Ann Carrns, in her New York Times article, discusses hardship withdrawals from workplace retirement accounts. Her article, “Hardship 401(k) Withdrawals, Explained”, begins as follows:
Hardship withdrawals from workplace retirement accounts are edging upward — another sign, along with rising credit card debt, that Americans have been feeling financial pain from inflation.
“Their budgets are stretched thin,” said Luis Fleites, the director of thought leadership at Empower Retirement, one of the largest retirement plan administrators.
Hardship withdrawals — which involve taking funds from a workplace retirement account early because of an urgent need — rose by 24 percent over the 12 months that ended on Sept. 30, according to an Empower report released in November. The findings are based on an analysis of 4.3 million accounts in corporate retirement plans that Empower administers, and a survey of about 2,500 Americans. (The pace of inflation has slowed recently but is still unusually brisk.)
Other big plan administrators reported increases in withdrawals as well. Vanguard, which administers accounts for about five million people, said nearly 0.5 percent of 401(k) participants took a new hardship distribution in October of this year, compared with 0.3 percent in October 2021.
To see the full article, click: “Hardship 401(k) Withdrawals, Explained”
Posted by Marin Larkin, Associate Editor, Wealth Strategies Journal.