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03/06/25 - 401k's Being Tapped for Emergencies

Thursday, March 6, 2025 at 5:22 PM

Almost five percent of Americans enrolled in a 401k style plan, made a hardship withdrawal in 2024. Image courtesy of Istock. 03/06/25.

More Americans are making 'hardship withdrawals.' But does this signal a major issue?

More Americans are withdrawing money from their retirement accounts. What does this signal?.

Vanguard released their latest survey, finding almost five percent of Americans with a 401k style retirement plans made hardship withdrawals in 2024. That was almost a two percent increase over the previous year. 

Often this signals people are struggling with dramatic bills or are at risk of some financial catastrophe. But researchers believe two factors are contributing to the increase. First, more Americans were automatically enrolled in 401k style plans, reducing how much they were taking home in the paycheck. Second, Congress loosened the restriction on what constituted a ‘hardship withdrawal,’ making it easier to take out money from those plans.

 

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