Required Minimum Distributions (RMD) Background and Summary
On December 23, 2008, President Bush sgned into law the Worker, Retiree, and Employer Recovery Act. The Act states that no RMD is required for 2009. As you are aware, the current global economic conditions have caused sharp declines in many contract values. This Act is designed to provide relief to contract owners who would otherwise be forced to take a distribution in 2009. The goal is to not force contract owners to take a distribution when their contract value is at a low point and instead allow those funds to stay invested in the contract and participate in any economic recovery.
The RMD Rules, Briefly Stated:
Individuals are required to take at least a minimum annual distribution from their account after they reach their required beginning date, which is the April 1 after they reach age 70 1/2.
For beneficiaries of deceased individuals not already receiving RMDs, the required beginning date is either following the 5th anniversary of death (for a complete distribution) or following the 1st anniversary of death (for a periodic distribution). Special rules apply if the only designated beneficiary is the surviving spouse.
The Situation That Congress Sought to Relieve:
In the current economic environment, many contract values have been diminished by the deep declines in the stock market.
Congress was concerned that requiring individuals to take 2009 RMDs could have the unintended effect of forcing individuals to “sell low.” As a result, the RMD would diminish the likelihood of the individual being able to participate in any economic recovery.
What This Act Changes:
No RMD is required for 2009.
Any individual who attains age 70 ½ in 2009 will not be required to take a first RMD by April 1, 2010, but the distribution for the 2010 calendar year must be taken by December 31, 2010.
If the individual takes a partial withdrawal, the distribution is not subject to the mandatory 20% withholding that is typically required of RMDs.
For beneficiaries under the 5-year rule, the 5-year deferral period is extended by one year (e.g., if an individual died in 2007, the period would end in 2013 instead of 2012).
Frequently Asked Questions
Q1. If I don’t take a 2009 RMD, won’t I be required to pay a tax penalty? No. Under the Act, there is no RMD required for 2009, and no tax penalty will be assessed if you do not take your RMD. In a normal year, the Tax Code assesses a 50% excise tax on any required distribution that fails to be distributed. But 2009 will not be a normal year. No excise taxes will apply because there will be no required distributions in 2009.
Q2. I’ve been taking RMDs for years and I’ve grown to depend on them as a source of retirement income. Can I still take the distribution that I had planned on? Absolutely. Your access to your contract hasn’t changed. The only thing that’s changed is that you aren’t required to take a 2009 minimum distribution. If you would like to take a distribution anyway, you can certainly do that.
Q3. I currently have a systematic withdrawal set up on my contract. Will I still receive my
payments? A systematic withdrawal is an automatic withdrawal that you take monthly, quarterly or annually. If there is currently a systematic RMD withdrawal set up on your contract, and you wish to keep it, there is nothing you need to do. The payment you receive will be based on the RMD calculation. However, you may elect to receive a systematic withdrawal in any amount that you request.
Q3a. If I stop my payments, what will happen in 2010? Starting in 2010, your systematic payments will resume in accordance with your original instructions.
Q3b. How do I stop my payments? If you wish to stop receiving the payments, please contact us.
Q3c. Can I return a systematic payment that I received? You can roll over any payments received back into the contract. The transaction will be processed on the day that all paperwork is received in good order prior to the close of the New York Stock Exchange.
Q4. What period does the relief apply to? The relief applies to RMDs due to be paid out to satisfy the 2009 RMD requirement. Any individual who attained age 70 ½ in 2008 and opted to defer his or her 2008 payment up to April 1, 2009, would still need to take a 2008 payment between now and April 1, 2009.
Q5. Which plans does this relief apply to? The waiver applies to the following plans: IRA, 401(a), 401(k), 403(a), 403(b) and governmental 457(b) plans.
Q6. What is the relief being provided with regard to RMD payments for the 2009 calendar year?
Relief is being provided in the following ways:
a) No RMD is required for 2009.
b) Any individual who attains age 70 ½ in 2009 will not be required to take a first RMD by April 1, 2010, but the distribution for the 2010 calendar year must be taken by December 31, 2010.
c) If the individual takes a partial withdrawal, the distribution is not subject to the mandatory 20% withholding that is typically required of RMDs.
d) For beneficiaries under the 5-year rule, the 5-year deferral period is extended by one year (e.g., if an individual died in 2007, the period would end in 2013 instead of 2012).
Q7. What about the RMD I just took for 2008? Am I going to receive any relief for that?
