You do not want this debit card in your wallet

[flashl]

Reserve Solutions is marketing a new kind of debit card - one that lets you stop at the ATM and withdraw money from your 401(k). The withdrawals are treated as loans against your retirement account, and you must repay the funds to the plan with interest. Of course, it's being marketed as a convenient way to access your money in a time of need.

But this is the most horrible idea ever. 401(k) funds are meant to be saved for retirement, not frittered away when you're a little low on cash. This card is a disaster waiting to happen... with consumers having immediate access to funds... possibly without thinking it all the way through.

Even though the funds withdrawn will initially be treated as a loan, that loan can quickly turn into a "distribution" if the employee defaults on the loan or leaves the employer (and therefore the plan). And taking a distribution from your 401(k) before you're retirement age can have dire tax consequences. In addition to regular income taxes that may be owed on the withdrawal, there are federal and state penalties that often apply. People typically end up losing about 50% of their money to the taxes and penalties.

If you need money and you have a 401(k), the first step is to stop contributing to that plan and use the money that would have gone into the plan for your current needs. The next step is to find cash anywhere but the retirement plan. Withdrawing from the 401(k) should be an absolute last resort, and should only be done in the direst of circumstances.

Wallet Pop

[rpannier]

1. Thanks for sharing

[ursi]

2. now that people can't use their houses as ATMs & can't easily file bankruptcy on credit card debt

the bank hacks bring us this!! Outrageous!

[CC]

3. Have to keep the American consumer

shopping. When your economy is based on consumption that is the only way to keep it a float. Very bad idea in the short run and the long run.

[f the letter]

4. that is a pretty bad idea. n/t

[AnnieBW]

5. The Bad Idea Bears

Just LOVE that one!

Gee, let's tie an ATM card to your retirement fund! That way, you can spend all you want now, and have nothing for when you get old!

[Warpy]

6. When you've got a kid with a hot appendix

and the nice pruneface at the admissions desk won't let you through the door unless s/he can see the money, you're going to go to that ATM and rape your 401K.

That is, if you even have one. If you don't, you're going to find yourself with a huge lien against your home, and/or garnished wages to pay for it.

The hospital will get paid. They don't care that you're working two shit jobs due to offshoring that barely cover your bills. They will get paid if you want your kid to live.

[sabbat hunter]

7. with a hot appendix

you would go to the ER and I believe that ERs by law cannot turn anyone away. How you pay for it is a different story, but at least the kid would get the surgery.

We need universal health care so people dont go bankrupt because their kid needed emergency surgery.

[Warpy]

9. I'm just giving you an indication of why someone would raid

their future in order to preserve what they have in the present, like a kid who's alive instead of dead and a house without a huge lien against it.

[phantom power]

8. Are they fucking kidding?

:banghead: