News and Commentary

UPDATED Plugging the Leak on 401(k) Plan Early Withdrawals by Sean Deviney, CFP®

American businesses appear to be doing a good job of helping their workers prepare for an eventual retirement by establishing and encouraging employees to contribute to 401(k) retirement savings plans. However, U.S. workers often view their growing retirement account balances as a convenient till they can tap into to pay for everyday expenses before they reach retirement age. When workers take early withdrawals or loans from 401(k)s, they put their accounts at risk of leakage, for which a lack of savings, tax penalties and missed years of investment appreciation may delay or derail their retirement plans and leave them without sufficient funds to pay for their golden years. These withdrawals and loans may also expose employers who sponsor defined contribution (DC) retirement plans with increased costs in the form of delayed retirements resulting in higher health insurance and workers compensation insurance premiums. To help avoid these scenarios, there are several strategies that employers should consider to more clearly educate workers about the financial implications of borrowing money from their 401(k) accounts.


About the Author: Sean Deviney is a CFP®* professional and a retirement plan advisor and director with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors and Accountants, and a registered representative with Raymond James Financial Services. For more information, call (954) 712-8888 or email

Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Sean Deviney is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC. Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants.

PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.

 This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of PWA and not necessarily those of Raymond James. You should discuss any tax or legal matters with the appropriate professional. The information contained in this report has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

 401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 ½, may be subject to a 10% federal tax penalty. Investments mentioned may not be suitable for all investors. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

 * Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

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Updated on January 31, 2022