Today, in recognition of ALS Awareness Month, Senators Richard Burr (R-NC) and Michael Bennet (D-CO) introduced the Kathryn Manginelli Act, or the Compassionate Retirement Act, which will provide more financial stability to families battling devastating diseases, such as amyotrophic lateral sclerosis (ALS). This bipartisan legislation will allow individuals, who are diagnosed with a terminal illness, to use retirement savings without incurring an additional 10 percent penalty if withdrawing before the age of 59 ½.
“Americans who have been diagnosed with ALS and other terminal illnesses share unexpected emotional and financial hardships,” said Senator Burr. “Many North Carolina families I’ve met with over the years have similar stories of the difficulties they face, including Kathryn and Joe Manginelli. The Manginellis brought to my attention the fact that those with terminal illnesses still face penalties for early retirement withdrawals. If Americans with terminal illnesses need to access their retirement funds to help cover unplanned health care costs, they shouldn’t be penalized for it. This is a commonsense fix. That’s why I’m honored to reintroduce this legislation in memory of Kathryn to provide more financial flexibility to Americans suffering from these terminal diseases and their families.”
“Individuals diagnosed with a terminal illness face immense physical and emotional hardship,” said Senator Bennet. “On top of that, the financial challenges of battling a terminal illness can be overwhelming. Patients are often left to shoulder the burden not only of the cost of their care, but also their family’s financial future. We can do more to ease some of that financial hardship for families by allowing individuals diagnosed with a terminal illness to access their retirement savings immediately and without penalty.”
Under current law, the disability exception requires the individual to be unable to carry out Substantial Gainful Activity. However, Americans diagnosed with degenerative, terminal illnesses, such as ALS, are still subject to the 10 percent penalty if they continue working in the months prior to becoming disabled to help cover their medical or disability-related expenses.
Named in honor of Kathryn Manginelli of Durham, North Carolina, who passed away from ALS on November 11, 2018, this legislation will provide families battling terminal illnesses with the ability to use their retirement savings without incurring this additional 10 percent penalty.
Senators Burr and Bennet first introduced this legislation on September 18, 2019.
To read a section-by-section of this legislation, also referred to as the Compassionate Retirement Act, click here.