Covid impact on 401(k)

One under-reported consequence of the COVID is its impact on American workers’ 401(k) retirement plans. There will be a permanent adverse effect on Americans’ financial future due to these premature withdrawals in the form of 401(k) loans and 401(k) hardships. COVID’s under-reported impact on 401(k)s has been a ten-fold increase in demand for loans and hardships. A sizable portion of workers’ 401(k) savings has been prematurely withdrawn from plans across the country to meet their short-term emergency needs. From our vantage point, we see a 1000% increase in emergency 401(k) withdrawal and loan requests.

How can the 40k provider sector help? One quick and powerful thing the 401(k) industry can do to ease the damage on America’s 40k plans is to cut the fees they are currently skimming from workers’ retirement savings. Today, greedy 401(k) providers who skim excessive asset-based fees are economically benefiting as they skim a percentage of each worker’s assets on an ongoing basis. Cutting their excessive asset-based fees would be the patriotic thing to do. 401(k) providers should be giving struggling, hard-working Americans a break during this unprecedented national emergency. We propose they cut their fees and let employees keep more of their retirement savings.