Bill Would Allow Penalty-Free Withdrawals from 401(k)s, IRAs

The bill is backed by the American Retirement Association, Nationwide Retirement Solutions, LPL Financial, State Street Global Advisors, the American Benefits Council and the ERISA Industry Committee (ERIC).

Brian Graff, ARA's executive director and CEO, said in a statement that the bill "smartly leverages the existing workplace-based retirement plan system to address this emergency savings problem while ensuring Americans continue to save for a secure retirement following an emergency."

It also "creates a new category of distribution in a 401(k) or similar plan that would allow workers who have a certain balance in these accounts to quickly access their savings to address a personal financial emergency without an additional tax penalty and a minimal amount of paperwork," Graff said.

Bennet added that "I hear all the time from Coloradans who get hit with an unexpected car repair they can't afford and then lose their job because they can't make it to work. Millions of families are trapped in this cycle of economic insecurity — one emergency away from everything falling apart."