Workers Risk 10% 401(k) Penalties as Hidden Fees and RMD Rules Cut Retirement Savings
Updated
Updated · FinanceBuzz · Jun 13
Workers Risk 10% 401(k) Penalties as Hidden Fees and RMD Rules Cut Retirement Savings
3 articles · Updated · FinanceBuzz · Jun 13
Summary
A 10% early-withdrawal penalty is among several common 401(k) pitfalls that can sharply reduce workers’ retirement balances, alongside overlooked fees, loan costs and missed distribution rules.
A 1% annual fee can snowball over a 30-year career into tens of thousands of dollars in lost returns because less money stays invested and compounding.
Age 73 now triggers required minimum distributions under Secure Act 2.0, rising to 75 in 2033, and missing them can bring penalties while complicating tax planning with Social Security or pension income.
In 2026, workers earning over $150,000 must make catch-up contributions as Roth deposits, while heavy employer-stock exposure should generally stay within Schwab’s 10% to 20% guideline.
One in eight retirees plans to return to work because they cannot afford retirement, underscoring that a 401(k) alone is often not enough.