Each year, EBRI and ICI publish statistics on 401(k) plan participants’ loan activity drawn from the annual EBRI/ICI 401(k) database cross sections, which provide a snapshot of loan usage at the year-end. Whereas 401(k) plan loans tend to be a multiyear process—with some individuals taking out loans in any given year and others paying them down or paying them off—meaningful analysis of a participant’s lifecycle of 401(k) plan loan usage must examine loans for a sample of consistent participants over time. This report analyzes 401(k) plan loan usage for a sample of 2.2 million consistent loan-eligible 401(k) plan participants—participants who maintained accounts in each year between 2016 and 2020 and were in plans offering loans.
- While the likelihood of having a plan loan in any given year is relatively low, more participants had loans at some point between year-end 2016 and year-end 2020. Overall, 29 percent of 401(k) participants in the sample had an outstanding loan at some point in the five years analyzed, compared with 18 percent at year-end 2016.
- Over the five years analyzed, the increase in loan usage was largest for younger participants or those with lower job tenure as they aged into longer tenure and higher account balances available for loans. For example, among participants in their 20s at year-end 2016, 7 percent had outstanding loans at year-end 2016. However, when the five years analyzed are considered altogether, 21 percent of participants in their 20s had taken out plan loans.
- New loans tended to be modest relative to account balances and decreased over time. The median new loan balance at year-end 2017 for participants with loans who did not have a loan balance at year-end 2016 was 16 percent of the total account balance. By 2020, the average loan balance for those participants had fallen to 4 percent of the total account balance. The change in the loan share reflects both changes in loan amounts (through payments or new/additional loans) as well as changes in the total account balance (through loan interest payments, contributions, withdrawals, and asset appreciation/depreciation).
- Among 401(k) plan participants with loans, those with larger account balances tended to take smaller loans as a share of their total account balance. At year-end 2017, 64 percent of participants with new loans and total account balances greater than $100,000 took out 10 percent or less of their account balance as a loan compared with 16 percent of those with balances of $10,000 or less. Similarly, those with smaller accounts tended to be more likely to take a larger share: 57 percent of those with new loans and balances of $10,000 or less at year-end 2017 took out more than 20 percent of their balance, compared with 14 percent of those with balances of $100,000 or more.
- Participants who were observed taking multiple loans between year-end 2017 and year-end 2020 tended to take smaller loans. Among participants with new loans at year-end 2017 who were observed taking an additional loan between year-end 2018 and year-end 2020, about three-fifths had an initial loan of $2,500 or less. Among participants with new loans at year-end 2017 who were not observed taking an additional loan, one-fifth had an initial loan of $2,500 or less.
Figure A9
Figure 8
401(k) Loan Incidence in EBRI/ICI 401(k) Database and Consistent Loan-Eligible Sample
Figure 2
p Fia grur ticeipa 5, nt Ls w oan B ith a ala cnc coun es a ts a s a t Sha the ree nd of 4 of t0 he 1 e(a k A c)c h ye L coun oaan rt b P Be a atla y w o nc efe fe n 2016 D Au ftre in r g La oa S nd a n I m 20 nit p20 le ia P tin t ion erhe i o ................................ d EBRI/ICI 401(k) dat...................... abase, 2.2 million 10
( R I Not nv Fie gefe ur st e e m r s e 3) e nt nc . AC e si om s m p ila Pa eny rr cp e a n Ins t ta te gte ritn i u oft s ob e lo. an 20 -ser e23 ligv ib . e le “dThe 4 b 0y 1( k US 40 ) p1( la Re n k )p t ir a pre la tim cn p ip e F a nt in a g t r s u Ma t ric b e yipa r A k ag e 1 nt e t, , tFi tee n rnur u st re Qua ,e o ra a nd rctc eo 40 ru 20 n1( t b 23 k a) la ”a n (c cJune e c,oun * ye )t a . rb A -ea v nla a d ila nc 20b e 1le 6 ( see at Figures A2
Sa Obs rah Holde erved n is Loan A Senior Dct ireicvit tor y of Retirement and Investor Research at the Investment Company Institute (ICI).
