Monday, June 4, 2012
ON BORROWING FROM RETIREMENT PLANS
3:06 PM | 
Posted by
pensionfinancialservices |
For some workers,
the option to borrow from their company retirement plan is another reason for
participating in the first place, but what (if any) limits on the number
of loans makes sense for employers?
A recent
New York Times blog by Ann Carrns cited 2010 data research from a Vanguard
study of roughly a quarter million participants
“in seven large, defined-contributions retirement plans” that addressed
the question for employers about possibly limiting the number of loans that its
employees can take from their 401(k) accounts.
The average
amount borrowed was about $5,000, and “we definitely saw that that the more
loans a person was permitted to take, the more money [he or she] would take,”
said a Vanguard senior research analyst.
The experts
at Pension Parameters Financial Services, Inc. can sort it all out for you from
the perspectives of both employers and employee. For the former, as the article
point out, the impact of withdrawals on “lower balance earning investment
returns” is among the issues.
For the
latter, for whatever reasons (including hardship withdrawals and the
documentation and restrictions they entail) loans are taken, and in whatever
amounts, it’s important to remember that the 401(k) funds were first and
foremost intended to grow and be there later for retirement, not now. Borrowing
from it early, it’s been said, is a “last resort”—but its ramifications on a
company and individual level—for the present as well as future planning--are
something that Pension Parameter Financial experts are available to discuss with you.
You can contact us at: Pension Parameters Financial Services, Inc.,
New York Office: Phone: (212) 675-9360 Fax: (212) 675-9363
New Jersey Office: Phone: (732) 583 -1313 Fax: (732) 583-6991
You can contact us at: Pension Parameters Financial Services, Inc.,
New York Office: Phone: (212) 675-9360 Fax: (212) 675-9363
New Jersey Office: Phone: (732) 583 -1313 Fax: (732) 583-6991
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