U.S. Sen. Richard Burr (R-NC) on May 27 sponsored legislation that would exempt individuals diagnosed with certain terminal illnesses from the 10-percent penalty imposed on early distributions from qualified retirement plans.
“Americans who have been diagnosed with ALS and other terminal illnesses share unexpected emotional and financial hardships,” Sen. Burr said. “If Americans with terminal illnesses need to access their retirement funds to help cover unplanned health care costs, they shouldn’t be penalized for it.”
Sen. Burr introduced the Compassionate Retirement Act of 2021, S. 1889, with original cosponsor U.S. Sen. Michael Bennet (D-CO). The measure is also known as the Kathryn Manginelli Act of 2021, which is named in honor of Kathryn Manginelli of Durham, N.C., who passed away on Nov. 11, 2018 from amyotrophic lateral sclerosis (ALS), a non-curable and progressive neurodegenerative disease that affects nerve cells in the brain and the spinal cord.
“Many North Carolina families I’ve met with over the years have similar stories of the difficulties they face, including Kathryn and Joe Manginelli,” said Sen. Burr. “The Manginellis brought to my attention the fact that those with terminal illnesses still face penalties for early retirement withdrawals. This is a commonsense fix.”
Specifically, S. 1889 would allow individuals who are diagnosed with a terminal illness to use retirement savings without incurring an additional 10-percent penalty if withdrawing before the age of 59 ½ years, according to a bill summary provided by Sen. Burr’s office.
Sens. Burr and Bennet first introduced the legislation in September 2019, but the bill stalled in the U.S. Senate Finance Committee.
“I’m honored to reintroduce this legislation in memory of Kathryn to provide more financial flexibility to Americans suffering from these terminal diseases and their families,” Sen. Burr said.