Legislation to allow retirement withdrawals to pay mortgages

By Christopher Quinn

The Atlanta Journal-Constitution

Georgia legislators introduced a bill to allow Americans to pay mortgages by withdrawing retirement funds, such as a 401(k) account, without penalty.

The bill's sponsors, Sen. Johnny Isakson, R-Ga., and Rep. Tom Graves, said they believe it would help people keep their homes in tough economic times.

"I firmly believe that economic recovery in this country will not occur until the housing market bounces back," Isakson said. "To that end, this legislation will help strengthen the American housing market because it will lead to a reduction in foreclosures and in turn will help stabilize home values.”

Graves said, “Many Americans who have been responsible enough to save for retirement in the past now find themselves out of work. Unfortunately, under current tax law these men and women cannot withdraw retirement funds to pay for their homes without paying a ten percent penalty to the IRS, often resulting in late payments, foreclosures, and at a minimum punishing a taxpayer who has saved responsibly in the past."

--Christopher Quinn