Congress created the 401(k) to help Americans secure their retirements by supplementing social security, a program that was never intended to serve as the sole vehicle for retirement income. While Congress amended the act to include borrowing from one’s 401(k), it doesn’t protect the borrower in all situations.
THE PROBLEM: When faced with overwhelming financial obligations, 30% of Americans take out loans against their own 401(k) retirement savings accounts. Studies show that borrowing against a 401(k) is typically the last resort of short‐term funding for families; as many borrowers have been previously turned down for other traditional forms of credit. Taking into account unforeseen circumstances, such as death and disability or job loss, $10 billion is lost annually from default on these loans.
THE ANSWER: 401(k) loan protection is a simple, affordable solution to safeguard retirement savings. It ensures the value of individual 401(k) plans will be 100% covered in the event of death, disability or involuntary job loss.
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