This relief applies only to 2009.
This information is provided as general guidance. It is not intended to be legal or tax advice. Any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor. The information source for this advisory is from ING-USA.
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Beginner Investing: What is Dollar Cost Averaging?
Dollar cost averaging —is an investing technique intended to reduce exposure to risk associated with making a single large purchase. The idea is simple: spend a fixed dollar amount at regular intervals (e.g., monthly) on a particular investment or portfolio/part of a portfolio, regardless of the share price. In this way, more shares are purchased when prices are low and fewer shares are bought when prices are high. The premise of dollar cost averaging is that the investor wants to guard against the market losing value shortly after making his investment. Therefore, he or she chooses to spread their investment over a number of periods.
Everyone knows the market goes up and down.
A common adage is to “buy low and sell high.” Trouble is, it’s next to impossible to know exactly what the market will do in the near future. What’s more, most individuals don’t have the discipline or courage to try to time the market. People who watch the market tend to put money in when it goes up and never put it in when it goes down. Or if the market’s gone up, they’re afraid they’ve missed it and they don’t do anything.
That’s where dollar-cost averaging comes in.
It’s a discipline that reduces risk, not something to get rich quick.
It’s a technique whereby you invest a set amount of money on a systematic schedule over the long haul regardless of how the market is performing. Because you’ve put your investing on autopilot, you’ll end up with more shares for your money when the market is down. But if stock prices rise, you wind up with fewer shares.
Pros of Dollar Cost Averaging
Affordability. Dollar cost averaging is more affordable and allows people to treat investing like paying a bill. It is difficult for most people to invest a $5,000 lump sum to max out a Roth IRA or Traditional IRA. However, many people may be able to afford a monthly installment of $416.66, which will put them on pace to max out their IRA for the year.
A similar example is investing in a 401(k) plan, which is deducted directly from your paycheck. Even if you could afford to invest the $15,500 limit at the beginning of the year from your cash savings, your paycheck wouldn’t be large enough to cover that. Most people also rely upon their paycheck to pay bills throughout the month. A 401(k) plan forces the participant to use dollar cost averaging.
Convenience. It is easy to set up dollar cost averaging as a monthly payment and incorporate it into your budget.
Cons of Dollar Cost Averaging
Lump sum investing can result in better returns. Lump sum investing can often result in better returns because you have your money in the market longer. This is based on the idea that the longer you have your money in the market, the better your returns are over the long run.
More fees. Dollar cost averaging also means making more transactions, which can result in higher brokerage fees. You won’t pay these fees if you are investing in a 401(k), but you could if you were making monthly purchases of a stock or mutual fund. You can mitigate these fees by investing quarterly or semi-annually.
Final Thoughts
As you can see, dollar cost averaging is more of an investing technique that forces you to implement a steady strategy, and tends to take the emotion out of when to invest. There will always be times that you think that the market will either go lower, or higher, but this forces you to keep more of a long term perspective.
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The Newest Community for Personal Finance, Investing, and Retirement Topics is eRollover.com.
Erollover.com, the leading portal for 401k’s, Retirement, and Personal Finance Topics, is proud to announce that we have opened up a new feature on our website that allows users to submit and share their own financial articles, photos, videos, and webcasts! Anyone is welcome to share exactly what interests them via these forms of media, while surfing around the site to see what other content may assist in their own financial and personal life! Plus, this newest Web 2.0 social submission site, is totally free of charge! Check it out and be sure to register by clicking here .
About eRollover.com
eRollover.com is a place for people to discover and share financial, investing, and retirement content from anywhere on the web. From the biggest online destinations to the most obscure blog, Erollover.com surfaces the best stuff as voted on by our users. You won’t find editors at Erollover.com — we’re here to provide a place where people can collectively determine the value of content and media and we’re changing the way people consume financial information online. Check it out and be sure to register at http://www.erollover.com/articlesubmit .
We Help You to find the Right Professional, whether online or in person!
eRollover.com is a leading portal for 401k, IRA and Retirement Information on the web. eRollover is a content rich web portal that informs users and assists users in facilitating their 401k, IRA, or 403b rollover, through our brokerage partnerships. eRollover also can assist a user in finding a trusted planner through eRollover’s data base of financial advisors and professionals located here.
How does it all Work?
