I thought the trend was towards more company involvement in employees 401K’s, i.e., offering professional portfolio management or, in certain cases, rebalancing funds for the employee.
I agree that this is a bad idea. Responsible companies should not endorse this.

My checking account reads -$91.91 and I see over 25K in my 401K….I know it is important to save, I give 20% each week, but the end result is I need to buy bread and milk. It is my money and I want to have access to it if I need it. What about in the case of an emergency??? Its takes at least 10 days to get a check and I know most emergencies are not going to wait 10 days. I know some are going to say I should have other options besides my 401K but you have understand not everyone has the ability to have many options, I am lucky to have money enough to save at all let alone have alternative options.

What a horrible idea (IMHO)! I don’t have a ton saved up for emergencies, but what constitutes an emergency? I think having immediate access to your 401K is a bad idea since you may not look at all the penalties in the split second it take whip out that debit card. If you have to wait a few days and sign a waiver that you udnerstand all the repercusions, you might see a different way out of that emergency.

From the post above:

[Bruce Bent] claims that too many employees avoid contributing to a 401k because they fear that they won’t be able to get at the money.

Perhaps I’m mistaken on the purpose of the 401k, but I contribute to my plan because I can’t get at the money anytime in the next 35 years. This is a long term investment, not an ATM.

To”broke” ,I wish I had a 401k with over 25 G’s-Hold on to it!If you need money,go collect beer cans for scrap.Do a rummage or garage sale,rip off copper pipes from vacant houses.Like Bob Dylan said”take your diamond ring,and pawned it,babe!”,but hold on to that 401k.

Well put, “Employees must wash hands”. A 401k should strictly be held for the long haul, that is its intended purpose, isn’t it? It should be treated almost as if it does not exist, until of course when you are at the point of retirement. If you continue reaching into the piggy bank (401K) every time your checking account is running low, the penalties, interest and other associated costs of doing so, will end up eating your funds; leaving you very little for the future. So, “Broke”, consider alternatives such as a part-time job or carefully budgeting your money. Otherwise, your strategy of using your 401k as “emergency funds” could very well leave you worse off. In summary, yes, I strongly disagree with the notion of using a debit card to easily access funds from what could be your financial savior down the road.

No denying that a 401K is for saving until retirement…..That said there could be many reasons a person would rather tap into that account rather than go without. No need to go into detail or offer examples, I am sure we can all think of some.

An emergency is defined by each person…If my brother needed life saving surgery I would help him in a minute at what ever cost to me. If the bank was going to take my home I would use that 401K money….The point is there is no point defining what an emergency is to each person…we have our reasons.

As for “because I can’t get at the money anytime in the next 35 years” not all of us have 35 years left. And, to add to that, a 401K is meant to be long term but there is no rule denying you access to YOUR money in the event you need it, the problem here is the ability and the speed at which you’re able to receive the money back. In the end it is OUR money and like freedom of speech, each of us should have the right to define how we use that freedom. It is not the place of my employer to hinder my ability to use my money in any manner I choose. I am not going to sit back and say everyone will use this ability the correct way but to reduce my options based on the possible misuse of the ability seems like someone is stepping on my rights. It is not and should not be the right of any governing body, whether it’s our city or our employer, to make decision about me based on the limited few who misuse freedoms.

Just playing devil’s advocate….

The whole point of a 401K is LONG TERM savings - for retirement. Giving the instant gratification generation easy access to their 401K is one of the worst ideas I have ever heard. There are huge tax consequences to early withdrawal from retirement accounts, which can perpetuate a person’s financial troubles. I completely understand the problems we are all having buying bread, milk and gas - and trying to save for an emergency. It’s almost impossible for those of us with kids.

This sounds like the worst idea ever. In a country where retirement and social security are a very large problem I cannot fathom how anyone would promote this. Right when it seemed like people were finally realizing that if they ever want to retire they need to contribute to a 401K, someone comes out with a great way to spend all those savings too.
I am 28 years old and am eligible for social security payments THE EXACT YEAR it is scheduled to be out of money (according to estimates). Fact is I am paying a portion of every single pay check to a system I will never even see any return on. How depressing is that? I consider the money I contribute to my 401k as untouchable. Apparently that is the only thing I will have to fall back on if I ever make it past 62.

If you need to raid your 401k to get stuff for the kids,than don’t have them in the first place.Get your self a cat or a dog.They will showed you way more love and compassion than any little bratty kid would ever do,and their up keep is a lot cheaper to.