U.S. Sen. Richard Burr (R-NC) on Sept. 18 sponsored bipartisan legislation to permit Americans who are battling terminal illnesses to use retirement savings without incurring an additional 10 percent penalty if funds are withdrawn early.
“This is a problem we can fix,” Sen. Burr said. “Americans who responsibly contribute to their retirement accounts, and who are later diagnosed with a degenerative, terminal illness, shouldn’t be penalized for using retirement funds to help cover unplanned living expenses that are a direct result of their diagnosis. This is especially true for those who will not live to the retirement age.”
Sen. Burr introduced the Kathryn Manginelli Act of 2019, or the Compassionate Retirement Act, S. 2495, with cosponsor U.S. Sen. Michael Bennet (D-CO) to amend the Internal Revenue Code of 1986 to establish an exception to the penalty on early distributions from qualified plans for individuals diagnosed with certain terminal illnesses, according to the bill’s text.
The bill is named in honor of Kathryn Manginelli of Durham, N.C., who died from ALS on Nov. 11, 2018, according to the congressman’s office. ALS, or amyotrophic lateral sclerosis, is a progressive neurodegenerative disease that affects nerve cells in the brain and the spinal cord.
“Each year, I meet with North Carolinians who have been diagnosed with or affected by ALS, who share the unexpected challenges that come with a devastating disease,” said Sen. Burr. “It’s through these visits I had the honor of meeting Kathryn Manginelli and her husband Joe. They brought my attention to the unintended impact penalties from early retirement withdrawals have on families like theirs who are struggling with terminal or debilitating illnesses.”
S. 2495 has been referred to the U.S. Senate Finance Committee for consideration.