How 401(k) Plan Participants F Use igure 6 Loans Over Time: An
401(k) Plan Participant Loan Usage During the Sample
were in plans eligible forN loa umb ns er, oa f nd yeat rs hus to lo in t an he pay sa off m am po le n gof nec w onsi loan sste ant t y e loa ar-n en -e d ligib 2017le b y40 in1( itiak l )l op ala n n p ratioa *rticipants.
enactment, if a loan repayment is due during the p 4e0 riod 1(k )b e Lg oinn aning In c oin de the nc d ea te of enactment and ending on December 31,
ht and tps:/ A3) /ww . w.ici.org/research/stats/retirement.
Steven Bass is an economist a t ICI. Craig Copeland is the Director of Wealth Benefits Research at the Employee
BrightScope and Investment Company In Ins itita itlut Le o. a20 n R 22. atiTh ose b B yr iA ght ccSc ou op ne t /I BC aIl aD necfin e ed Contribution Plan Profile: A Close
Percentage of consistent loan-eligible 4 F 0i1g (k u )r p el aA n 5 participants by age or tenure,* year-end
An Figurea 6, lys Initia is l Loa on R f L atios b oayn A Acti ccount Bav lait ncy e ................................ of Co Figun res 5iste ................................ nt 401(k) Pl ................................ an .... 11
Figure 1
EBRI/ICI 401(k) Database
Figure A11
The EBRI/ICI P e 40 rc1( enk ta)g e d a ot f a cb on as se iste dn oc t lum oan-e ent ligs loa ible 4ns 01( kout ) plst ana p ndi arting cipaa ntt sy b ey a r a-ge end. and I tte n is u rnot e,* yp eoss ar-eible nd 2 0t1 o 6– tr 2a 0c 2k 0 intra-year
2020, 1 the repayment may be delayed for one year from the original due date.
Distribution of ratio of initial loan balan 25% ce to total account balance by total account balance,* year-end 2017
L ook a SeeB Inve etne 40 fit s1( tm Re ke)nt sea Pla Comp rns ch I , 20 a ns ny 19 titIns . utSa e tit n D (ute EBie RI 2023. g)o, . Tha C A: nk Bs t right o A Sc da op me B aend nsim Whon, ashingt EBon, RI d D aC ta : Icnv om ep stlia mnc ent e C and omI pT d any ir e Ins ctor tit, ufo ter. A da vt aa ila ble
Age and Tenure Increase for Consistent Sample
Consistent LoaL n-o Ea lig nib B leIa n Slia atm in ac pll e e Ls o a as n a B S ah la an re c e os f tb hy e 4 A 0c1 c(o ku ) P ntl a B na P laa nrc ti e c A ipfa te n rt L To ea n nu Irn eitiation
Snapshots o 23% f 401(k) Pla23% n Loan Activity
Figure 7
Figure A3
Par Nt uici mberp ofa Yen art s s, 201 L6 oa – n2 In0 ci2 de0 nc e by 401(k) Plan Participant Tenure
loan activity. In this analysis, participants are obser Fvie gd u ra en A d 7 categorized as follows:
Figure 7, Initial Loan Amounts by Single or Multiple Loans ...................................................................................... 12
20% 20% 1
11 tabulations. This Issue Brief was written with assistance from the Institute’s research and editorial staffs. Any views
a t https://www.ici.org/system/files/2022-09/22-ppr-dcplan-profile-401k.pdf. 19%
