgrace. I am no longer a member and hope the elections if fair will vote the liberals and their Acorn out of office. Where is the justice department when you need them.

  • pam mitchell

    AARP and Acorn are corrupt and the justice department should look into both.

  • John Cartlich

    Cecilia, I WONDERED why AARP really gave a hoot about their captiv…er…’members’. At one time Neal Bortz mentioned a conservative, pay attention to their member’s opinions, alternative. I lost the website when my new-fangled typewriter crashed. (I suppose the smart thing would to be to go to Neal’s website and see if I can find it.)


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