,401(k) Loans = Retirement Insecurity

401(k) Loans = Retirement Insecurity


 

Publication Date: April 2008

Publisher: National Center for Policy Analysis (U.S.)

Author(s): Pamela Villarreal; Robert Reeves

Research Area: Economics; Labor

Keywords: retirement; 401k retirement

Type: Brief

Abstract:

The popularity of 401(k) plans has grown in recent years. According to the Employee Benefits Research Institute, almost two-thirds of employers offer such plans and millions of employees now contribute to them. These defined contribution plans allow workers to set aside part of their earnings in tax-deferred retirement accounts that are invested in stock and bond funds. A worker can begin to withdraw funds from the account without penalty at age 59 and one-half. All contributions, as well as accumulated dividends and interest, are subject to income tax when the funds are withdrawn.