Bank of America report reveals significant increase in Q3 hardship distributions
- Hardship distributions from retirement plans rose 13% in Q3
- 27% increase in hardship distributions since Q1
- Average hardship withdrawal in Q3 was $5,070
- Hardship distributions only represent 0.59% of participants
- Market and economic conditions may be a factor in hardship distributions
- Participants must generally be 59½ years old to withdraw penalty-free
- Number of participants borrowing from workplace plans increased by 1.9% in Q3
- Generation X has the highest percentage of loans outstanding
- Average financial wellness score decreased from 57 to 55
According to a new Bank of America report, hardship distributions from retirement plans have seen a significant rise. In the third quarter, there was a 13% increase compared to the second quarter, and a 27% increase since the first quarter. The average hardship withdrawal in Q3 was $5,070. However, it’s important to note that these distributions only represent 0.59% of participants. While the bank doesn’t ask for the reasons behind these distributions, market and economic conditions may be contributing factors. Participants must generally be 59½ years old to withdraw penalty-free from their retirement plans. Additionally, the number of participants borrowing from their workplace plans increased by 1.9% in Q3, with Generation X having the highest percentage of loans outstanding. Despite following best practices, the average financial wellness score decreased from 57 to 55, indicating some participants are not confident in their financial security. It’s crucial for individuals to make positive changes today to improve their financial situation.
Factuality Level: 7
Factuality Justification: The article provides information from a Bank of America report about the increase in hardship distributions and loans from retirement accounts. It includes quotes from a managing director at Bank of America and provides information about the rules for withdrawing from retirement plans. The article does not contain any obvious bias or personal perspective. However, it lacks some context and details about the current economic environment and the reasons behind the increase in hardship distributions.
Noise Level: 3
Noise Justification: The article provides information on the increase in hardship distributions and loans from retirement accounts, but it lacks in-depth analysis or exploration of the consequences of these actions. It also does not provide evidence or data to support its claims. The article stays on topic and does not dive into unrelated territories, but it lacks actionable insights or solutions for readers.
Financial Relevance: Yes
Financial Markets Impacted: No
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Rating Justification: The article discusses the impact of the current economic environment on retirement-plan participants, but there is no mention of any extreme events or financial market impacts.
Public Companies: Bank of America (BAC)
Key People: Lisa Margeson (Managing Director of Retirement Research and Insight at Bank of America)
Reported publicly:
www.marketwatch.com 
