Rep. Sean Maloney, D-N.Y., proposed a new bill this week to the U.S. House of Representatives that would allow first-time home buyers to withdraw funds, tax-free, from their retirement accounts under the umbrella of coronavirus-related distributions.
The funds could then be used towards a down payment on a new home, helping more people to attain homeownship, Rep. Maloney said. The National Association of Realtors said this week the bill has its full support.
The bill is known as the “First-Time Homebuyer Pandemic Savings Act”, and would allow up to $25,000 of a coronavirus-related retirement distribution to be tax-exempt and penalty-free as long as it is put toward a down payment on a first home. The bill modifies a provision in the CARES Act that provides a penalty-free distribution from an eligible retirement plan or IRA of up to $100,000 without having to pay an early withdrawal penalty.
The NAR is calling on members of the U.S. House of Representatives to support the bill.
“While various barriers have stood in the way of homeownership for younger generations, COVID-19 has pushed the American dream further out of reach for countless families and individuals by no fault of their own,” NAR President Vince Malta said in a statement. “This legislation would make a tremendous difference to those struggling to save for the down payment on their all-important first home.”
Saving for a down payment remains a major obstacle to homeownership for young Americans.
“Making sure the next generation of homeowners have the resources they need to buy their first home is going to play a big role in our economic recovery,” Rep. Maloney said in a statement. “This bill is a way to bring new opportunity to new homebuyers and help young families get one step closer to realizing the American dream.”