Proposed Legislation Allows Retirement Account Withdrawals for Mortgage Payments

Minnesota Senator Norm Coleman has proposed legislation that would allow individuals who are 60 days late on their mortgage payments to dip into their 401(k) or individual retirement accounts (IRA) without paying a penalty.

According to a press release, the Home Ownership Mortgage Emergency Act (HOME) is meant to help these homeowners avoid foreclosure.

The Republican lawmaker’s proposal would allow these individuals to withdraw up to $100,000 without paying the standard 10% early withdrawal penalty through 2009. There would be no income tax payment required as long as the withdrawals are paid back within three years.

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For joint filers, the amount would be limited to borrowers making no more than $114,000 or $166,000.

“I have been troubled by the increase in the number of foreclosures to date, and the projections that the worst is still to come,” said Coleman, in the press release. “While there is no one single solution to the housing crisis, my bill offers a reasonable and measured effort that can help folks stay in their homes in these difficult times. We should not penalize them for trying to keep a roof over their head and I urge my colleagues to support this measure as we seek to help out homeowners in trouble.”

Foreclosures in the U.S. have doubled in the last year, and more than 14.5% of subprime mortgages are past due, according to the press release.

ASPPA Issues Standards of Practice for Recordkeepers

The American Society of Pension Professionals&Actuaries (ASPPA) has issued standards of practice for recordkeepers so that plan sponsors, investment advisers, and investment managers will have criteria by which to gauge the services they receive.

According to a press release from the Washington, D.C.-based group, ASPPA has established the qualification standards on which recordkeepers will be reviewed and evaluated for this new certification. ASPPA has partnered with the Centre for Fiduciary Excellence (CEFEX) for the audit methodology and delivery of the certification.

Recordkeepers who meet the criteria set by ASPPA will get a certification.

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The standards of practice for the recordkeeper certification will be similar in structure to those published in 2006 by Fiduciary 360 for fiduciary advisers, managers, and plan sponsors.

“Since recordkeepers play an integral role in helping fiduciaries fulfill their obligations, it is appropriate to provide a program where they can demonstrate their adherence to the standard. This certification fulfills that need,” said Brian Graff, Executive Director of ASPPA, in the press release.

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