Hardship withdrawals from 401(k) plans surged to 4.8% of participants in 2024, up from 3.6% in 2023, according to Vanguard Group Inc. data. The increase reflects growing financial pressure on American workers seeking immediate cash access.
Tax Penalties Make Early Access Costly
“It should really only be a last resort,” said Paul Brahim, certified financial planner and Financial Planning Association president, reported CNBC.
Traditional 401(k) withdrawals before age 59½ face income tax plus a 10% penalty unless qualifying for hardship exemptions. The compound interest …