Bill May Help Home Owners Tap Retirement Accounts

A new bill introduced in Congress this week, if approved, would allow home owners to withdraw funds tax-free from their retirement accounts to help pay for their mortgage.

The Home Act, introduced on Wednesday by Sen. Johnny Isakson, R-Ga., and Rep. Tom Gravees, R-Ga., would allow home owners to take up to $50,000 from their retirement account or half of the current value of their account to help pay their mortgage without incurring the standard 10 percent tax penalty, HousingWire reports. Any money withdrawn would be required to go toward paying the mortgage within 120 days to avoid the tax penalty.

"This bill will help Americans who are at risk of foreclosure use their own resources to make their mortgage payment on time without being penalized by the federal government," says Isakson. "I firmly believe that economic recovery in this country will not occur until the housing market bounces back."

Source: “Bill Allows Tax-Free Use of Retirement Funds for Mortgage Payments,” HousingWire (Oct. 5, 2011)