These are hectic times, so we always look to what participants do in the 401(k) plans to see what the industry is up to. While salary deferrals in 401(k) plans have remained consistent, participants have increasingly been withdrawing their retirement savings through hardships or loans.
According to Fidelity Investments’ 2023 third quarter shows that 2.3% of workers took hardship withdrawal, up from 1.8% in the third quarter 2022.
In Q3, 2.8% of participants took a loan from their 401(k) plans, which is the same as Q2 and up from 2.4% in Q3 2022.
The percentage of participants with a loan outstanding has increased slightly to 17.6%, up from 17.2% last quarter and 16.8% in Q3 2022.
Similarly, in-service withdrawals—where an individual may choose an in-service withdrawal rather than a loan if they prefer to assume taxes and penalties and not have to repay the amount they withdraw—inched up in Q3, rising to 3.2% of participants, up from 2.7% from a year ago.
