401(k) hardship withdrawals rise

Here are three of the week's top pieces of financial insight, gathered from around the web:

Roth accounts gain in popularity

More employers are now offering access to a Roth 401(k), said Greg Iacurci at CNBC. In 2022, 89.1% of businesses with a 401(k) plan "allowed workers to set aside money in a Roth account," which grows tax-free until retirement after the initial contribution. In 2013, just 58.2% of employers offered Roth access. Despite the increased availability, only 21% of workers made a Roth contribution last year, compared with 72% who contributed to a pre-tax account. The retirement law passed in 2022, Secure 2.0, will "let employers offer their company match in a Roth account," which should bump the uptake. The law also requires that "catch-up" contributions up to $7,500 for people making $145,000 or more be made to Roth accounts.

ESG funds look to rebrand

Investors are souring on sustainability, said Shane Shifflett in The Wall Street Journal. "The third quarter was the first time that more" funds that consider environmental, social and corporate-governance (ESG) criteria were liquidated or recast than were added, according to Morningstar. Until recently, "companies were rebranding faltering funds to cash in" on the ESG craze. Now it’s the opposite: Pacific Financial earlier this year "removed sustainability from the name of three mutual funds," and all three funds "subsequently saw their assets under management jump." Political pressure, from critics like Republican presidential candidate Vivek Ramaswamy, "could be factoring into the changes." At least "five other funds also announced they would drop their ESG mandates this year, while another 32 sustainable funds will close."

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401(k) hardship withdrawals rise

More Americans are tapping their retirement savings to pay their bills, said Alexandre Tanzi in Bloomberg. "Some 2.3% of workers took a hardship withdrawal last quarter, up from 1.8% a year earlier," according to Fidelity Investments. "The top two reasons given for the uptick were to avoid foreclosure for homeowners or eviction for renters and for medical expenses." More workers (2.8%) also took out a loan against their 401(k) account in the third quarter; such loans generally have to be paid back "over as long as five years with interest." After burning through savings, most Americans "now have less cash on hand than they did when the pandemic began," according to the Federal Reserve.