Since the start of the COVID-19 pandemic in early 2020, countless individuals have seen a major impact on their financial stability as a result. One of the areas of finance that was heavily impacted for many people is their 401(k) accounts. Both employers and employees have seen an impact from the pandemic, especially as businesses around the country continue to recover from the impacts felt by the pandemic. There are a number of ways that your 401(k) may have been impacted that are important to be aware of. 

Reduced Or Paused Matching Contributions
For many businesses, particularly smaller businesses, the impact of the COVID-19 pandemic forced them to make difficult financial decisions. For some, this included pausing matching contributions to savings accounts like a 401(k). While a number of businesses have maintained their matching contributions, about one in ten businesses have had to reduce or fully pause them to maintain financial stability. Fortunately, many of these same businesses are anticipating a return to normal contributions once they have recovered from any losses suffered during the pandemic. 

Temporary Increased Access To Retirement Plans
One of the steps taken at the beginning of the pandemic was implementing the CARES Act, which focused on helping individuals heavily impacted. Given the financial hardships that many people experienced from the pandemic, the CARES Act temporarily allowed people to access their retirement savings for financial emergencies. While there is normally a 10% penalty for withdrawing funds from a retirement account, the CARES Act ensured that people would not have to pay the penalty when accessing the funds. Additionally, they will have up to three years to pay off any taxes from the money that was withdrawn from the account. This can help people get access to the money they need while the pandemic continues to impact the financial health of countless families around the country. 

It is important to remember that a retirement account should not be accessed unless it is a true financial emergency. Saving as much from the account as possible will keep your retirement portfolio at a healthy level and ensure that you can stay on track with your retirement plan.