Troops Given Pass on 10% Retirement Withdrawal Penalty

April 22, 2004 ( - Active National Guard and Reserve troops could pull money out of their retirement savings plans without the customary 10% early withdrawal penalty under a bill okayed unanimously Wednesday by the U.S. House of Representatives.

The House voted 415-0 to waive the penalty for retirement accounts and pensions for National Guard and Reserve troops deployed six months or longer since the September 11 terrorist attacks, the Associated Press reported. The Guard and Reserve troops would still have to pay regular federal income taxes on withdrawn funds.

The bill would apply to National Guard and Reserve troops activated between September 11, 2001, and September 12, 2005. Those military personnel would be given two years after they return to civilian life to replenish the accounts.

U.S. Representative Clay Shaw (R-Florida) said the bill is designed to aid the one-third of reserve troops who took a pay cut when activated to duty.

While House Democrats voted unanimously for the bill, many said the country should make a much bigger effort to support troops fighting in Iraq and Afghanistan.

“That is a really pathetic gesture,” said Representative John Tanner (D – Tennessee) “Active duty guard and reservists and their families are the only people in this country who have been asked to sacrifice anything, anything whatsoever.”

Employers are not required to pay workers activated to duty, nor do they have to continue providing health insurance and other benefits. Employers are required to give the same or equal job to the soldier when active duty ends.

The measure now goes to the U.S. Senate.