You may ask, how do we do this? Everything on Erollover.com — from news to videos to images to Podcasts — is submitted by our community (that would be you). Once something is submitted, other people see it and vote on what they like best. If your submission rocks and receives enough votes, it is promoted to the front page for all of our visitors to see. Who knows, the article that you submit could become wildly popular, and more importantly, help someone’s personal finances or retirement planning. Check it out and be sure to register at by clicking here.
eRollover is a portal for 401k, IRA and Retirement information. Through several partnerships, erollover brings educational information to the user and assists in facilitating a 401k, 403b, or other retirement account rollover, through eRollover’s affiliate network or by using eRollover’s database of financial advisors.
Advisor Data Base
Users that are interested to learn more about the inner workings of their 401k’s can locate an advisor through our extensive advisor database.
Users can search through eRollover’s extensive data base of financial advisors. Search capability is done by the user typing in the city, state, or zip code to locate advisors in their area. After a narrowing the advisors down according to their own personal preference, the user can contact the advisor directly. This is a free service to our users.
Rollover Service
Users can select from several leading brokerages that are partnering with eRollover to directly rollover your 401k or IRA plan. This provides a safe, fast and efficient way to take care of your 401K with no worries. eRollover will be adding additional services in the weeks to come.
Tools
eRollover offers users a selection of tools such as an Asset Allocator, which assists users in setting up their portfolios according to each investor’s risk tolerance and timeframe. They can then access Mutual Fund Profiles and Data to insure that they can eliminate funds that are not performing, and adding those that may be a better fit. Finally, Market Data Charts allow users to see the breakdown of the market so investors stay informed about the economic environment that may impact their portfolios.
Erollover is constantly adding new tools to further inform our users, and provide added value to their portfolios by using the site.
Aggregated Content
eRollover has aggregated content from various sources such as RSS feeds, Podcast’s, Video’s, in addition to our own blog and article writers. Also, there is a section of the site that allows individual users to share articles and stories on all aspects of investing and personal finance. As a result, the amount of information is extremely current and comprehensive.
eRollover is really an online personal finance and investing community
And it doesn’t stop there. Because Erollover.com is all about sharing and discovery, there’s a conversation that happens around the content. We’re here to promote that conversation and provide tools for our community to discuss the topics that they’re passionate about. By looking at information through the lens of the collective community on Erollover.com, you’ll always find something interesting and unique. We’re committed to giving every piece of financial content on the web an equal shot at being the next big thing. Check it out and be sure to register at http://www.erollover.com/articlesubmit .
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I commonly get approached by individuals who are looking for advice on what their upcoming divorce means to their 401k, IRA, or other retirement plan. Divorces are tricky anyhow, but when you throw in tangible assets it opens up to a whole new dimension. Here are some brief details about what this means to your investments.
Can my IRA assets be awarded to my ex-spouse in divorce proceedings?
Yes. IRA assets can be awarded to an ex-spouse in the course of a divorce settlement.
Can IRA assets be awarded as part of a legal separation agreement?
Yes. In addition to being awarded in divorce proceedings, IRA assets may also be awarded to a spouse in the course of a legal separation.
What happens with IRA assets that are awarded to a former spouse in divorce proceedings?
Typically, IRA assets that are awarded to a former spouse in divorce proceedings are transferred to an IRA established in the name of the former spouse. This type of direct transfer is often referred to as a ‘transfer incident to divorce.’
Are IRA assets that are transferred to a former spouse typically taxed at the time of transfer?
IRA assets generally are not taxed at the time they are transferred from one spouse’s IRA to the IRA of a former spouse provided the transfer is made in accordance with a court-issued divorce decree or separation agreement.
Are IRA proceeds received in a divorce settlement exempt from the IRS 10% early withdrawal penalty that typically applies to taxable distributions taken prior to age 59½?
No, there is no special exception to the 10% early withdrawal penalty for IRA proceeds that are awarded to you as a former spouse in a divorce settlement. Once the awarded IRA assets have been transferred to an IRA in your name, you are typically subject to the normal IRA rules governing distributions, taxes and penalties.
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Referencing the article By David Pitt, AP Business Writer
We have gotten fervent feedback to our recent articles about the changes to your 401k, 403b, 457, and IRA accounts that may change under the Barack Obama Presidency. eRollover is striving to keep you up to date on these possible changes. I am actually referencing an article by David Pitt to delve a little bit further into possible 401k and retirement changes. The original article can be found here.
Retirement initiatives among economic priorities in Obama administration
The election is over and the message is clear — the economy is priority one. The big question now is how some of President-elect Barack Obama’s campaign proposals will affect retirees and workers with 401(k) and other retirement accounts. Looking at them a bit closer may reveal some clues.
