Protect My Retirement Benefits
A troubled economy has required many struggling workers to borrow from their 401(k) plans in order to meet emergency expenses. But borrowers need to be aware of the risks they may face when taking a 401(k) loan. Today, defaults from death, disability or job loss affect millions of Americans each year. The option to enroll in a 401(k) loan protection program would safeguard them against the dangers default can pose.
When faced with financial obligations, between 20 and 28 percent of Americans take out loans against their own 401(k) retirement savings accounts to pay off debts in an attempt to alleviate short-term financial stress. But borrowers are often unaware of the fact that a loan can be due in full within 60 days in the event of job loss due to factors such as death, disability or layoffs. This often results in involuntary default – a serious concern with real consequences that can put a lifetime of financial security at risk. These loan defaults disproportionately impact minorities and working poor with the peak demographic being those who earn between $30,000 and $89,000 annually.
401(k) loan protection is a smart, cost-effective and reliable solution to help borrowers prevent loan default. It’s essential for borrowers to fully understand the implications of borrowing and to have the option to protect the loan to avoid additional financial distress. Simply put, 401(k) loan protection should be made available to borrowers to secure their retirement savings and allow them to focus on resolving their day-to-day financial demands.
Custodia Financial, which offers protection dedicated to safeguarding America’s personal financial resources, launched this website and an advocacy program to raise awareness of 401(k) involuntary loan defaults. The campaign strives to educate the general public, media and Members of Congress about the growing problem of involuntary 401(k) loan defaults and the simple, sensible solution that exists to correct this growing problem.