Lawmakers try to ban 401(k) debit cards
August 25, 2008 by Sam NarisiPosted in: In this week's e-newsletter, Latest News & Views, Payroll software, Security and law, Uncategorized
Most employers agree allowing employees to make easy withdrawals from 401(k) accounts is a bad idea. Soon, it might be illegal, too.
We wrote last week about a new service that allows employees to use a debit card to tap into money set aside by a loan from their 401(k) funds. Most employers oppose the idea on the grounds that it could encourage employees to make impulse purchases with money meant to be saved for retirement.
Looks like some members of Congress agree. Senators Charles Schumer (D-NY) and Herb Kohl (D-Wis) recently introduced a bill to ban the use of the debit cards.
Says Kohl: “These debit cards allow a participant to use his or her retirement savings to make everyday purchases like buying a cup of coffee. Clearly that’s not what the 401(k) is for.”
We’ll keep you posted.
Tags: 401k, debit card, Kohl, Schumer
August 26th, 2008 at 6:21 pm
I agree….but Congress better not touch it either and be sure also not to tax our 401K dollars that are currently in our accounts, as I heard Pelosi suggested. We will all have to start a “no, you don’t” campaign to our congressmen if that suggestion rears its ugly head.