The group Ye aof r In -E itc n ia onsi dl l2 o0 ast 1 n6 e bnt ala loa ncen a -e mligib ong le co n 40 si1( ste kn)t p lola an n p -elia gr ib tic leipa 401 nt (ks) w paa rts d icipe am ntog s w ria th p hic new a lly loa n sism bila y tre n bu ot reh to th ,* year-e en e dnt 20 ir1e7 EBRI/ICI
2 See note 10. Median loan balance as a share of the total account balance for consistent
3% 18%
to Loan Payoff
Septem b Bri egrhtS 12 co , p2 e 0 a2 nd 3 Inve • N so tme . nt 590 Comp I 17% n any itiaIns l Lo tita ute n A 2022 moure ntpso rt bs y the Sin nu gle mb oe r r M au nd lt 6% ira pln eg L e o oa f n inv s estment options offered in large
7%
Percentage of consL iso tea nn t l o H an is -e t34% lo igr ib yl eb 4 y 0 1 A (k c )c po lau n n pa t rB tica ip la an n ts c e by tenure,* year-end 8%
Joint Com Age m iof tt ee on Taxation. 2019. General Ex 9% planation of Certain Tax Legislation Enacted in the 115th Congress (JCS-
Tenure Distribution for 401(k) Participants
Year-End, 2016–2020 2
6%
Initial Loan Ratio
expressed in this report are 15% those loan-eof ligit bhe le 4 a 0ut 1(khor ) pla a nnd parsh ticioul pand ts not with b ne e w a sc loarn ibe s, d y e to ar 14% -tehe nd officers, trustees, or other
By Sarah Holden, ICI; Steven Bass, ICI; and Craig Copeland, EBRI
401(k) database and the P ce onsi rcenst tae gn et o sa f lom anp -e le li ga ibtl ey e 40 a1 r(-ke )nd plan 2 01 par6, w ticipait nh a ts w im the od uia tsn a tandg in eg of loa4 n5 for s, yea rt-he end full database, 46 for the
One 30%
Fi gure 8, Pa40 rti1( cipa k)nt L*oan Payoff During SaIn m itp iale l l oP ae n ra iod mo ................................ unt by loan category, year................................ -end 2017 12% ................................ 13
401( 12 k) plans, the role of employer contributions (including the structure of emp8% loyer matching contributions), and the
Per • c enta Loa ge o n f elig consiibl stee nt – lo a an ny -e lp iga ibrlteic 4 ipa 01(nt k) in a plan p pa la rtn th icipaa ntt sha ws ithb le oe an i ns d be ynt a29% c ifi ce ou dn a t s ha balan vcing e* aa t ty le eaa r-st en one d 20 1 p6a , ry tic ea ipa r-e 29% n nt d w 20it 1h a 6–2 020
2- 19 In )a. dA dv iti ao ila n b to le pa eta w kin wgw s.jc epta .g ra ov te/ge ly fo ta r tmid tach dm lee -a nt ge /bf d 3a or 9c mid 0a -te -62 nu 10% dre d- d4f7d partici -b2b1 pants -44908319 , this obse 86 rv 4% 0d ed/s cumu -2-19 la-tiv 52 e33 loa .pnd finc . idence
Percentage of 401(k) plan participants by tenure* and sample group, year7% -end
Dold, Elizabeth Thomas. 2018. “Qualified Plan Changes Within the Bipartisan Budget Act.” Journal of Pens 10% ion Benefits
>30 percent
sponsors of EBRI, Employee Benefit Resea 12% rch Institute-Education and Research Fund (EBRI-ERF), or their staffs.
