WASHINGTON, D.C. - Montana’s Congressman, Denny Rehberg, today contacted Speaker of the House Nancy Pelosi (D-CA) and House Committee on Education and Labor Chairman George Miller (D-CA) urging them to include legislation he recently introduced, The Retiree Relief Act, in any upcoming legislation that reaches the floor of the House this week.

“With only days left before the end of this current Congress, it’s critical we move quickly to provide some economic relief for regular Montanans,” said Rehberg, a member of the House Appropriations Committee.  “I’ve got a cost-effective solution that will take some of the financial burden off of our state’s senior citizens and allow them to have more money to put toward filling up their gas tank, putting food on the table, and paying for healthcare.”

The Retiree Relief Act would provide relief to seniors citizens by allowing them to continue to keep money in retirement accounts that they are typically required by law to withdraw once they reach age 70 ½. 

Currently, an investor must make a required withdrawal based on the size of their account and their age every year after age 70 ½.  This rule is intended to prevent investors from using retirement accounts as a tax shelter.  If an individual fails to take a required minimum distribution (RMD), they are heavily penalized by the IRS, which taxes the amount not withdrawn at 50%.

Rehberg’s bill would waive any penalties for not taking the RMD for 2008 and 2009.  Additionally, the bill would allow seniors that have already taken their RMD for 2008 to re-contribute those amounts to their savings accounts without penalty. 

Suspending the mandatory withdrawal would allow retirees to keep the money in their account if they choose, and possibly recover some of their losses.  Seniors have spent years saving for their retirement and forcing them to take out artificially large amounts now could be devastating in later years.

Letter:

Dear Speaker Pelosi and Chairman Miller,

I am writing to call your attention to a matter of great urgency.  As you know, the consequences of mounting losses in the stock market are falling heavily on retirees.  The value of retirement savings has been greatly diminished, and for some retirees, waiting out the market is not an option.  

Current law penalizes older Americans by requiring them to take a required minimum distribution (RMD) out of their retirement accounts every year after age 70 ½.  This requirement was originally designed to keep wealthy investors from hoarding investments in tax sheltered accounts.  However, in the current economic climate, this policy is forcing seniors to liquidate their savings at severely reduced prices and will impact their economic security in the years to come.

During times of economic uncertainty, Congress must not solely focus on politically connected industries like banking and automobiles.  We have it in our power to lend a helping hand to millions of seniors who made the sacrifice to put money away for their retirement by suspending the penalties associated with forced required minimum distributions for 2008 and 2009.

I urge you to bring up the attached legislation as either a stand alone bill or as part of another legislative package before the end of the 110th Congress.

Sincerely,

Congressman Denny Rehberg