Q: What are some of the ideas Obama has proposed that could impact my retirement planning?
A: One issue Obama has endorsed may get serious consideration before he takes the oath of office in January.
Obama proposed a temporary suspension of the required minimum distribution rule, which forces tens of millions of retirees to take money out of their IRA and 401(k) accounts once they turn 70 1/2. The rule is designed to give the government its share of the taxes on the money, which has been accumulating tax free. Failure to take out the money results in a 50 percent penalty assessed by the IRS.
Suspending the mandatory withdrawal would allow people to keep the money in the account and possibly recover some of their losses when the market recovers.
Obama’s plan would temporarily waive the penalties and taxes on withdrawals made after age 70 1/2. There’s interest in Congress to get it done — sooner rather than later.
The chairman of the House Committee on Education and Labor, Rep. George Miller, D-Calif., has asked Treasury Secretary Henry Paulson to suspend the tax penalty immediately.
AARP, the Washington-based group that represents 39 million people aged 50 and older, also has urged Paulson to take the action right away.
David Certner, the group’s legislative policy director said the required withdrawals essentially force retirees to take money out of the market at the bottom, recording large losses, rather than letting them keep their money in the account to potentially recoup the losses when the market improves.
Department of Treasury spokesman Andrew DeSouza said Wednesday he had nothing to report on the issue and declined to comment further.
“There’s absolutely no reason to force people to take out a larger share of their current account at the bottom of the market,” said Monique Morrissey, an economist with the Washington-based Economic Policy Institute. “It doesn’t make any sense at all.”
A second proposal made by President-elect Obama would allow workers to make hardship withdrawals of up to 15 percent of their balance from individual retirement accounts or 401(k) plans this year and in 2009. A withdrawal of up to $10,000 would not be subject to the 10 percent early withdrawal penalty charged by the IRS, but normal income tax would be due.
Some economists believe too many 401(k) plans already are underfunded and too frequently tapped for loans or early withdrawals, and making such a change sends the wrong message.
“I know people are feeling pain, but if you raid the piggy bank every time there’s market downturn or recession, you will not have enough left in the piggy bank for old age,” Kra said.
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Obama-Elect, The end of 401k, IRA, and Retirement Accounts as we know them?
Well, the election of 2008 has come and gone. Barack Obama is the president-elect of our great nation. Now, the main question turns to, “How will Obama’s election affect me personally?†Well, since you asked, the main target of the Obama administration may be your 401k, 403b, IRA, and other Retirement accounts.
2009 may well bring a concerted and all-out effort by the Obama administration and a Congress controlled by Democrats shooting to turn the generally Republican Investor Class into an endangered species by, among other tactics, raising investment taxes and ending the tax preferences for 401(k)’s, IRAs, and other retirement accounts.
Here is the emerging battle plan for Obama’s War against Tax-deferred Retirement Plans:
Investment Taxes are going to be raised.
Obama wants to raise capital gains taxes even though he has admitted that it might be bad for the economy and might actually decrease tax revenue to the government. For now, he’s talking about raising the highest cap gains rate by one third to 20 percent, though earlier in the campaign, he floated pushing it as high as 28 percent, a near doubling. Now that he has been elected, he could revert to his early campaign promise of 28%. With the next administration facing a trillion dollar budget deficit—maybe more—there will certainly be pressure to raise taxes to higher levels than now being suggested.
Annuities and Life Insurance had better watch out as well.
The government’s mouth has been watering for a number of years, considering the windfall of cash that would come from taking away the tax deferred status of cash value insurance and annuities, and also the tax free life insurance benefit to beneficiaries. This could have a “double jeopardy†effect on estate taxes as well, since many affluent individuals rely on life insurance to cover the death tax.
401(k)’s, IRAs, and other retirement plans may be a thing of the past.
Democrats in the House are now talking openly about the longtime liberal dream of repealing the tax advantages of putting money into a 401(k) plan or other tax-advantaged retirement account. Some think that since the savings rate isn’t going up for the investment of $80 billion [in 401(k) tax breaks], they have to started to think about whether or not they want to continue to invest that $80 billion for a policy that’s not generating the revenue they say it should.
Teresa Ghilarducci, an economist at the New School for Social Research in New York, floated a radical alternative to 401(k)s at a hearing held by Miller Oct. 7.
