Source: United States Senator for New Jersey Bob Menendez
“Victims of disasters deserve a quick response from the federal government when they need it the most. As we have learned from the devastating effects of Superstorm Sandy in New Jersey, the disparate treatment of victims affected by natural disasters is unfair and ultimately counterproductive for recovery efforts,” said Sen. Menendez. “Our bipartisan bill would fix this issue by permanently providing relief measures that would automatically apply once a Presidential disaster declaration is issued, directly helping victims instead of having them wait for Congressional action.”
“When disaster hits, families and business owners should not be penalized when using their savings while trying to get back on their feet. Saving for retirement is hard enough, let alone during disasters,” said Dr. Cassidy.
When unexpected natural disasters occur, many affected individuals turn to their retirement plans, commonly known as 401(k)’s, to cover unexpected costs like repairing their homes. These individuals are restricted from doing so without paying the required penalties, such as the 10 percent withdrawal fee. When natural disasters hit, however, Congress rarely acts the next day. Congressional action to waive these fees can take weeks, creating an additional burden for families already struggling.
Meanwhile, the President can issue a disaster declaration and trigger Federal Emergency Management Agency’s (FEMA) authorization to act immediately without having to wait for Congress. This would also ensure relief is equal for all tragedies, avoiding disparate treatment like in past disasters. In 2005 Congress granted disaster tax relief for Hurricane Katrina victims four weeks after the hurricane made landfall, however, in 2012 it failed to provide relief for victims of Hurricane Sandy.
The American Retirement Association supports the legislation.
“Every year tens of thousands of Americans are victims of disasters from floods, tornadoes, hurricanes, forest fires, or more recently a global health pandemic. But because there are not permanent rules on the use of retirement funds by individuals impacted by these situations, victims are dependent upon Congressional action after the occurrence of each disaster. The ARA strongly supports permanent retirement plan tax relief measures that would automatically apply once a Presidential disaster declaration is issued. ARA applauds and supports Senators Cassidy and Menendez’s legislation that would make eligibility for these distributions in these circumstances permanent,” said the American Retirement Association
###