On July 23, 2020, New York Representative Sean Patrick Maloney introduced the First Time Homebuyer Pandemic Savings Act, a new bill that will help first-time homebuyers realize their dreams of homeownership, during and after America’s recovery from the coronavirus public health and economic crisis.
The First Time Homebuyer Pandemic Savings Act allows first-time buyers to withdraw funds from their retirement accounts under the umbrella of coronavirus-related distributions to assist with the purchase of a home. The bill would allow for up to $25,000 of the coronavirus-related distributions to be tax-exempt and penalty-free to be put towards the down payment of a home for new homebuyers. The bill would also extend the coronavirus-related distribution sunset clause to December 31, 2021.
The Coronavirus Aid, Relief and Economic Security (CARES) Act, which passed in March, created a new hardship withdrawal for Americans who invest in 401(k)-type contribution plans or individual retirement accounts (IRAs) for those impacted financially by COVID-19. The coronavirus-related distribution is not subject to the early-distribution penalty of 10 percent and can be repaid over three years.