Under her plan, workers would receive a annual $600 tax refund if they set aside 5 percent of their pay into a retirement account run by the Social Security Administration, which would then invest globally in risky assets to seek high returns.
From that pool, workers would be paid a guaranteed 3 percent a year indexed to inflation.
The change would encourage workers not to hang on to jobs longer than planned.
Because their returns would be guaranteed, workers would be able to retire on schedule, she said.
“We need people to retire when the economy tanks in order to keep up aggregate demand and to reduce pressure on the labor market. And the only way to do that is to unhook the finance markets from retirement income,” she told Reuters.
Not only would removing the preferential tax treatment of these vehicles raise investment taxes by $100 billion a year, as well as affecting the “Rich†making less than $100,000, it would surely prompt many Americans, already shell-shocked by the market’s recent losses, to flee stocks. There are trillions of dollars in American retirement accounts, and abandoning the higher-returning stock market at a probable bottom is probably the worst long term financial move that an investor could make.
Simply put, if you believe in the American economy’s prosperity over the foreseeable future, then you have to believe in the stock market. If you don’t, then you have to admit that the government will have to fund all of its promises one way or another. The low lying “hanging fruit†of 401k, IRA, and Retirement plans may just be too tempting for them to look the other way.
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Asset Allocation Analysis for your 401k or IRA
by Mike Rowan, eRollover.com
As I sit here this morning watching the stock market futures tumble, I can’t help but think about investors out there who feel panic and despair about their retirement portfolios. I know that this stock market behavior over the last 2 months has been absolutely brutal and there is almost no place to hide. Even money market funds have been frozen and have required cash infusions to guarantee their liquidity.
Historically, the only thing that has been proven to prevent massive losses in your portfolio is to have an asset allocation strategy. I can’t stress how important this strategy is for your 401k, 403b, IRA, or other investment and retirement accounts. eRollover has invested in an asset allocation calculator, which can assist in setting up your plan according to your risk tolerance. This feature is free, and will actually generate a print out with its recommendations. Please feel free to utilize this feature of our site by filling out our asset allocation questionnaire.
Here is the definition of asset allocation, according to Investopedia.com.
An investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon.
The three main asset classes - equities, fixed-income, and cash and equivalents - have different levels of risk and return, so each will behave differently over time.
Investopedia Says… “There is no simple formula that can find the right asset allocation for every individual. However, the consensus among most financial professionals is that asset allocation is one of the most important decisions that investors make. In other words, your selection of individual securities is secondary to the way you allocate your investment in stocks, bonds, and cash and equivalents, which will be the principal determinants of your investment results.”
As you can see, this strategy can help you to minimize risk and maximize returns over the long term. Please take advantage of our 401k and Retirement Asset Allocation Engine, and get your portfolio optimized for these turbulent market conditions.
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A 457 plan is a retirement or pension plan that provides benefits to government employees as well as employees of tax-exempt organizations. Employees participating in 457 plans are allowed to defer their compensation on a before-tax basis via regular payroll deductions. Money placed in these accounts grows on a federally tax-free basis until withdrawn.
Today, we’re going to explain the basics of 457 retirement plans, touching on topics such as employee eligibility, contribution limits, as well as the differences between these plans and 401(k) or 403(b) plans.
Employer 457 Retirement Plans
The growing interest in 457 plans stems from the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), which made a number of changes as to how these 457 plans are treated. Employers eligible to participate in these plans include state and local government agencies that are exempt from federal income taxes, as well as other non-church organizations exempt from federal income taxes such as:
Governmental and Non-Governmental Plans
As just discussed, there are two types of 457 plans - those for governmental agencies and those for non-governmental / tax-exempt organizations. Some government plans were established under the provisions of Section 457(g) - but these types of plans can no longer be created. Most of the plans in existence today are Section 457(b) plans and that’s what we’re going to discuss first in this publication. We’ll cover the topic briefly here, but we’ve got an entire publication dedicated to 457(f) plans.
Non-Governmental 457b Plans
Non-profit organizations are now able to provide their employees with 457 plans in addition to their traditional 403b plans. Such companies can establish an eligible plan under Section 457(b) or what are called “ineligible” plans under Section 457(f).
Non-governmental 457(b) plans are limited to a predefined standard group of higher compensation employees - typically directors or officers of the company. Oftentimes this compensation limit is the same as that used for 401k participation testing purposes. And because these plans are usually limited to highly-compensated employees or a select group of executives, they are sometimes referred to as “top hat” plans.
