The Availability and Utilization of 401(k) Loans
AbstractWe 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.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17118.
Date of creation: Jun 2011
Date of revision:
Publication status: 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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Other versions of this item:
- Beshears, John & Choi, James J. & Laibson, David & Madrian, Brigitte C., 2011. "The Availability and Utilization of 401(k) Loans," Working Paper Series rwp11-023, Harvard University, John F. Kennedy School of Government.
- Choi, James J & Beshears, John & Laibson, David I. & Madrian, Brigitte, 2011. "The Availability and Utilization of 401(k) Loans," Scholarly Articles 5027953, Harvard Kennedy School of Government.
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
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- Li, Geng & Smith, Paul A., 2010. "401(k) LOANS AND HOUSEHOLD BALANCE SHEETS," National Tax Journal, National Tax Association, vol. 63(3), pages 479-508, September.
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