The National Active and Retired Federal Employees Association (NARFE) asked Congress last month to suspend the requirement that retirees age 72 and older take distributions from retirement savings accounts such as the Thrift Savings Plan.
“I respectfully urge you to support suspending required minimum distributions (RMDs) on retirement accounts for calendar year 2022,” NARFE National President Ken Thomas wrote in a letter to Congress on July 8. “Our nation’s retirees are facing the brunt of the economic downturn and suspending RMDs would provide real relief for those living on fixed incomes.”
“The RMD calculation for 2022 is based on the retirement account balance as of December 31, 2021, when markets like the S&P 500 were close to all-time highs,” Thomas wrote. “Unfortunately, with the S&P 500 stock market index down by more than 20 percent since then, seniors will be forced to withdraw a far greater percentage of their retirement accounts than expected or face a punishing 50 percent tax penalty. These required withdrawals will force seniors to sell assets at stock values that have been depressed by the Federal Reserve’s tightening monetary policy in response to surging inflation.”
NARFE said that there is recent precedent for suspending RMDs. The Coronavirus Aid, Relief, and Economic Security (CARES) Act waived required minimum distributions during 2020 in response to the market crash at the height of the COVID-19 pandemic. “We are now experiencing a similar, severe decline in the stock market. Coupled with high inflation and the timing of the crash, the situation is similarly concerning today,” wrote Thomas.
“Congress has acted swiftly in the past to address such downturns, including multiple economic packages to assist Americans during the pandemic,” Thomas wrote. “Both chambers must once again take action to protect retirees living on fixed incomes.”
To read the full text of the letter, go here.