According to a statement released to the media:
Isakson and Graves said the HOME Act would allow Americans to make withdrawals from their retirement accounts to pay timely mortgage payments.
Isakson, who spent over 30 years in the real estate industry, said this to Congress last week:
“The bill will help those who risk foreclosure use their own resources to make their mortgage payment on time without being penalized by the federal government.”
Isakson also said that he believes the bill will help strengthen the housing market because it will lead to a reduction in foreclosures.
Under current tax law, U.S. resident cannots withdraw retirement funds to pay for their homes without paying a 10 percent penalty to the Internal Revenue Service, said Graves.
The Act would allow a taxpayers to withdraw money from a qualified retirement plan penalty free to make mortgage payments toward his primary residence with a lifetime cap of $50,000 or one-half of the present value of one’s 401(k) account (whichever is smaller), so long as those funds are used for that purpose within 120 days of withdrawal. Deferred income tax otherwise due on those withdrawals would still be due to the Internal Revenue Service.