[March 26, 2020]

Ric Edelman Calls on House of Representatives to Waive IRS Early-Withdrawal Penalty and Permit Loans for IRA Accounts

The House of Representatives must join their Senate colleagues and pass legislation immediately so Americans under age 59½ can withdraw money from their Individual Retirement Accounts without incurring a 10 percent IRS early-withdrawal penalty, and let individuals borrow funds from their IRAs with permission to return the money to their accounts once the COVID-19 crisis is over, says acclaimed financial advisor Ric Edelman, founder of Edelman Financial Engines, the largest independent financial planning and investment advisor¹.

"Millions of Americans are being laid off or furloughed during the COVID-19 crisis, and a great many of these families have most of their savings in IRA accounts," Edelman (News - Alert) notes. "They are forced to pay a 10 percent IRS penalty on money they need to buy food and medicine. The existing rules never contemplated this national emergency."

The nation's 401(k) plans typically permit hardship withdrawals and let participants borrow money from their accounts, but there are no such provisions for IRAs. Taxpayers who withdraw money from IRAs and don't return it to their accounts within 60 days are subject to taxes and a 10 percent IRS penalty.

Since government officials are planning to help families cope with the crisis by distributing thousands of dollars to individual American households anyway, Edelman, who has been called recognized as one of the most influential thought leaders in the financial planning field by InvestmentNews, RIABiz and Wealth Management magazines, recommends that Congress waive the IRS penalty and permit loans as temporary measures.

"Some 70 million Americans have nearly $9 trillion in IRA accounts," Edelman says, citing data from the Employee Benefit Research Institute and the Investment Company Institute. "For those forced to tap into their IRAs to pay for food and medicine during this crisis, the taxes and 10 percent IRS penalty is an unnecessary and crushing blow to their personal finances and future retirement security."

"The solution is simple," says Edelman, whose firm is ranked the #1 independent financial advisory in the nation by Barron's, and who was personally ranked by Barron's 3 times as the nation's #1 independent financial advisor. "The House must pass legislation immediately to let people under age 59½ borrow from their IRAs and make withdraws without incurring the 10 percent IRS penalty. This will make it easier for households headed by someone under 59½ to manage the crisis without creating any long-term adverse economic impact to themselves."

About Ric Edelman

Ric is a financial advisor and has been recognized as one of the most influential people in the financial planning and investment management profession by three leading trade publications: Investment Advisor² RIABiz³ and InvestmentNews⁴. Three times he has been ranked as the nation's #1 Independent Financial Advisor by Barron's⁵. In 2004, he was inducted into Research magazine's Financial Advisor Hall of Fame⁶ and in 2019, the Barron's Hall of Fame⁷. In 2017, he received the IARFC's Lifetime Achievement Award⁸. Ric is also a Distinguished Lecturer at Rowan University, an award-winning host of one of the longest-running radio show on personal finance in the country, a producer of award-winning specials for Public Television, and a #1 New York Times bestselling author who has written 10 books on personal finance.

About Edelman Financial Engines

Since 1986, Edelman Financial Engines has been committed to always acting in the best interest of our clients. We were founded on the belief that all American investors - not just the wealthy - deserve access to personalized, comprehensive financial planning and investment advice. Today, we are America's top independent financial planning and investment advisor, recognized by both InvestmentNews and Barron's with 170 planner offices across the country and entrusted by more than 1.2 million clients to manage more than $213 billion in assets. Our unique approach to serving clients combines our advanced methodology and proprietary technology with the attention of a dedicated personal financial planner. Every client's situation and goals are unique, and the powerful fusion of high-tech and high-touch allows Edelman Financial Engines to deliver the personal plan and financial confidence that everyone deserves.

For more information, visit www.EdelmanFinancialEngines.com and www.FinancialEngines.com.

¹ Ranking and status for 2019. For independence methodology and ranking, see InvestmentNews Center (http://data.investmentnews.com/ria/).

² The Investment Advisor magazine listing of the Investment Advisor 25 is based on readers' opinions and highlights those who are ahead of the pack with their insights, innovation and disruption. Advisors and other industry participants cast about 12,000 total votes for leaders in the following six categories: RIA/Advisory; Independent Broker-Dealers; Custody & Clearing; Portfolio, Investing & the Markets; Politics/Regulation/Compliance; and Fintech/IA/AI. Investor experience/returns were not considered as part of this ranking.

³ The RIABiz listing of the 10 most influential figures in the Registered Investment Advisor industry is in recognition of notable, driven and influential executives who are advancing their firms and are considered influential in the RIA business. Investor experience/returns were not considered as part of this ranking.

⁴ Based on the opinions of the editors of InvestmentNews using the following definition as a guidepost: Those who have conceived new ideas and tools that have propelled the industry forward. Investor experience/returns were not considered.

⁵ According to Barron's, "The formula [used] to rank advisors has three major components: assets managed, revenue produced and quality of the advisor's practice. Investment returns are not a component of the rankings because an advisor's returns are dictated largely by each client's risk tolerance. The quality-of-practice component includes an evaluation of each advisor's regulatory record." The rankings are based on the universe of applications submitted to Barron's. The selection process begins with a nomination and application provided to Barron's. Principals of Edelman Financial Services, LLC self-nominated the firm and submitted quantitative and qualitative information to Barron's as requested. Barron's reviewed and considered this information, which resulted in the rankings on Aug. 27, 2012/Aug. 28, 2010/Aug. 31, 2009.

⁶ Research magazine cover story "Advisor Hall of Fame," December 2004 (based on serving a minimum of 15 years in the industry, having acquired substantial assets under management, demonstrating superior client service and having earned recognition from peers and the broader community for how they reflect on their profession). Investor experience/returns were not considered as part of this ranking

⁷ Barron's Hall of Fame advisers have been ranked for 10 or more years on the Barron's Top 100 Financial Advisors list. Barron's listings are based on data compiled by many of the nation's most productive advisers, which has been submitted to and judged by Barron's. Key factors and criteria for each award include assets under management, revenue produce for the firm, regulatory and compliance record, and years of professional experience. This award is not indicative of this advisor's future performance.

⁸ Presented by the International Association of Registered Financial Consultants (IARFC). Candidates must hold a professional designation and must have disseminated their comments on financial topics by having them widely published in articles, journals, books, etc. They must have provided outstanding personal service or leadership in the financial services industry. Nominees must have participated in some aspect of financial education to the public or to other members of the profession. Investor experience/returns were not considered.

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