8% Initial Loan Balance
c onsistent sample, and 45 for the consistent loan-eligib 35% le F isa gum rep 4 le (see Fi 35% gure A6). Similarly, the three samples had
20s
7%
availability of plan loans. Holden, Bass, and Copeland 2022 reports on the availability and use of 401(k) plan loans, as well as
23% Year-End 9% Memo:
loan outstanding. 10%
pattern also occurs when analyzing by age and tenure at the same time. 19% That is, for a given age group, loan incidence peaks
Figure 3 34% 20%
33% 33%
25, no. T4 (Sum wo m 21% er): 67 2 –69. Available at www.groom.com/wp-content/uploads/2022/11/Qualified-Plan-Changes-Within-
Figure A1, 401(k) Loan Incidence ................................................................ 9% ......................................................... 15
Years of Tenure 25% 20%
NY ee ita he r 3 o r 0 fs E NB eRI w Lno oarn EBRI-ERF l 15% obbies or ta 4k 0 A e 1s p v (e kr )osit aP ge la 21% ions n In it 21% on ial spe Lo 21% acn ifi B c21% ap la olic nc 21% y e s proposals. EBRI Me inv diait nes comm 9% ent on this
Ho similaw r m >2 e04 d p ia0 en te rc1 en(k) nur t to e 3 0 Pl a p t ey rc eea anrt-n end Part 2016: seve icin ye pa an rs for ts Use the full d Lo atabase a n 32% and s eO ightv ye ear rs for Ti me both th : eAn consi stent and
Initial Loan Amount 30%
401(k) plan participants’ asset allocations by participant age. Lin and Smith 2008 explores the 18% costs and b18% enefits of 401(k)
Li, Geng, aY nd ear Psa of ul A Te. nu Sm re 2 it0h. %2008 2016 . “Borrowing 2017 From Yourself: 2018 401(k L)o L aoa n H ns 2019 is a to nd 20% ryHousehold 2020 Balance 2016–2020 Sheets.” Finance
17% 10%
fo r mid-tenured individuals, and for a given tenure group, loan incidence peaks for middle-aged individuals. For example,
Year4 -En 01(d k )2 P 01 a6 rticipant Loan Usag 2% e Varies by Age Year-End 2020
the-Bipartisan-Budget-Act.p19% df. 19% 30% 19% 19% 19%
Backgr >0 too 4 0 2und s $5,071 30% $2,000
research.
consiste 18% nt loan-eligible 18% samples (see 29% Fi 18% gure 18% A7). 18% However, by year-end 2020, partic18% ipants in both of the18% consistent
Account Bala • nc e*OutstandingO lne oa n loa –n apre pa-r2 ti0c2ipa 0 — nt with aO pne osit loa ive n loa pren b -20a 2la 0 — nce at year-end. 29% 8%
loans co Tmp hrea ere 20d1 7 with other household borrowing. 12%
Fi and gurEec onomi A >2, 10>L p 0oa e c tro s D c n His e 2nis t tc otu or 2ss 0 28% y ion Se p b ey rc e Tner tnur ies (F 7% e ................................ EDS), no. 20 11% 08-42 (A................................ ugus 15% t). Washingt18% on, D ................................ C: Feder19% al Reserve Bo ........................ 22% ard. Available a t15
Analysis of Loan Con Acti sistent vity of Con siCo stent n loas n-istent 401(k) 1 Pl Consa isten nt Consistent loan-
among p $a 2rticip 5,000 a nts or17% m in or e their 50 Pes rc, eo n 9% b ta sg eerv oe f d c oc numu sistela nttiv loe an loa -elin gibinc le 4 id 0e 1nc (k)e p ris lane p sa fro rticm ipa23 nts p we itrc h e lont ans fo b r ytho age s*e with less than two years
28% 9% 23%
Loan balance14% for consistent loan-eligible 401(k) plan participants with new loans, year-end
50s
16% 16%
>2 to 5 20s 30s 6,4 27% 4 50 5s 50s 60s 3,117 All
(year-end I n th 2016 e) US retirement system, pa 40 id 1(of k) f plans are one com pa pyone ingnt do of wnthe voluntary re M tir uletm iple ent loa pla ns n offerings de O si nl gy ne loa d tn o in 2020
20%
sa mples ha EBd 7% R Ia /Ig C eId 4 0 b1y( kfour ) yea pa rs a rtic nd ipa inc ntsr,e ased tehe ligi ir bl te enur pae rt ib ciypa four nts, ye Ea B rR s, w I/IChil I 4e 0 1t(he k) media pa n a rtic gie pa ant nd s, tenuree of ligitbl he e ful pal rticipants,
20%
>2 to 5 14% 18% 20% 22% 23% 27%
https://www.federalreserve.gov/econres/feds/borrowing-from-yourself-401k-loans-and-household-balance-sheets.htm.
