Employees dipping into their 401(k) plans to meet immediate financial needs is a problem that continues to go ignored by employers, says Financial Advisor Magazine.
So said the Consumer Financial Protection Bureau in a report this week. Writing about the report, Financial Advisor Magazine noted that 401(k) dipping was among the worst employee financial practices that many companies simply ignore. Doing so is both a disservice to the employee and an added cost to the employer, the bureau advised.
See also: Employees struggle with financial health
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Employees lose out in the long run because they're essentially depleting their retirement fund. And employers have to process the withdrawals, adding to the expense side of benefits administration.
When employees finally realize the fact that they're paying today's bills with dollars set aside for tomorrow, they suffer stress—which costs the employer in more sick days, presenteeism and other stress-related syndromes.
The bureau said there's plenty of research that offers proof that employers don't offer much in the way of financial counseling to their workforce, and chastised businesses for overlooking this obvious way to improve employee health and wellness. One suggestion from the bureau: Make the financial counseling entertaining so that more employees will be engaged in the sessions and retain the information.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
