It's bad enough that 40% of workers in their 20s and 30s cash out their 401(k)s when they switch jobs, even though taxes and penalties decimate the balances to almost half, according to a CMI survey of 1,200 people in January commissioned by Fidelity.

Worse, even, a small percentage of 401(k) participants take out loans or hardship withdrawals from their retirement savings, which average only $122,000 in the first place, with a national median balance of $66,000, data from the Investment Company Institute and the Employee Benefit Research Institute shows.

Now Congress is debating the pros and cons of supplying people with 401(k) debit cards.

Are they serious? Putting this piece of plastic in investors' hands would be akin to telling them to live for today and go out and spend whatever money they've saved for retirement.

The Reserve, one of the few companies in the nation that offers such debit cards, testified before the House of Representatives that having accessibility to their money would actually encourage more people to contribute to their 401(k)s because they don't like giving up control over access to their money in the first place.

Easy access for needs of today can't be a sales pitch to Americans to contribute to their retirement savings. Hopefully, the entire discussion about 401(k) debit cards will end in the hallowed halls of Congress and the pages of this and any other industry publication-and the publicity will end there, because as it is, many people don't even know they can borrow up to $50,000 at an average rate of 8% against their 401(k).

Meanwhile, last week, a company that provides rollover assistance to individuals called RolloverSystems, posted a calculator in its website to dissuade people from cashing out of their 401(k)s by showing them how much money today could accrue to money tomorrow.

A 30-year-old, for instance, who withdraws a plan balance of $20,000 would get socked with $8,000 in taxes and penalties. Instead, letting the $20,000 grow at an annual growth rate of 8% a year for the next 40 years would build a nest egg of $434,490.

This is the message we need to get out. Not spend today, regret it tomorrow.

(c) 2008 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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