3 of tenure to 32 percent for those with more than 10 to 20 years of tenure, before falling to 24 percent for those with more
Holden, Sarah, Steven Bass, and Craig Copeland. 2022. “401(k) Plan Asset Allocation, Account Balances, and Loan
Sug >g 5 6 es p0 ested rcen Ci t to tatio 10 pern c: e nH tolden, Sarah, Steven Bass, and Craig Copeland, “How 401(k) Plan Participants Use Loans
Pa Holdr et n ici and 2V p 0a 1nD a 8 n erhe ts i 2001 , 2;0 Mu 1 nn 6 e – ll, 2 Sun 0d2 én, 0 a nd Taylor 2000; and US General Accounting Office 1997 find 24% that the
Not paid off by 24% year-end Age of Participant
Fi gure> A 53, to L 1oa 0 n History by Account Balance ................................ 9,627 ................................................................ 4,851 .......... 16
12% 18%
$Y 2e ,0 a0r0 s o of r lTe ess nu • re $New 10,0 da 00 tlo a to ba a < n s $ e 2 –5 ,a 0 0p 0 1 a6r% ticipa 2016–2020 9% nt with an outstanding 2016–2020 loa29% n balance at tda het acba urs re ent yea 46% r-end 2016–2020 but not at the prior 2016–2020 y 16% ear-
complement Social Security. Rising to be the most popular employer-sponsored defined contribution (DC) retirement
database was unchanged 23% between year-end 2016 a 24% nd year-end 2020.
>5 to 10 21% 23% 23% 24% 23% 30%
than 30 Loy ae na C rs a to ef gte ory nure (see Figure A1). Similarly, among participants with more than 5 to 10 years of tenure, cumulative
Activity2 in 202 020 0.” ICI Research Perspective 28, no. 11, and EBRI Issue Brief, no. 576 (November). Available at
22% $12,442
prese Ov nce er oTim f a loa e: A n n An prova isly ion sis of incre La os aen Ac s 401( tivk it)y pof articip Consi ant ste co nt n trib 401 ution (k) P ra late n P s.a rticipants, 2016–2020,” EBRI Issue Brief, no.
>10 to 20 10,440 5,412
1
5 E p Be RrIc/e IC nIt 4 o0 r 1 le (k s) s Database
>$2,000 to $5,000 end. The year in which th 10% 27% e new loan is observed, 26% is considered the loan initiatio 56% n. 9%
>0 to 2 plan, 401(k) pla 22% ns have close to $ 16% 7 trillion in assets, and 18% employers typica 18% lly design their 401( 0% k) plans to include a 0%
Munnell, Alic2 ia 0 1H 9., Annika Sundén, and Catherine Taylor. 2000. “What Determines 401(k) Participation and
By Sarah >1H 0 old to 20 en, ICI; Ste25% ven Bass, IC 25% I; and Cra 25% ig Copeland, 4% 25% EBRI 24% 4% 32%
Only loan in 2020 26% 5% 6%
6%
inc Figid ur ee nc Ae $4, 5 ris ,0I0 e nit 0 s tia fro o l Loa 20 a n to Ac 30count Balances Increase for Con 11 s ,i 7s 0te 4 nt Sam18% ple 25% 6,879
$9,887
4 27% 18%
>> $2 5 ,t0 o0 5 0 to $10,000 21%17% 11% 20% 26% 20% 23% 19% 25% 59% 10% 6% 12%
78%
r aTh nge e Emp of inv loyeest e m Be ene nt fit opR tio esns ea,r c eh mIns ploy tite ute r c ont (EBr 17% R ibut I) is ions a no to nppro rom fit, 25% ot no enp pa ar rtis t 26% ica ipa n, nt pub sa lic ving, policaynd res flexib earch ilio ty rg 16% of aniz ac ac tion ess tha ofte t n does not
Contribution >2s? 0 ” to C 3R 0R Working Pa22% per, no. 2000- 23% 12 $9,. 08C 3hestnut 22% Hill, MA: Cent21% er for Retirem21% ent Research a 29% t Boston College,
26%
73% 73%
those in their 60s.
