Retirement plan administrators tell USA Today they’ve seen a sharp uptick in the number of desperate 401(k) account holders raiding their accounts to make mortgage payments and hold off foreclosures. This disturbing and sad development in the mortgage crisis suggests homeowners are being forced to sacrifice retirement income security to keep their homes; in so doing, they’re getting slammed with the double whammy of normal withdrawal income taxes plus 10 percent penalties if they’re younger than age 59 1/2.

Hardship withdrawals rose 23 percent in January compared with the same period last year at plans administered by Merrill Lynch, according to the article; Great-West Retirement Services reported a 20 percent increase.

USA Today notes that taking a loan against a 401(k) account is a less severe option, but probably not palatable for consumers already struggling with debt.

Related posts:

1. Older Americans taking a big hit in foreclosure crisis
2. Strategic defaults: Why older homeowners walk away from mortgages

Tags | 401(k), IRA, portfolio, retirement