Last week, Rep. Haley Stevens (D-MI) introduced legislation aimed at waiving early withdrawal penalties for victims of retirement account fraud.
The proposed bill, titled the “No Penalties for Victims of Fraud Act,” seeks to alleviate the financial strain on individuals affected by fraud related to their 401(k) or retirement plans. Under this legislation, the 10% early withdrawal penalty typically imposed on individuals who take money out of their retirement accounts before the age of 59½ would be eliminated for verified victims of fraud.
These individuals must provide documentation of their fraud losses through law enforcement or court verification to qualify for the penalty waiver. While victims would not face penalties for early withdrawals, they would still be required to repay the amount they take out.
This legislation comes in response to a growing number of cyber-attacks targeting Americans’ long-term savings. The bill has been referred to the House Ways and Means Committee for consideration.
