COVID, inflation, and a possible recession, all good reasons why hardship distributions are up.
According to Fidelity, the percentage of 401(k) participants taking hardship withdrawals from their accounts rose to 2.4% in 2022, up from 1.9% in 2021.
Fidelity claims that it represents the highest share of hardship withdrawals they have ever recorded, which noted the share typically ranges from 2% to 2.3%.
Vanguard also recorded a rise in hardship withdrawals in 2022. About 2.8% of participants in its plans made hardship distributions in 2022, up from 2.1% in 2021.