Covid’s under-reported impact on 401ks has been a ten-fold increase in demand for 401k loans and 401k hardships. A sizable portion of 401k savings has been prematurely withdrawn from plans across the country to meet savers’ short-term emergency needs. The impact from massive numbers of premature withdrawals has not been compiled yet. Still, as a broad-based provider of 401k plans to small businesses, we can make a reasonable assessment. From our vantage point, we see a 1000% increase in emergency 401k withdrawal and loan requests. Without question, there will be a permanent adverse effect on Americans’ financial future due to these premature withdrawals.
So how can the 40k industry help? One quick and meaningful thing the 401k sector can do to ease the damage on America’s 40k plans is to cut the fees they are currently skimming from workers’ retirement savings. Every industry sector should do what it can to help ease America’s suffering, and the 401k industry should be no exception. Today, greedy 401k providers who skim fees are economically benefited by the stock market’s growth as they skim a percentage of each worker’s assets. Cutting excessive 401k fees would be the honorable and patriotic thing to do. We call upon companies that provide 401k plans and simultaneously pocket 401k fees to give hard-working Americans a break during this unprecedented national emergency by cutting their skim.