Inflation Causing Uptick in 401k Hardship Withdrawals - AMAC & FoxBusiness
The negative effects of the inflation of the past two years have been well documented, but it goes beyond Americans complaining about higher food costs and trouble paying rent. In this piece, Megan Henney cites new data from Bank of America showing emergency withdrawals from 401k retirement plans in first quarter of 2023 are up 36% from the second quarter of 2022, with nearly 16,000 workers taking money out. Income tax is due on the withdrawals, and those under 59½ face a 10% early withdrawal fee, though medical expenses are usually granted an exception. But a key point is this: “Someone who takes a hardship withdrawal also cannot pay it back to his 401(k) and cannot roll that money into another retirement savings account.” This is setting many Americans up for real financial struggles in retirement, especially with Social Security’s looming insolvency in just a decade. Full article here.