The everyday 401 (okay) saver withdrew $ 12,000 through the coronavirus: Vanguard
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Retirement savers appear to benefit from relaxed rules on 401 (k) withdrawals during the coronavirus pandemic.
The typical 401 (k) investor has debited $ 12,000 in a “coronavirus-related distribution” from their account, according to a new Vanguard analysis of their customer data.
This number represents the median of the payout – in other words, the amount exactly in the middle of all the payout amounts.
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Coronavirus-related payouts are a new type of old-age pension enacted in March by CARES federal law to help people in need of money during the economic downturn.
About 4.5% of Vanguard 401 (k) investors performed coronavirus distribution between March and September, indicating that few participants used the agent, the Vanguard analysis said.
However, that equates to nearly 187,000 investors, according to a CNBC analysis of Vanguard data released this summer that found that coronavirus distribution was available to approximately 4.2 million 401 (k) customers.
It’s also more than double the payout rate through late May, when less than 2% of Vanguard 401 (k) investors used the payout mechanism, according to company data.
This suggests that more people turned to this safety valve of the CARES Act as the recession dragged on and other statutory temporary financial relief measures such as one-time economic reviews and improved unemployment benefits ended.
The CARES Act allowed investors to withdraw up to $ 100,000 from 401 (k) plans, individual retirement accounts, and other account types in the form of coronavirus-related distribution through December 30th. Investors will not have to pay a tax penalty when withdrawing pension funds early and will have flexibility in paying income taxes.
The typical amount withdrawn has increased slightly from around $ 10,400 to $ 12,000 since May.
In May, the typical investor withdrew more than half of their 401 (k) savings in the form of a coronavirus distribution, according to previous Vanguard analysis.