Washington, D.C. – Today, U.S. Senators Michael Bennet (D-Colo.) and Richard Burr (R-N.C.) introduced the Compassionate Retirement Act, which will help provide more financial stability to families battling devastating diagnoses, such as Lou Gehrig’s Disease or ALS. This legislation will allow families in these circumstances to use retirement savings without incurring an additional 10 percent penalty if withdrawing before the age of 59 ½.
“Patients and families battling terminal illnesses face immense physical, emotional, and financial tolls,” said Bennet. “The financial impact of managing a terminal illness can be overwhelming as incomes are restricted and health care bills can drain savings, leaving patients to shoulder the burden of not only their immediate care, but their family’s financial future. Our legislation will give Americans diagnosed with terminal illnesses the ability to access their retirement accounts without penalty, helping to ease the financial hardship facing many families. I’m proud to join my colleague Senator Burr in this effort.”
“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 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. This is a problem we can fix. 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. Inspired by Kathryn’s story and others, I am proud to introduce this legislation with my colleague Senator Bennet.”
Under current law, the disability exception requires that a person be unable to carry out Substantial Gainful Activity. However, Americans diagnosed with degenerative, terminal illnesses, such as ALS, are still subject to the 10 percent penalty if they continue working in the months prior to becoming disabled to help cover their medical or disability-related expenses.
This legislation will provide families battling terminal illnesses with the ability to use their retirement savings without incurring this additional 10 percent penalty.
A copy of the bill text is available HERE.