It appears especially the middle aged, you know those ones who desperately need a job and are denied, are raiding their 401ks. From Fidelity Investments Q2 2010 statistics on 401k, retirement accounts:

the percentage of participants either initiating a loan or a hardship withdrawal increased. Loans initiated over the past 12 months grew to 11% of total active participants from about 9% one year prior. The portion of participants with loans outstanding also increased two full percentage points in the second quarter to 22%. The average initial loan amount as of the end of the second quarter was $8,650 with an average loan duration of three and half years.

Frankly I thought this number would be much higher, for we have horrific stories of people posting online their suicide notes. Maybe it is because those who are going homeless already blew past any retirement savings. Regardless, a sign of the times and this is only people who have retirement savings to tap into.

While the majority of 401(k) participants continued to save during the quarter, the percentage of participants either initiating a loan or a hardship withdrawal increased. Loans initiated over the past 12 months grew to 11% of total active participants from about 9% one year prior. The portion of participants with loans outstanding also increased two full percentage points in the second quarter to 22%. The average initial loan amount as of the end of the second quarter was $8,650 with an average loan duration of three and half years.

During the second quarter of this year, 62,000 participants initiated a hardship withdrawal, as compared to 45,000 participants who initiated one during the prior quarter. As of the second quarter, 2.2% of Fidelity’s active participants took a hardship withdrawal, up from 2.0% one year prior. Additionally, 45% of participants who took hardship withdrawals one year prior also took a hardship withdrawal in the 12 month period ending in the second quarter of this year. Plan sponsors report that the top reasons why participants are taking hardship withdrawals are to prevent foreclosure or eviction, pay for college, and the purchase of a primary residence.

Fidelity has found that the average age of those taking a loan or hardship withdrawal is between 35 and 55 years old – a worker’s peak earning years – when individuals often have to deal with multiple, competing, financial challenges. Distributions from a 401(k) or 403(b) are taxed as ordinary income, plus if you are under age 59½ you may be subject to a 10% early withdrawal penalty.

According to Fidelity, there is some good news too, while contributions are flat, 401k values are up 15% in comparison to a year ago. Of course putting retirement on the stock market roulette wheel, these numbers will assuredly change.

The average 401(k) account balance as of the end of the second quarter was $61,800, up 15% from the same time last year, but down from the end of the first quarter of 2010. The average deferral rate, which refers to the percentage of a participant’s salary saved, held steady during the quarter at about 8% with one-in-three (32%) participants deferring at 10% or higher. Similar to the first quarter, more participants increased their deferrals (5.3%) than decreased (2.9%) in the second quarter.