The Availability and Utilization of 401(k) Loans

John Beshears, James Choi, David Laibson and Brigitte Madrian

No 17118, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We document the loan provisions in 401(k) savings plans and how participants use 401(k) loans. Although only about 22% of savings plan participants who are allowed to borrow from their 401(k) have such a loan at any given point in time, almost half had used a 401(k) loan over a longer, seven-year horizon. The probability of having a loan follows a hump-shaped pattern with respect to age, job tenure, account balance, and salary, but conditional on having a loan, loan size as a fraction of 401(k) balances declines with respect to these variables. Participants are less likely to use loans in plans that charge a higher interest rate, and loans are smaller when plans allow fewer simultaneously outstanding loans, impose a shorter maximum possible loan duration, or charge a lower interest rate.

JEL-codes: D14 D91 (search for similar items in EconPapers)
Date: 2011-06
New Economics Papers: this item is included in nep-ban
Note: AG
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Published as The Availability and Utilization of 401(k) Loans , John Beshears, James J. Choi, David Laibson, Brigitte C. Madrian. in Investigations in the Economics of Aging , Wise. 2012

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Related works:
Chapter: The Availability and Utilization of 401(k) Loans (2011)
Working Paper: The Availability and Utilization of 401(k) Loans (2011)
Working Paper: The Availability and Utilization of 401(k) Loans (2011)
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