Savings & Pensions

Brief Analysis #615 - 401(k) Loans = Retirement Insecurity

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  All contributions, as well as accumulated dividends and interest, are subject to income tax when the funds are withdrawn.