An important part of SECURE 2.0 that should garner more attention is The Savings Access for Escaping and Rebuilding (SAFER) Act.
It allows for a Section 72(t) withdrawal, without the 10% additional tax on early distributions, from qualified retirement plans for survivors of domestic abuse. It passed with the larger law late last year.
The SAFER Act was the focus of a recent Third Thursday webcast from Women in Retirement and the American Retirement Association. It explained that the distribution must be made during the one-year period beginning on a date on which the individual is a victim of domestic abuse by a spouse or domestic partner.
The maximum aggregate amount which may be treated as an eligible distribution is the lesser of $10,000 (inflation-adjusted) or 50% of the value of the employee’s account under the plan.
For the purposes of the legislation, domestic abuse is defined as physical, psychological, sexual, emotional, or economic abuse, including efforts to control, isolate, humiliate, or intimidate the victim or to undermine the victim’s ability to reason independently, including abuse of the victim’s child or another family member living in the household.
A plan administrator may rely on the participant’s certification that the distribution is an eligible distribution to a domestic abuse victim. Any portion of an eligible distribution to a domestic abuse victim may generally be recontributed to a retirement plan. The amendments made by this section apply to distributions made after December 31, 2023.
Scope of the Issue
Individuals of all ages, income levels, racial and ethnic communities, sexual orientations, and religious affiliations experience violence in the form of sexual assault, domestic violence, dating violence, trafficking, and stalking, according to the webcast’s presenters.
According to the Department of Health and Human Services, there are 1.3 million victims yearly. In 2022, the National Domestic Violence Hotline received 770,000 calls/contacts, a 25% increase and the highest in nearly 30 years.
One in four women is homeless because of violence committed against her, and 92% of homeless mothers experienced severe physical and/or sexual abuse during their lifetime.
Nearly three in four survivors (74%) report staying with an abusive partner because they did not have the financial means to leave, and a study of survivors of domestic violence found that nearly half (45.9%) returned to their abusive partner within a year of leaving because they lacked the money to support themselves and their children.1
A full 99% of survivors experience economic sabotage, economic control/coercion, and economic exploitation, which results in debt, poor credit, and a lack of savings.2
Access to funds through the SAFER Act allows survivors to address their unique and specific needs without administrative hurdles or limitations on use. It also provides agency and independence and improves emotional well-being while promoting housing stability and safety.
“Basically, I didn’t have to worry about, like, just trying to struggle just to, you know, make the payments on the rent…,” one survivor said. “I just could like relax; I could relax for a little bit and save … Save enough money where I can, yeah, just pay my rent month to month like I’m supposed to. So, it just put me in a better zone…”3
Resources
https://www.workplacesrespond.org
National Domestic Violence Hotline (hehotline.org)
Call 1-800-799-7233
Love is Respect National Teen Dating Abuse Helpline (loveisrespect.org)
Call 1-866-331-9474
Rape, Abuse & Incest National Network’s (RAINN) National Sexual Assault Hotline (rainn.org)
Call 800-656-HOPE (4673) to be connected with a trained staff member from a sexual assault service provider in your area.
National Resource Center on Domestic Violence (nrcdv.org)
1. Sources: Hess, C., & Del Rosario, A. (2018). Dreams Deferred: A Survey on the Impact of Intimate Partner Violence on Survivors’ Education, Careers, and Economic Security (p. 53). Institute for Women’s Policy Research.; Mary Kay Foundation. (2012). Truth About Abuse Survey Report. Mary Kay Foundation.; Anderson, M. A., Gillig, P. M., Sitaker, M., McCloskey, K., Malloy, K., & Grigsby, N. (2003). “Why Doesn’t She Just Leave?”: A Descriptive Study of Victim Reported Impediments to Her Safety.
2. https://www.freefrom.org/wp-content/uploads/2021/06/Survivors-Know-Best.pdf
