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Employee Hardship Saps 401(k)s

Loans, hardship withdrawals are on the rise.

By staff Writer | Updated on September 02, 2010

More employees are borrowing from their 401(k) accounts or withdrawing funds outright, according to Fidelity Investments, which says the top reasons workers cite for drawing on their retirement accounts are avoiding foreclosure or eviction, paying college tuition or purchasing a home.

Of the 11 million participants in Fidelity 401(k) plans, 62,000, or 2.2%, took a hardship withdrawal in the second quarter, up from 45,000 in the first quarter. (Workers pay a 10% penalty on hardship withdrawals.)

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