American Workers Borrowed From Retirement Savings Is Escalating

American workers borrowed from retirement savings is increasing rapidly from 1.9% to 2.5%, those workers got 401(k) loans from their workplace plan.

American workers borrowed from retirement savings are increasing [Photo: Yahoo Finance]

Understand Its Consequences

According to a new survey from Bank of America, those Americans experiencing hardship withdrawals from their 401(k) increased to 12% in the second quarter than to the first three months of the year. Those American workers borrowed from retirement savings are escalating. Professional experts are worried that American workers are started to treat these accounts as savings, not retirement accounts. American workers should think about it first before withdrawing their retirement savings early.

Professor Steve Parrish feared for American workers to go in and out of their retirement plans. Before thinking of withdrawing your 401(k) early, understand the consequences because it is not only the money that is gone but robbing your future self. Understand the consequences before withdrawing your 401(k) early because you need to pay some taxes and penalties. You will pay taxes as an ordinary income and a 10% early withdrawal penalty.

[REMEMBER] The loan you borrowed is from your retirement savings, you need to pay it back within five years. The payments and interest will go back into your account. But, once you leave your current job, you need to pay your loan in full within short order. Otherwise, if you do not pay you will be considered defaulted and owe a 10% penalty if you are under 59 and half of age.

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