4.9: IRA and 401(k) Withdrawal Delays

Instruct the Treasury to allow seniors to delay required withdrawals from 401(k)s and IRAs.

Other Information:

Currently seniors are required to start withdrawing from their 401(k)s and IRAs at age 70 1/2 and every year thereafter over their lifetime. But the explicit requirement that withdrawals continue on an annual basis -- and the related requirement that the amount withdrawn be based on currently much higher year-end 2007 asset values -- is based on Treasury regulations, not the statute, which has a less specific mandate. That means the Secretary of the Treasury has authority to change its regulations to protect seniors from being forced, at this critical time, to sell their investments and "lock in" their losses just after market values have plummeted in an almost unprecedented fashion. Obama and Biden are calling on Treasury to temporarily suspend the required withdrawals for retirees over age 70 1/2. Because retirees often make these required withdrawals late in the year, there is still time to help millions of affected seniors -- but only if done promptly. In addition, because lower-income seniors may have no choice but to take withdrawals this year and in 2008, Obama and Biden will exempt any withdrawals made up to the required minimum amount from taxation. This will give seniors the flexibility they deserve -- to forgo withdrawals if they choose or to take those withdrawals tax free if they need those resources to pay their bills.

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