The financial fallout from the coronavirus is prompting record keepers to give plan participants a break on the fees they charge for hardship distributions and loans from their retirement accounts.
On Thursday, Empower Retirement said it will not charge origination fees on any new plan loans and will suspend charges for all hardship distributions. The fee waivers cover all tax-qualified workplace retirement plans that permit such distributions, including any hardships withdrawals and loans allowed under the recently enacted CARES Act.
The fee waivers will remain in place until further notice, according to the news release.
Empower follows Voya Financial, which announced similar fee breaks Wednesday. Voya said that it will credit back to its defined contribution plan participants hardship distribution and loan initiation fees as well as fees associated with coronavirus-related distributions through Sept. 30.
John Hancock Retirement also informed advisers that it will temporarily waive fees related to participant hardship withdrawals and suspend any fees for plan amendments made in response to the COVID-19 pandemic, according to CEO Patrick Murphy. The changes will be effective from April 3 through the end of the year, at which the fees will revert to standard fee charges, Mr. Murphy said in an email.
“With 6.6 million filing for unemployment last week, Americans may need to tap into their 401(k) account to cover necessary expenses for themselves and their loved ones,” said Will Hansen, chief government affairs officer at the American Retirement Association and executive director of the Plan Sponsor Council of America. “Any reduction or elimination in fees associated with accessing those funds is extremely generous.”
Ascensus and Vanguard did not immediately respond to queries about whether they planned to reduce or waive their fees.
Fidelity said the company has never charged for hardship withdrawals and will not charge fees for any hardship distributions under the CARES Act.