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Warn employees of the dangers of dipping into 401(k) funds

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in Compensation and Benefits,Employee Benefits Program,Firing,HR Management,Human Resources

As the economic meltdown worsens, employees facing personal budget crises may go looking for their own financial bailouts—by tapping into 401(k) savings. They may turn to HR pros like you to learn how to take hardship withdrawals of 401(k) funds or borrow against their investments.

There are good reasons to steer them away from treating their retirement nest eggs as rainy-day funds.

With personal savings rates near an all-time low, many Americans believe their 401(k)s are all they have to fall back on. “Because the credit crisis has made borrowing from financial institutions more difficult, we’re seeing more employees turn to their 401(k)s to get the money they need to help them get by,” says Pamela Hess, director of retirement research for the HR consulting firm Hewitt Associates.

But 401(k) funds continue to take huge hits as the stock market tanks. Analyses of 401(k) performance by three of the biggest investment firm...(register to read more)

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