PLANADVISER - July/August 2019 - 22
trendspotting
Hardship Withdrawals Climb 40%
The Bipartisan Budget Act is seen as the catalyst
NEARLY a year and a half after passage
of the Bipartisan Budget Act of 2018,
Fidelity has evidence of a significant
spike in hardship withdrawals.
" It makes sense that we would see
this trend, " says Kevin Barry, president
of workplace investing at Fidelity. " The
law changed the rules for 401(k) loans
and hardship withdrawals, making it
easier to draw the money directly as a
hardship without first getting involved
in the loan process. "
As provided in the budget act,
participants of 401(k) or similar taxqualified
retirement plans may take
a hardship distribution from their
account without first exhausting any
available loan from the plan.
Further, the act expanded the
types of contributions and earnings a
plan may make available for hardship
distributions. And it directed the IRS
and Treasury Department to eliminate
the safe harbor requirement barring
participants from contributing to their
plan for six months while the validity
of their request was judged-i.e., was
the distribution needed to satisfy an
immediate and heavy financial need?
" As a result of this change in incentives,
we've seen a clear shift, " Barry
" As a result of
this change in
incentives, we've
seen a clear
shift. Loans are
down 7%, so far,
and hardship
withdrawals are
up 40%. This is
a big issue. "
22 | planadviser.com July-August 2019
says. " Loans are down 7%, so far, and
hardship withdrawals are up 40%.
This is a big issue. "
While correlation does not equal
causation, it should be observed how
the trend of greater claiming of hardships
comes at a time when the U.S.
economy and job market are healthy.
And, in Barry's assessment, the drop in
the rate of participants taking loans is
TALKING POINTS
Worry Forecast
What advisers predict will be clients' 3 greatest worries for the
next 12 months, and what clients say those actually are:
in itself demonstrative.
He also notes that the change in the
law was created with good intentions,
relating to the hurricane disasters of
recent years and the need for millions
of Americans to access liquid funds.
" Moving forward, this is a topic we
are looking at closely, and we're already
talking to a lot of our clients about [it], "
he says. -John Manganaro
56%
Advisers
66%
Investors
Increased market
volatility
27%
Advisers
33%
Investors
The cost
of health care
26%
Advisers
31%
Investors
Taxes
26%
Advisers
27%
Investors
The safety of their
assets
26%
Advisers
23%
Investors
Inadequate savings
for retirement
24%
Advisers
16%
Investors
Inflation/Rising
interest rates
Source: Nationwide Advisory Solutions, " Advisor Authority Study, " conducted by The Harris Poll
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PLANADVISER - July/August 2019
Table of Contents for the Digital Edition of PLANADVISER - July/August 2019
An Array of Models
2019 Recordkeeper Services Survey
Advice for All
Pension Risk Transfer on the Rise
Investment Oversight Partners
Through the 'Window'
Now Who is a Fiduciary?
Venue Clauses
The SEC's Standard on IRA Rollovers
PLANADVISER - July/August 2019 - C1
PLANADVISER - July/August 2019 - FC1
PLANADVISER - July/August 2019 - FC2
PLANADVISER - July/August 2019 - C2
PLANADVISER - July/August 2019 - 1
PLANADVISER - July/August 2019 - 2
PLANADVISER - July/August 2019 - 3
PLANADVISER - July/August 2019 - 4
PLANADVISER - July/August 2019 - 5
PLANADVISER - July/August 2019 - 6
PLANADVISER - July/August 2019 - 7
PLANADVISER - July/August 2019 - 8
PLANADVISER - July/August 2019 - 9
PLANADVISER - July/August 2019 - 10
PLANADVISER - July/August 2019 - 11
PLANADVISER - July/August 2019 - 12
PLANADVISER - July/August 2019 - 13
PLANADVISER - July/August 2019 - 14
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PLANADVISER - July/August 2019 - 21
PLANADVISER - July/August 2019 - 22
PLANADVISER - July/August 2019 - 23
PLANADVISER - July/August 2019 - An Array of Models
PLANADVISER - July/August 2019 - 25
PLANADVISER - July/August 2019 - 26
PLANADVISER - July/August 2019 - 27
PLANADVISER - July/August 2019 - 2019 Recordkeeper Services Survey
PLANADVISER - July/August 2019 - 29
PLANADVISER - July/August 2019 - 30
PLANADVISER - July/August 2019 - 31
PLANADVISER - July/August 2019 - 32
PLANADVISER - July/August 2019 - 33
PLANADVISER - July/August 2019 - 34
PLANADVISER - July/August 2019 - 35
PLANADVISER - July/August 2019 - 36
PLANADVISER - July/August 2019 - 37
PLANADVISER - July/August 2019 - 38
PLANADVISER - July/August 2019 - 39
PLANADVISER - July/August 2019 - Advice for All
PLANADVISER - July/August 2019 - 41
PLANADVISER - July/August 2019 - 42
PLANADVISER - July/August 2019 - 43
PLANADVISER - July/August 2019 - Pension Risk Transfer on the Rise
PLANADVISER - July/August 2019 - 45
PLANADVISER - July/August 2019 - Investment Oversight Partners
PLANADVISER - July/August 2019 - 47
PLANADVISER - July/August 2019 - Through the 'Window'
PLANADVISER - July/August 2019 - 49
PLANADVISER - July/August 2019 - Now Who is a Fiduciary?
PLANADVISER - July/August 2019 - Venue Clauses
PLANADVISER - July/August 2019 - The SEC's Standard on IRA Rollovers
PLANADVISER - July/August 2019 - C3
PLANADVISER - July/August 2019 - C4
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