Senate Bill Would Limit Using 401(k)s as Rainy-Day Funds

(Bloomberg) Workers will be limited in tapping their 401(k) retirement plans for loans under legislation two senators plan to introduce today that’s designed to counter the erosion of retirement assets.

“During these difficult economic times, we are increasingly seeing 401(k) funds being treated as rainy-day funds,” Senator Herb Kohl, a Wisconsin Democrat, said in a statement obtained by Bloomberg News. “A 401(k) savings account should not be used as a piggy bank for revolving loans.”

Kohl, 76, who’s chairman of the Senate Special Committee on Aging, plans to introduce the “SEAL 401(k) Savings Act” with Senator Mike Enzi, 67, a Wyoming Republican. The bill would reduce the number of loans workers may take from a 401(k) and give participants more time to repay after losing a job. It will allow savers to contribute to their plan after taking a hardship withdrawal and ban debit cards linked to the accounts, according to Joe Bonfiglio, a spokesman for Kohl’s aging committee.

.....(snip).....

Almost 28 percent of participants in 401(k)-type accounts had an outstanding loan at the end of 2010, which is a record, according to a study released today by benefits consultant Aon Hewitt, a unit of Chicago-based Aon Corp. (AON) The average outstanding loan balance was $7,860, said Aon Hewitt, which used a database of about 2 million employees in 110 plans. ............(more)

The complete piece is at: http://www.bloomberg.com/news/2011-05-18/senate-bill-would-limit-savers-using-401-k-s-as-rainy-day-funds.html

It's okay if *they* do it with our money, but it's not okay if *we* do. What a crock of slimy sludge.

People are using them as a last resort.

and raid your pension funds but you can't borrow your own money?
Is it fascism yet?

..this will have a chilling effect on 401(k) plans if it ever gets passed (i doubt it will though).

help the real economy. Wall Street needs a few more years to use our money and find ways to diminish for their own benefit before they let us have it back.