Record Numbers of Americans Take Hardship Withdrawals from Their 401(k)s

In 2022, a record 2.8 percent of the 5 million people enrolled in 401(k) plans managed by Vanguard tapped their retirement savings for financial hardships. The figure is an increase from 2.1 percent in 2021 and the pre-pandemic average of about 2 percent, according to Fiona Greig, global head of investor research and policy at Vanguard.[0]

Similar trends were seen with other 401(k) plan administrators and the federal government’s Thrift Savings Plan, she said in a LinkedIn post.[1]

Fidelity Investments, the largest 401(k) plan administrator in the nation, found that 2.4 percent of plan participants, or roughly 716,000 workers, withdrew money from their retirement savings in 2022 to prevent hardships, a 26 percent increase from the prior year.

Cash-strapped Americans are turning to their 401(k) accounts for financial emergencies, such as medical bills, foreclosure, or eviction.[2] In 2020, Congress allowed those affected by the Covid-19 pandemic to pull as much as $100,000 from individual retirement accounts or 401(k)-type plans without the 10% early-withdrawal penalty that generally applies under age 59½.[3]

Since 2018, government changes have also meant that rules have been more lenient surrounding taking money from retirement accounts.[4] People who take money out for hardships are restricted to the amount they need and must pay income tax on withdrawals from traditional accounts, plus often a 10% penalty if they are younger than 59½ years.[5] The law also allows 401(k) plans to let participants borrow an amount that is generally up to half of their balance or $50,000, whichever is less.[5]

Rob Austin, director of research at Alight Solutions LLC, a 401(k) provider to about 200 large plans, said about half of 401(k) participants taking hardship withdrawals do so to avoid eviction or foreclosure, while another 15% used the plans to pay medical bills.[2]

According to financial services firm Fidelity, the share of 401(k) participants taking hardship withdrawals from their accounts rose to 2.4% last year, up from 1.9% in 2021.[6] This represents the highest share of hardship withdrawals recorded at Fidelity, which noted the share typically ranges from 2% to 2.3% annually.[6]

0. “Record Number of 401(k) Hardship Withdrawals Seen in 2022” ASPPA Net, 2 Feb. 2023,

1. “Hardship Withdrawals From Retirement Accounts Surge as Americans Battle Rising Prices” The Epoch Times, 3 Feb. 2023,

2. “Report: Record Number of Americans Dipping Into 401(k)s”, 2 Feb. 2023,

3. “More 401(k)s Do Double Duty as Emergency Funds” Newsmax, 2 Feb. 2023,

4. “Cash-strapped Americans squeezed by higher prices are tapping into their 401(k)” Daily Mail, 2 Feb. 2023,

5. “Short on Cash, More Americans Tap 401(k) Savings for Emergencies – WSJ” The Wall Street Journal, 2 Feb. 2023,

6. “401k hardship withdrawal rules: Record share of Americans are raiding their 401(k) plans” CBS News, 6 Feb. 2023,