Median 22%
xsec-29nov22.pdf. 21%
12 $8 % ,016 69%
>30 12,720 Age of Participant 9,672
The • sa m Mp M ule ltu ip lt of leip lc ole lo onsi ans st ae nn st – loa a n p-a erligib ticipa lent 40 w 1( ho k) p pa la id n p off a artic nd ip ini ant tia s st ted ar su ted b seq theue ana nt ly ne siw s w loa ith slight 19% ns or wly a s ob highe ser r 19% v 40 ed 1( tk o ) ha pla vn e an
>$10,000 to $15,000 2 13% 22% 60% 5%
>5 to 10Fi gure A >5, $2I ,5 nit 00 20% ia to l Loa <$5n B ,000a18% lances b21% y 401(k) Plan Participa21% nt Tenure ................................ 22% ................................ 32% 18% .......... 32% 17
$7,246
lob throug by oh p r tala ke n loa positi nso.ns I n a on le volu gisla nt tiv arey prro etp iro esm als ent . savings framework, policymakers have recognized that allowing limited
December. >A 30 vailable at http14% s://c 61% 14% rr.bc.edu/wp-14% content/uploa14% ds/2000/12/w12% p_2000-12.pd12% f. 19%
14% 14%
Copyright Information: This report is copyrighted by the Employee Benefit Research Institute (EBRI). 13% You may
27%
Key 13 Findings:
All 8,016 3,739
account b inc ala re nc asi es a ng tloa yen b ar-a ela nd nc 20 e, 16 indi tha can th ting ea d ful dit l d iona atal b baor ser ow sam ing. ple and ended the analysis with significantly higher
>$15,000 to S $e 2e 5 ,Fi 00 g0 ure A12 in the appendi15% x. 21% 60% 3 5%
>10 to 20 24% 28% 26% 22% 35% 34%
$5,128
All 18% 20% 21% 22% 22% 29%
a ccess to retirement accumulations—such as through plan loans—promotes retirement sa 41% ving.
7% 7%
5 One loan pre-2020 19% $4,564
Holden, Sarah, Steven Bass, and Craig Copeland. 2023. “What Does Consistent Participation in 40 19% 1(k) Plans Generate?
Figur ce op A > y6, $ , 1pA ,0 rg int 0e 0 , tD oor is $ t 2d r,ibut 5 ow 00nloa ion for d this 40 1( rek p)o rPta solely for rticipants p ................................ ersonal and noncomm ................................ ercial use, provided t................................ hat all hard copies ret.a in 17
The Investment Company Institute 28% (ICI) is the leading association representing regulated investment funds. ICI’s mission is
$3,739
*Tenure groups are based on participant tenure at year-end 2016. The tenure variable is generally years working at current
>$25,000 a to c c$ount 50,00 b 0alances at year-end 20 17% 20 (see Figure A8). The highe 19% r average account balanc 59% es among consistent loan-4%
>20 to 30 9% 11% 11% 10% 16% 15%
US Dep— artp m ay eint ng of dow Ln abor, Employee Benefits Security Administration. 17% 20254% 3a. Private Pension Plan: Abstract of Form
14 16%
Year-End 2016 32%
*Tenure groups are based on participant tenure at year-end 2016. The tenure variable is generally years working
Because recordkeepers p8% rovide data as of year-end, we can only observe loans with a positive balance at ye 55% ar-end. Thus,
E Ca ha ch ye nges in 401 ar, EBRI( ka)nd Pla In Ac CI publ count ish B staala tinc stie cs on s, 201 40 61 –( 20 k)20 pla .”n p ICIa r Re ticsea ipant rch P s’ loa erspe n ac cttiv ivit ey 29 dr, ano. wn 2, a from nd the EB a RI nnu Iss aue l EB BRI rie /I f, Cno. I
56% 59% 33%
to stre any ng em the a pnd loy n ea the r ll c an d op fo tu h ynd u rs ight a m tion a y a nd oo vf e rot the sthe a ta er s ys ae e p a t p rs ma lic oa fna b ple a 30% g re t inot c me ipa ic nt tie oind s c n inus ont thtry ea 4 in fo 0e 1r d (kthe )t he pl a ulti rne.in, maa te nd be yne ou fit moaf ythe cit e lon or g -qte uot rm eind sm iv aill p duaol rinv tions esto of r.
