Over the weekend, Newsday writer Saul Freidman wrote the Treasury could have bailed out seniors but didn’t and brings up some great points. The article discusses how the US Treasury could’ve helped older taxpayers by suspending the requirement that people over 70 1/2 must withdraw a certain amount from their IRAs, 401(k) and similar tax-deferred savings plans or face a stiff penalty.
Freidman writes that the required amount of the distribution is based on people’s age and the value of their savings plans as of Dec. 31, 2007, when the stock market was high. Since then, the markets have tanked, which meant that account holders would be forced to sell equities at deep losses – 40 percent or more – to make the withdrawal.
According to the article, lawmakers from both parties had endorsed the idea of suspending the requirement, but Paulson delayed making a decision until mid-December, by which time most distributions already had been taken to meet the Dec. 31, 2008 deadline. To read the article, click the link below.