While millions of people turned to their retirement accounts to make it through the Great Recession, a greater percentage of blacks and Hispanics did so, according to two recent studies from investment companies.
Blacks were 55 percent more likely and Hispanics were about a third more likely to borrow money from their retirement accounts than their white and Asian counterparts, a report issued last month by the investment company Vanguard said.
Although blacks and Hispanics were more likely to take out a loan, they borrowed about the same amount of money from their accounts as whites and Asians.
USA Today reported last month that nearly 9 percent of African-Americans took hardship withdrawals from their 401(k) plans in 2010, up from 6.3 percent in 2007. By comparison, 1.7 percent of white workers took a hardship withdrawal in 2010, versus 1.1 percent in 2007, citing a survey by Ariel Investments and Aon Hewitt, a financial-services and human-resources company.
Unlike loans, hardship withdrawals are subject to taxes and penalties but do not need to be repaid. Employees are eligible for a hardship withdrawal if they meet certain requirements, including if they become disabled or lose their income, according to the Internal Revenue Service.