WASHINGTON—Legislation that would allow unemployed workers to withdraw money from their retirement accounts penalty-free has been introduced in the U.S. House of Representatives.

U.S. Rep. Randy Forbes, R-Va., joined 23 other representatives as co-sponsors of bill HR3612, also known as the Retirement Savings Act of 2009.

The bill would amend the code of the Internal Revenue Service, waiving the 10 percent penalty for withdrawing from a tax-exempt retirement plan before the beneficiary is 59 years old. The exemption would apply to individuals who have received federal or state unemployment compensation for 26 consecutive weeks.

According to Forbes’ office, he became a co-sponsor of the bill on Thursday at the request of International Paper Co. employees from the Franklin paper mill. The company announced Oct. 22 that it would close the mill by spring, affecting about 1,100 workers.

“The early withdrawal penalty is an IRS provision that encourages saving for retirement and planning for the future,” Forbes said in a written statement. “Unfortunately, there are many individuals in our communities that have saved diligently for years, yet are now facing unemployment as a result of situations beyond their control related to the economic downturn.”

He added, “At times of severe financial distress when cash is gone, accessing retirement money can be a necessary financial move. Penalty free withdrawals can help families avoid foreclosures on homes, maintain health care payments, and prevent long-term damage to their credit.”

HR3612 was introduced on Sept. 22 by Rep. Paul Broun Jr., R-Ga., and referred to the House Committee on Ways and Means. The bill is co-sponsored by 23 Republicans, including Forbes, and one Democrat.

“The federal government has been quick to bail out Wall Street and the auto industry,” Forbes said. “Yet, we have families in our own communities who are being impacted by major layoffs and plant closures. This legislation would help them access their own money during a time of great need, without a government penalty for doing so.”