401k Withdrawals Mostly to Prevent Foreclosures
For 401(k) plans that allow hardship withdrawals, 98% of those made in 2009 were used to prevent eviction or home foreclosure, according to a new survey.
The Profit Sharing 401k Council of America surveyed plans at 931 companies with 8.6 million participants and found that nearly 100% of hardship distributions were tied to efforts to save a home. Coming in close second at 97.2% was paying for medical expenses followed by post-secondary education costs (93.5%).
In 90.2% of the plans surveyed, 401(k) loans were permitted. An average of 23.1% of participants had loans outstanding with an average loan amount of $8,760. Nearly 52% of the plans only allowed one loan at a time.
Employee participation remains high in 401(k) plans, the data showed. On average, 87.3% of eligible employees have a balance in the plan. Participants who retired in 2009 participated in the plan for an average of 15.3 years. Nearly 23% of plan participants were no longer actively employed by the plan-sponsoring company.