Bailout idea

I haven't seen supporting data on this one way or another but I don't see much of downside to this idea.

What if the US instituted a policy that waived the 10% penalty of IRA withdrawal? Currently those funds in IRAs are fulfilling some role in the economy but to the owners of those funds they are not directly stimulating the economy. It seems to me that if people could draw on those funds now it would:

• help many with urgent needs
• stimulate production
• put money into circulation
• boost tax revenue as those withdrawals would be treated as income

In terms of retirement, a great many people are now experiencing a negative return on their IRA investments anyway, so that purpose is not being fulfilled (at the moment). My thought is that waiving the penalty would be a temporary measure.

Update: Yes - I know that the fund holders who might do this will not be able to participate in the recovery, when it happens. This is an idea for a quick shot in the arm for the economy while helping people access their own money, in time of need, without an additional 10% penalty.