Posted: December 12, 2021
Washington – Today Rep. Mike Thompson (CA-05) and Rep. Mike Kelly (PA-16) announced the introduction of the Disaster Retirement Savings Act. This bipartisan bill helps survivors of natural disasters by allowing them to withdraw funds from retirement accounts to cover the unexpected and emergency costs related to disasters without incurring fees or penalties. This tax relief would be automatically triggered if the President issues a Federal disaster declaration. The legislation provides much needed certainty for survivors of natural disasters, such as the fires that have hit Thompson’s district over the past four years.
“Survivors of natural disaster deserve to know that the Federal government is working to help them respond and recover from the moment the emergency begins. That’s why I am proud to introduce this important bipartisan legislation that allows people in disaster zones to withdraw funds from their retirement accounts without penalties or fees to cover emergency expenses such as temporary housing,” said Thompson. “Under this legislation, this tax relief would be automatically triggered in case of a Federally declared disaster, providing certainty for people who are often experiencing the worst moment of their lives. We must pass this bill as soon as possible to be prepared.”
“Americans should not be penalized for withdrawing their hard-earned retirement money to cover emergency costs stemming from a natural disaster,” Kelly said. “This bill will provide the resources and the peace of mind for people in a moment when they really need it.”
Under current law, people impacted by natural disasters are subject to up to 20 percent withholding and 10 percent in tax penalties if they draw from their retirement funds to cover emergency disaster costs. Congress often acts afterwards to provide relief, but it’s not always immediately and is not a certainty. The Disaster Retirement Savings Act of 2021 fixes that problem by allowing survivors of disaster to access $100,000 of retirement funds after a Federally declared disaster without paying fees or getting hit with penalties. These funds can be used to cover costs such as emergency housing and can then be repaid over a three-year period. Read the text of the legislation here.