Borrowing from the Future: 401(k) Plan Loans and Loan Defaults

Timothy (Jun) Lu, Olivia Mitchell, Stephen P. Utkus and Jean A. Young

No 21102, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Tax-qualified retirement plans seek to promote saving for retirement, yet most employers permit pre- retirement access by letting 401(k) participants borrow plan assets. This paper examines who borrows and why, and who defaults on their loans. Our administrative dataset tracks several hundred plans over 5 years, showing that 20% borrow at any given time, and almost 40% do at some point over five years. Employer policies influence borrowing behavior, in that workers are more likely to borrow and borrow more in aggregate, when a plan permits multiple loans. We estimate loan default “leakage” at $6 billion annually, more than prior studies.

JEL-codes: D04 D14 H24 J26 (search for similar items in EconPapers)
Date: 2015-04
New Economics Papers: this item is included in nep-age and nep-lma
Note: AG LS PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as Timothy (Jun) Lu & Olivia S. Mitchell & Stephen P. Utkus & Jean A. Young, 2017. "Borrowing From the Future? 401(K) Plan Loans and Loan Defaults," National Tax Journal, National Tax Association, vol. 70(1), pages 77-110, March.

Downloads: (external link)
http://www.nber.org/papers/w21102.pdf (application/pdf)

Related works:
Journal Article: Borrowing From the Future? 401(K) Plan Loans and Loan Defaults (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:21102

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w21102

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().