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YOU ARE CORRECT
C. – Fidelity reports that hardship withdrawals have spiked by 40%.
Why the spike? The Bipartisan Budget Act of 2018 makes it easier for participants to take a hardship withdrawal (e.g., by removing the requirement to exhaust plan loan options first). That’s why Fidelity recently reported that, among plans that have implemented the new changes, hardship withdrawals have increased by 40% since the beginning of 2019. From a plan leakage perspective, hardship withdrawals are worse than loans, because the leakage is permanent.
If you’re concerned about leakage from 401(k) loan defaults and hardship withdrawals, talk to us at Custodia Financial. We’ll help you analyze your plan and suggest solutions to combat this leakage, helping your participants retain the retirement assets they’ve worked so hard for.
INCORRECT – The correct answer is C. – Fidelity reports that hardship withdrawals have spiked by 40%.
Why the spike? The Bipartisan Budget Act of 2018 makes it easier for participants to take a hardship withdrawal (e.g., by removing the requirement to exhaust plan loan options first). That’s why Fidelity recently reported that, among plans that have implemented the new changes, hardship withdrawals have increased by 40% since the beginning of 2019. From a plan leakage perspective, hardship withdrawals are worse than loans, because the leakage is permanent.
If you’re concerned about leakage from 401(k) loan defaults and hardship withdrawals, talk to us at Custodia Financial. We’ll help you analyze your plan and suggest solutions to combat this leakage, helping your participants retain the retirement assets they’ve worked so hard for.
