Vanguard Reports Increase in 401(k) Hardship Withdrawals
1 report, 1 independent
Updated Jun 19
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What happened
According to information from Vanguard, 6% of 401(k) participants took a hardship withdrawal in 2025, which is an increase from 5% in 2024. Early 401(k) withdrawals have recently reached a record high. The SECURE 2.0 Act allows for a penalty-free withdrawal of $1,000 for emergencies.
From aol.com
Why it matters
The rise in withdrawals is driven partly by the ability to take penalty-free emergency funds under the SECURE 2.0 Act. However, taking money out early often incurs a 10% penalty and increases annual income, which can change tax brackets. The primary financial drawback is the loss of compound interest.
From aol.com
Who's involved
- VanguardProvided the financial statistics regarding 401(k) withdrawals
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The entities involved
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Vanguard
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