Covid-19 on 401(k) impact part 2
Covid’s under-reported impact on 401(k)s has been a ten-fold increase in demand for 401(k) loans and 401(k) hardships. A sizable portion of 401(k) savings has been prematurely withdrawn from plans across the country to meet savers’ short-term emergency needs.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 401(k) plans to small businesses, we can make a reasonable assessment. From our vantage point, we see a 1000% increase in emergency 401(k) 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 401(k) sector can do to ease the damage on America’s 401(k) 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 401(k) industry should be no exception. Today, greedy 401(k) 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 401(k) fees would be the honorable and patriotic thing to do. We call upon companies that provide 401(k) plans and simultaneously pocket 401(k) fees to give hard-working Americans a break during this unprecedented national emergency by cutting their skim.