The big advantage of these plans is that they allow employees that are in their peak earning years to defer the payment of federal and state income taxes on their contributions to the plan.
457b Plan Restrictions
Plans for these non-governmental entities are much more restrictive than governmental plans. For example, money deferred into these plans cannot be rolled over into any other type of tax-deferred retirement plan - only another non-governmental 457 plan. In addition, the money placed into these accounts is not held in a trust for the sole benefit of the employee that makes the deferral. Instead the money remains the property of the employer and therefore is available to creditors.
Deferral Limits 2008 / 2009
In 2007, the contribution limit on a 457b plan was $15,500 and that limit remained the same in 2008. Contributions moved up to $16,500 in 2009. In the years 2010 and beyond, the deferral limit on these plans will move up in $500 increments and will be indexed for inflation. This deferral limit applies to both governmental and non-governmental 457b plans.
Catch-Up Contributions
If you’re over 50 by the end of the calendar year, then you also qualify for an additional catch-up contribution of $5,000 in the years 2007 and 2008. In 2009, catch-up contributions moved up to $5,500. Catch-up contributions only apply to governmental plans. Non-governmental 457b plans are not eligible to make catch-up contributions.
457b Special Catch-Up Contributions
Finally, you may also qualify for a special catch-up contribution of $15,500 in 2007 and 2008, up from $15,000 in 2006. In 2009, this special catch-up contribution moved up to $16,500. This special catch-up contribution cannot be combined with the $5,000 / $5,500 catch-up contribution for those aged 50 and over. In order to qualify for this special catch-up deferral, you must have under-contributed in prior years. Speak with your plan’s administrator to verify your eligibility under this special provision.
Please visit our site for more Retirement, 401k, and Insurance information: www.erollover.com
Obama proposes to lift penalties for limited IRA, 401k, 403b withdrawals
By Mike Rowan, eRollover.com
I was watching the Presidential debate last night and heard Barack Obama mention that he would implement a plan where individuals would have access to some of their 401k, IRA, 403b, or 457 Plan money, penalty free. This would help them to have access to some funds during this financial crisis. I think that this is actually a pretty good idea, even though I am not an Obama supporter. However, I would like to see him also come up with a plan where they could get this money back in their 401k or other retirement plan as well. It is well known that the tax deferred retirement plans, such as a 401k or 403b, are the best way to accumulate wealth for retirement. Here is an excerpt from an article that I googled this morning that lays out the details of his plan.
Here is the Article
Democrat Barack Obama is proposing lifting penalties for withdrawals of up to $10,000 from retirement accounts, such as 401k, 403b, and 457 plans, and imposing a 90-day moratorium on foreclosures on some homeowners as part of a plan to boost the economy and aid middle-income taxpayers.
The economic crisis is dominating the presidential campaign, and polls show voters are favoring Obama over Republican candidate John McCain to deal with it. The Illinois senator has opened a 10-percentage point lead over McCain, 53 percent to 43 percent, among likely voters nationally in a Washington Post-ABC News poll taken Oct. 8-11. That’s up from a 4-point lead in a Post-ABC poll taken at the end of September.
Foreclosures
The foreclosure moratorium would apply to banks that are getting capital through the $700 billion rescue plan approved by Congress. It would impose a 90-day ban on foreclosures on homeowners who are trying to keep current on their mortgages.
Obama, 47, calls for a lending facility for states and localities that are having trouble borrowing.
Obama, 47, endorsed a proposal by McCain to suspend rules requiring retirees to begin liquidating Individual Retirement Accounts and 401(k)s at age 70 1/2 to avoid selling assets while markets are down. He would expand it to allow withdrawals of up to 15 percent, with a maximum of $10,000, without facing the tax penalties such withdrawals usually carry.
He also endorsed suspending taxes on unemployment insurance benefits.
McCain, an Arizona senator, held a rally in Virginia Beach this morning along with running mate Sarah Palin, the governor of Alaska. He portrayed himself as the underdog in the contest and emphasized his experience.
“The next president won’t have time to get used to the office,” McCain, 72, said. “He will have to act immediately.”
McCain didn’t present any new proposals on the economy. He repeated his plan to buy up troubled home loans as a way to help beleaguered borrowers.
“I’m not going to spend $700 billion of your money just bailing out the Wall Street bankers and brokers who got us into this mess,” McCain said. “I’m going to spend a lot of that money to bring relief to you, and I’m not going to wait 60 days to start doing it.”
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