401(k)s tapped to save homes

[babylonsister]

401(k)s tapped to save homes
But withdrawals trigger penalties

By Christine Dugas
USA TODAY


Struggling to save their homes from foreclosure, more Americans are raiding their 401(k) retirement accounts to pay their bills — and getting slammed with taxes and penalties in the process, according to retirement plan administrators.

Rather than borrow money from their 401(k) accounts, which would have to be paid back, a growing number of beleaguered families have been cashing out, plan administrators say.

This is happening even as borrowing from 401(k) accounts remains fairly flat. Fewer still are borrowing from 401(k) plans to buy homes. By contrast, new figures from plan administrators show the number of 401(k) "hardship withdrawals" is up in early 2008 compared with the same period last year.

The main reason? The need to stave off foreclosure or eviction.

Consider Tamara Campbell, who raided her 401(k) after her husband was laid off from his job as an occupational technician, and they fell behind on their mortgage for several months. "If I hadn't done that, we would have been foreclosed on last year," says Campbell, who lives in a Denver suburb.

more...

http://www.usatoday.com/printedition/news/20080311/1a_lede11_dom.art.htm

[PA Democrat]

1. I think that many people will be working the rest of their lives. Retirement is a luxury few will

be able to enjoy. Sad, isn't it?

[bullimiami]

2. 7 years of the republican 'dream' has destroyed the quality of life for 10s of millions of families.

thank you george w bush and his enablers.

[HughBeaumont]

3. Including the delusional clowns who voted against their best interests . . .

. . . that made all of this happen.

[leftofcool]

4. We have to wait an extra 5 years or so for retirement

I am fortunate to have teachers' retirement but with medical costs, we have to wait now for hubby to retire or have him go ahead and retire and then both of us take part time jobs just to cover the medical insurance which is with a pre-existing cancer condition is now 1600.00 per month...100.00 more than my retirement.

[babylonsister]

6. Wow. $1,600 a month, for two?

That stinks. All the years you worked for retirement, only to spend it on that? That's not the way it's supposed to be. I'm sorry. :hug:

[Liberal In Texas]

5. I gotta tell you, if I had to I would do the same thing.

Besides, since the first of the year, my 401K has lost 10% of it's value. Even with penalties and taxes, it might actually be a good idea to use it rather than lose it.

[Bentcorner]

7. If only these people had not been forced to buys homes they could not afford

I don't feel sorry for any of them.