3 ms·

Compared to prior year same period, it's 28-33% jump for both Fidelity and Vanguard.

by pcurve 3y ago

lotsofpulp 3y ago
Percentage changes of a percent are not a very good signal. If a 33% increase in the percent of hardship withdrawals means the proportion of people doing hardship withdrawals went from 1.8% to 2.4% of people doing a hardship withdrawal, an increase of 0.6%, then I do not know if that is significant enough to be newsworthy. What is the volatility or standard deviation? Are these just normal fluctuations? I am just trying to figure out if this is clickbait or not. Frequently, sources of data will withhold data regarding the distribution to obfuscate the fact that there has not been a material change.
- pcurve 3y ago
  The trend has been going on for couple years. It's not a clickbait. Hardship withdrawal is up by 3x fold looking at 20 year chart. https://image.cnbcfm.com/api/v1/image/107162765-1670436208538-J6qLY-the-share-of-401-k-savers-who-withdraw-cash-for-a-hardship-is-at-an-all-time-high.png?v=1670436215 https://image.cnbcfm.com/api/v1/image/107162765-167043620853...
  - mywittyname 3y ago
    In 2019, new rules took effect which greatly expanded what constitutes a hardship withdrawal. So it's not really an apples-to-apples to look at data pre-2018. We would expect an uptick no matter what (which we see in 2019). So this is a matter of how much of this is attributed to economic conditions vs. people taking advantage of new laws.
    - lotsofpulp 3y ago
      Very good point. https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/irs-final-rule-eases-401k-hardship-withdrawals.aspx https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pa... Specifically: >Under the rules currently in place, plan administrators must take into account "all relevant facts and circumstances" to determine if a hardship withdrawal is necessary. The new rule requires only that a distribution not exceed what an employee needs and that employees certify that they lack enough cash to meet their financial needs. Plan administrators can rely on that certification unless they have knowledge to the contrary. Plans are required to apply this standard starting in 2020. It might still be interesting to track changes in hardship withdrawals, but I am not sure if it is for the reason people might assume without the knowledge that the rules greatly changed.
- deleted 3y ago
  [deleted]
mgkimsal 3y ago
I suspect the year before was a jump up from the prior year as well.

Compared to prior year same period, it's 28-33% jump for both Fidelity and Vanguard.

by pcurve 3y ago

Compared to prior year same period, it's 28-33% jump for both Fidelity and Vanguard.

Percentage changes of a percent are not a very good signal. If a 33% increase in the percent of hardship withdrawals means the proportion of people doing hardship withdrawals went from 1.8% to 2.4% of people doing a hardship withdrawal, an increase of 0.6%, then I do not know if that is significant enough to be newsworthy. What is the volatility or standard deviation? Are these just normal fluctuations? I am just trying to figure out if this is clickbait or not. Frequently, sources of data will withhold data regarding the distribution to obfuscate the fact that there has not been a material change.

pcurve 3y ago
The trend has been going on for couple years. It's not a clickbait. Hardship withdrawal is up by 3x fold looking at 20 year chart. https://image.cnbcfm.com/api/v1/image/107162765-1670436208538-J6qLY-the-share-of-401-k-savers-who-withdraw-cash-for-a-hardship-is-at-an-all-time-high.png?v=1670436215 https://image.cnbcfm.com/api/v1/image/107162765-167043620853...
- mywittyname 3y ago
  In 2019, new rules took effect which greatly expanded what constitutes a hardship withdrawal. So it's not really an apples-to-apples to look at data pre-2018. We would expect an uptick no matter what (which we see in 2019). So this is a matter of how much of this is attributed to economic conditions vs. people taking advantage of new laws.
  - lotsofpulp 3y ago
    Very good point. https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/irs-final-rule-eases-401k-hardship-withdrawals.aspx https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pa... Specifically: >Under the rules currently in place, plan administrators must take into account "all relevant facts and circumstances" to determine if a hardship withdrawal is necessary. The new rule requires only that a distribution not exceed what an employee needs and that employees certify that they lack enough cash to meet their financial needs. Plan administrators can rely on that certification unless they have knowledge to the contrary. Plans are required to apply this standard starting in 2020. It might still be interesting to track changes in hardship withdrawals, but I am not sure if it is for the reason people might assume without the knowledge that the rules greatly changed.
deleted 3y ago
[deleted]

mgkimsal 3y ago

I suspect the year before was a jump up from the prior year as well.