One under-reported consequence of the COVID is its impact on American workers’ 401k retirement plans. There will be a permanent adverse effect on Americans’ financial future due to these premature withdrawals in the form of 401k loans and 401k hardships. COVID’s under-reported impact on 401ks has been a ten-fold increase in demand for loans and hardships. A sizable portion of workers’ 401k savings has been prematurely withdrawn from plans across the country to meet their short-term emergency needs.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 401k withdrawal and loan requests.
How can the 40k provider sector help? One quick and powerful thing the 401k 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 401k 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. 401k 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.