More Americans Are Reportedly Taking Money Out of 401(k) Plans

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( – On August 8, The Bank of America released their Q2 2023 Participant Pulse report which showed that an increased number of Americans have been taking money out of their 401(k) plans.

In the press release that was released along with the report, it was noted that there was a 36 percent growth in the number of Americans who had made withdrawals from their 401(k) plans. According to Newsweek, the report comes at a time when many are worried about the state of the U.S. economy, especially following the announcement by the Federal Reserve that there would be a 0.25 percent increase bringing the interest rate up to 5.5 percent.

A CNN poll recently also showed that 51 percent of Americans believed that the U.S. economy was still in a downturn and that things were only expected to get worse over time.

Newsweek reported that in a recent tweet, the Biden administration said that under President Joe Biden, there were 13.4 million jobs added to the U.S. economy, and unemployment rates had dropped to under 4 percent.

Investopedia defines a 401(k) plan hardship withdrawal as a plan an action taken by those who are in need of “heavy financial” assistance promptly. It further adds that this is an authorized withdrawal and the IRS has the right to waive penalties for this.

According to Newsweek, a Bank of America spokesperson said that in order to qualify for this withdrawal, Americans needed to show particular reasons for hardship. As such, they indicated it is likely that the high costs of living and rising inflation rates have been at least part of reason for the increase in people making such withdrawals.

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