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StrangeBrew 
LSU Fan
Salvation Army-Thanks Obama
Member since May 2009
11482 posts
| 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 1:49 pm)
The only one benefiting is the plan administrator. More a case for means testing, which will again reward negative behavior.
quote:
More than one in four American workers with 401(k) and other retirement savings accounts use them to pay current expenses, new data show. The withdrawals, cash-outs and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already shaky retirement security for millions of Americans.
quote:
“Encouraging or enabling people to spend down retirement money in anything other than the most severe circumstances is a terrible mistake,” said David C. John, a senior fellow at the Heritage Foundation who studies retirement policy.
401k Breach
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GoCrazyAuburn 
Auburn Fan
Member since Feb 2010
9063 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 2:12 pm to StrangeBrew)
Not shocked at all. Clients call in all the time wanting to do this with their accounts (not just 401(k)'s). It is a terrible trend.
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weaglebeagle
Auburn Fan
Alabama
Member since Jan 2011
1097 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 2:58 pm to GoCrazyAuburn)
I'm not shocked either. A family member had a "mid life crisis" of sorts and drained their 401k. They haven't contributed a dime since and are 50 years old right now. 
I don't even consider my 401k as an option for anything unless it became the most severe of situations. Even then I'd think twice.
Plus a lot of the people I work with are paying back their 401ks right now. They think it's just a glorified savings account they can dip in to when they feel like it. There is a major lack of financial education in this country.
This post was edited on 1/15 at 3:00 pm
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Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
49352 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 3:02 pm to GoCrazyAuburn)
Tex
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GoCrazyAuburn
Auburn Fan
Member since Feb 2010
9063 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 3:08 pm to Broke)
Huh?
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foshizzle
LSU Fan
Member since Mar 2008
25080 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 3:28 pm to StrangeBrew)
Seems to me to be an income problem that just happens to lead to a retirement problem.
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GoCrazyAuburn
Auburn Fan
Member since Feb 2010
9063 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 3:30 pm to foshizzle)
Or just a spending problem.
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Vols&Shaft83 
Tennessee Fan
Member since Dec 2012
3110 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 3:32 pm to StrangeBrew)
My mother did it, got killed. I wish she had to come to me first, I'd have given her the money if things were that bad.
But my mother is a financial retard, she was gonna a Pay Day loan to make sure she had enough money for Christmas, thank god I was there and had cash on hand.
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KG6
LSU Fan
Member since Aug 2009
615 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 3:35 pm to weaglebeagle)
quote:
I don't even consider my 401k as an option for anything unless it became the most severe of situations
This. And even in that situation, I would probably just reduce the contribution amount to help pay things off. I guess the only way I would ever spend money out of it is if somehow my wife and I both lost our jobs for 6+ months.
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Sigma
Auburn Fan
Member since Dec 2005
990 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 4:19 pm to KG6)
quote:
I guess the only way I would ever spend money out of it is if somehow my wife and I both lost our jobs for 6+ months.
And even then I would work at McDonalds or bag groceries before I would cash in the 401k.
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jmtigers 
Southern Miss Fan
1826.71 miles from USC
Member since Sep 2003
3210 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 4:33 pm to Sigma)
quote:
And even then I would work at McDonalds or bag groceries before I would cash in the 401k.
This.
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GoCrazyAuburn
Auburn Fan
Member since Feb 2010
9063 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 4:35 pm to Sigma)
Man, why can't some of my clients be more like you guys 
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buddhavista
Member since Jul 2012
3543 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 5:10 pm to jmtigers)
quote:
And even then I would work at McDonalds or bag groceries before I would cash in the 401k.
This.
pretty much this, although if I can't find a job in 6 months the economy is in really terrible shape. Unemployment in my industry is sub 5%, probably closer to 3%.
And honestly if you are only using your 401k for savings, you are going have a bad time.
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foshizzle
LSU Fan
Member since Mar 2008
25080 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 5:40 pm to buddhavista)
I'll also note that probably most people in this situation don't have nearly enough saved to start with even if they didn't raid the account.
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StrangeBrew
LSU Fan
Salvation Army-Thanks Obama
Member since May 2009
11482 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 7:21 pm to foshizzle)
Being chronically unemployed would ultimately lead me to withdraw, but it would only happen after I instituted an austerity program like no other.
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jso0003
Auburn Fan
Birmingham/Atlanta
Member since Jun 2009
4456 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 7:31 pm to GoCrazyAuburn)
quote:
Man, why can't some of my clients be more like you guys
Well if they all spent their free time researching ways to obsessively save money and plan their personal financial futures they probably wouldn't need you! 
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Cold Pizza 
Ohio State Fan
Member since Sep 2011
7639 posts
| re: 1 in 4 401k's being raided for use on current expenses-WAPO article (Posted on 1/15/13 at 10:16 pm to StrangeBrew)
It's a stupid rule allowing you to borrow 401k money from your account without penalty. I was told one time the rule is there to encourage lower-income people to use 401k's. I don't believe it.
It's there for the benefit of plan administrators.
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