Bank of America released its Q2 2023 Participant Pulse, which found average 401(k) balances increased by $7,250 (9.6 percent) since the end of 2022. The report also found that a growing number of 401(k) participants are initiating withdrawals from their plans.
The number of participants taking hardship distributions increased 36 percent year-over-year, following increases in Q1 2023. In addition, the percentage of participants borrowing from their workplace plan in Q2 also increased (2.5 percent, up from 1.9 percent in Q1).
“The data from our report tells two stories – one of balance growth, optimism from younger employees and maintaining contributions, contrasted with a trend of increased plan withdrawals,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions at Bank of America. “This year, more employees are understandably prioritizing short-term expenses over long-term savings. However, it’s critical that employees continue to invest in life’s biggest expense – retirement.” Read the report.