Americans would be allowed to make penalty-free withdrawals from their retirement accounts for certain emergency expenses under a bipartisan bill introduced last week by U.S. Rep. Brad Wenstrup (R-OH).
“I know that many Americans struggle to save for retirement and are unsure about their financial futures,” Rep. 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 Enhancing Emergency and Retirement Savings Act of 2022, H.R. 7146, which Rep. Wenstrup sponsored on March 17 with original cosponsor U.S. Rep. Tom Suozzi (D-NY), would permit penalty-free “emergency” distributions up to $1,000 from tax-exempt retirement plans, according to the congressional record bill summary.
If enacted, the bill would set a one-distribution limit per calendar year for emergency expenses; allow repayment to plans of such distributions over a three-year period; and require the withdrawn amount to be paid back into the plan before an additional distribution from that same plan is allowed to safeguard long-term savings, according to the text of the bill.
“Most Americans don’t have $400 in their bank accounts in case of emergency,” said Rep. Suozzi. “By allowing penalty-free emergency distributions, this bipartisan legislation will ensure hard-working Americans have access to their retirement money should they be faced with emergency expenses.”
H.R. 7146 is the companion bill to the same-named S. 1870, introduced in May 2021 by U.S. Sens. James Lankford (R-OK) and Michael Bennet (D-CO).