401K IRS Penalty Moratorium?

[blueworld]

My 58-year-old husband lost his job in an auto-supply related industry this week, along with all benefits. We have less than 20K in a 401K. We are happy to have it, and have significantly downsized our lifestyle & choices for years. We believe in living more simply so others can simply live. No hype, truly.

With the economy as it is, every prime job at Wal-Mart will have 75 applicants, and I doubt many 58-year-olds will get those. We're sure he'll find work, but we're also pretty sure it will take a while. We're assuming we'll need that 401K money to help us get through a good portion of the year.

It infuriates me that while the financiers & Big 3 automakers are getting bailouts at my grandchildren's expense, we'll have to pay an "early withdrawal" 10% IRS penalty next year for using money we never would have touched if they (along with others!) didn't force this situation on us!

While the GOP bloviates about irrelevant items like birth control & demands more useless tax cuts for gazillionaires, I'd like to suggest one to the Dems: put a hold on that penalty. Unemployed Americans will be living on those 401K withdrawals during these times! We deserve as much respect & concern as the GOP contributors!

What do y'all think?:grr:

[valerief]

1. Congrobbyists don't care about us. nt

[mrreowwr_kittty]

2. Not just the penalty but ALL the taxes.

If you are unemployed and forced to use your retirement funds to survive you shouldn't have to pay any taxes on them. Also, get rid of taxes on unemployment benefits.

[doodadem]

3. Same boat

We're doing the same thing here--between taxes and penalities, we're losing about 10K of my husband's little 401K of 30K. But we don't have a choice anymore, we have to take it out. We need every penny, especially since his unemployment benefits are about to run out.

There was talk of this legislation, but can't find out where it went. Not going to come soon enough to help us.....

[HereSince1628]

4. I think if a person can restore their 401k they should get their penalty back.

I know that doesn't exactly help you now, but it provides an incentive to restore retirement savings and every dime in personal retirement savings could be worth a quarter when it comes to government spending pn the lost dime down the road.

I raided my retirement savings when I lost my job during W's first recession. It hurts, twice.

[dixiegrrrrl]

5. I think the IRA accounts were/are a scam and fraud.

Look what they did:
they force you to give up control of your money for 20-30 years.
the money usually goes to banks and investment companies and Wall Street
where it artificially pumps up the economy.
The only proof yo have any money is a aper statement.

The crooked investment banks now have "lost" most of the retirement funds, with a few
exceptions.
Companies have "lost" people's pension funds.

If by some miracle you do get to withdrawal age, there are taxes on the funds...
capital gains, income taxes, etc. ( with the exception of years 2008 thru 2010 )
( gee, what a co-incidence for big bucks people, as it turned out)

And now there is talk of making retirement plans mandatory for workers..you will have to contribute, no choice.

And didja notice this last broad daylight robbery of the Treasury occurred just before most boomers were eligible to take out the money?
I think the money was long gone before this crash.

I was lucky enuff to reach 59.5 years and took it out a few years ago.