Are You Missing Out on These 401(k) Gains?

A 401(k) plan is a great way to set yourself up for retirement since you can contribute pre-tax dollars. In recent months, though, the government has made it easier to withdraw money from 401(k) accounts for those facing financial problems due to the COVID-19 pandemic.

It's good that the federal government has tried to offer flexibility to those looking for ways to cope with financial hardships, but taking money out of a 401(k) often isn't the best way to deal with a short-term need. Exercising this option means missing out on potential gains that can help build financial security in your later years.

Most Americans haven't taken advantage of early withdrawal opportunities. In fact, according to recent research by Fidelity Investments, just 3% of workers with 401(k)s on Fidelity's platform took a CARES Act distribution. Unfortunately, Fidelity also found the average withdrawal by those that did so was $12,100, a hefty sum. Those who took out that money won't just see their final 401(k) balance fall by that amount, though; they'll miss all the profits they'd have earned from it over the years.

Source Fool.com