AARP today urged Treasury Secretary Henry Paulson to temporarily freeze mandatory retirement account withdrawals.
The Washington-based association, which represents 39 million members 50 and older, joined both presidential candidates in asking for a temporary waiver of requirements that people who are at least 70½ begin taking minimum distributions from their retirement accounts.
The minimum withdrawals are based on the fair market value of retirement accounts on the last day of the previous year.
Since the stock market has declined substantially this year, that could force older Americans to take withdrawals from individual retirement accounts or 401(k)s based on account values that are much higher than they are today, AARP said in a statement.
Failure to do so would mean having to pay a penalty of 50% of the amount of the distribution.
“Fairness dictates that we provide relief to these individuals who have no other recourse than to use their retirement savings to meet current living expenses,” Bill Novelli, AARP’s chief executive, said in a letter to Mr. Paulson.
AARP also asked the Treasury secretary to provide relief for retirees who don’t have the option of delaying withdrawals and who find it necessary to withdraw funds from retirement accounts to meet daily living expenses.
AARP urged Mr. Paulson to act quickly, as the deadline for making withdrawals is Dec. 31.
Department of the Treasury spokesman Andrew DeSouza declined to comment about AARP’s request.
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