American Thinker Blog: Disturbing Trend -- and Worse to Come

American Thinker Blog: Disturbing Trend -- and Worse to Come: "As the economy continues to worsen under Obama's 'recovery' plan, more disturbing news emerges. A record number of workers made hardship withdrawals from their 401(k) retirement plans. In fact, 'the number of workers borrowing from their accounts reached a 10-year high' and reflects 'the financial stress many workers' are experiencing according to Beth McHugh, Fidelity's vice president of marketing insight.

The report was made by Fidelity Investments which administers 17,000 plans and represents 11 million participants. The number of people initiating the hardship distributions has risen from 45,000 in 2009 to 62,000 in 2010. Equally alarming is that '45 percent of participants who took a hardship withdrawal a year ago, took another one this year.'

These 401(k) withdrawals are a result of the increasing unemployment in the country as well as companies cutting back on 'overtime or overall hours' of their workers.

401(k) plans have 'a provision that allows withdrawal of money from the plan' if an individual 'can demonstrate ‘heavy and immediate financial need' and there is no other resource that an individual can use to meet the need.' Many employers allow hardship withdrawals only for the following reasons:


* To pay the medical expenses of the worker, his/her spouse, or dependents
* To pay costs related to the purchase of a principal residence
* To pay a maximum of 12 months worth of tuition and related educational expenses for post-secondary education for an individual, his/her spouse, or dependents
* To make payments to prevent eviction from or foreclosure on the principal residence


An employer will generally require that the employee submit a written request for a hardship withdrawal.