When it comes to separating workers from their 401(k) retirement savings, nobody does it better than Wall Street. Whether through investment fees, administrative fees or just hidden fees, Wall Street has profited handsomely from the accounts of the millions of U.S. workers who must rely on 401(k) plans as their only retirement option.

Recently, Wall Street invented yet another way to profit from 401(k) accounts --- a 401(k) debit card. This debit card, which can be used at ATM machines, permits 401(k) participants to have access to their retirement accounts 7 days a week, 24 hours a day. Of course there is a fee collected for this service. How much easier can Wall Street make it to assure that no one will be able to retire in America?

In February of this year, The Washington Times reported that a large New York financial firm was marketing this new 401(k) debit card, and already had 10,000 cardholders. The debit card taps into 401(k) loans that participants can take from their own accounts. The loan amount is transferred to the debit card company, which opens an interest-bearing account for the participant. The participant is then free to make purchases with the debit card, or get cash at an ATM machine.

So what’s wrong with this new gimmick? Several things. First of all, as with any debit card, the card company collects a fee. In this case, it keeps a portion of the interest that participants must repay on their loans. Second, every day that goes by during the period of a loan is a day that defeats the purpose of a 401(k) account --- to accumulate tax-free earnings for retirement. Third, if the participant fails to timely repay the loan, it is treated as an impermissible early withdrawal from the account, and the participant is immediately charged income tax and a 10% penalty on the unpaid amount.

All this new debit card really does is add one more risk to 401(k) plans. The basic 401(k) risks have always been:  (1) that participants won’t save enough for retirement; (2) even if they do save enough, they won’t invest it properly; and (3) even if they save enough and invest wisely, they will live longer than expected and run out of money. The debit card now offers the easy opportunity for those that would otherwise save enough, to continually drain their savings.

Of course, Wall Street defends this new product as a service to those who need ready access to funds in these troubled economic times. And therein lies the real irony of this story. The U.S. economy is reeling under the weight of the largest housing crisis since the Great Depression. That crisis has caused a mortgage crisis, that has caused a virtual meltdown of the U.S. and world investment markets. So, just when 401(k) accounts are being hammered by poor investment returns, Wall Street invents a device to easily pull money out of those accounts. As everyone knows, the worst time to pull money out of investment accounts is when they are in a downturn. All you do is lock in your losses.

It is often repeated but true, that the only way to invest for retirement is to be a patient and long-term investor. The debit card is yet one more way to assure that 401(k) accounts will not be invested for the long term, and will not be there for retirement.

Wall Street continues to profit at the expense of retirement security.