The 401k withdrawal statistics for the 2nd quarter of 2010 are in. They are not totally unexpected, but compared to last year, they have increased significantly.

The number of Individuals who initiated hardship withdrawals from 401k accounts in the 2nd quarter of last year was moderately high at 45,000. However this year, that number has increased 38% to 62,000.

The reasoning for such a large increase in only 1 year, can be explained by the large amount of people who have become and continue to become unemployed. When people lose their jobs, they are forced to dig into their retirement funds such as their 401k plans, IRAs, Roth IRAs and anything else that was once in their nest eggs.

Because of these early withdrawals, 401k account holders must pay an additional 10% penalty for taking their money out prior to retirement. Only those 59 1/2 years old and older can take the money out penalty free. Not only is this destroying once promising retirement plans, but it’s also costing people the additional penalty.