• Loan paydown –49% a participant with an outstanding loan balance at the current year-end that is lower than
29% 29%
>> $3 50 0,000 to $100,O 0 Y 0 ne 0 e a rl- oE an n5% d p , r2 e0 -2020 16–2020 21% 4% 4% 20% 4% 55% 7% 4% 7%
e Thi ligib s rle ep 40 or1( t akna ) p ly aze rtic s 401 ipant (k s c ) p om lan loa port n usa with p greior for re a sea sarm ch finding ple of 2.2 m theill aion con vailabili si ty st e of ntp loa lans n 39% -loa eligib ns le is 40 cor1( rekla ) tp ela d n with higher
55 00 A2 nn 0 >0 $ua 0 0 t2 l Re o0 $ 01 1p ,0 2 or 0 00 0 ts 2. 2 W 00 a3sh 2ingt 004on, 2005 DC 20 : 0US 6 2D 00 e7pa 20 rt0m 8e 2nt 00 9 of 2L 0a 1b 0or 20, 1E 1m 2p 0loy 12 e 20 e1 B 3e2ne 01fit 4 s Se 2015cur 20it 1y 6 A 20 d1 m 7inis 201t8 ra2 tion. 019 2 A 0v 2a 0ilable
Figure A7, aTe t cnur urree n tD eis mtprlibut oyerion for and thu 40 s m 1( ak y) o P vearr sttic atipa e ynt eas rs ................................ of participation in the 401 ................................ (k) plan. ............................ 18
27%
the observed cumulative loan incidence does not includ 15% e participants who took out and paid off a loan during the same
>0 to 2 >2 to 5 >5 to 10 >10 to 20 >20 to 30 >30 All
40 582 1( ( kMa ) dracth) ab . aA se vac ila ross ble sect at wions ww, .ic w i.or hicg h p /file rov s/ide 202 a 3/ sn pearp 29 sh -ot 02 .p of dloa f n usage at the year-end. Whereas 401(k) plan loans
ICI’st me he— mb rep pe aor irs d t o inc p ffrov ludide e mutu d tha atl fu you nds d,o eso ve xchang rbea-ttra imd a end d fuw nd it 25% h p s (ETFs rope)r, c clo ita steion. d-end Any fu nd uss e, b ae nd yond unit tinv he esc stme opent of trus the ts for (UITs egoing ) in
their outstanding loan balance at the prior year-end. It is possible that participants may have paid down the
Note: The con22 sistent loan-eligible sample is 2.2 million 401(k) plan participants with account balances at the end of each
>M $1 e0 d0 ia ,n 0 0t0 enure 7 28%8 822% 7 46% 12 4% 12
contribution rates. 20%
participants—participants who maint 9%ained accounts in each year between 2016 and 2020 and were in plans offering
at www.dol.gov/agencies/ebsa/researchers/statistics/retirement-bulletins/private-pension-plan.
Note22% : The consistent loan-eligible sample is 2.2 million 401(k) plan pa22% rticipants with account balances at the end
calendar year and did not have any other loan balance at year-end 2016 18% through 2020. 25% 18%
21%
t ae nd nd ht to tpbs:/ e a /ww mult w.e iyb er ai.or r pr goc /pu ess blic —a w tions ith so /rm esea e indiv rch-idua public ls a ta tio king ns/iout ssu eloa -brns ie fs in a /cont ny egnt iv/wha en yeta -d r oe and s-cot onsi hest rs p ent a- yp ing artic the ipa mt io dn ow -in n -
the Unit ye ea dr S fro ta m te 2 s0 , 1a 6nd th rUC oug ITS h 2 0a2 2nd 0 01 w 7shimi o w la err efu in nd 4s 0 1o (ff k)e p re l2 a 0 d n 1 sto 8 a linv lowe in sg to p rs la n in loo athe ns.2 r 0juris 19 dictions. ICI also 2 0re 20 presents its members in
Fi gur re e qA uir 8, eA s E ccB oun RI’ts p Ba rla ior nc eexpress Distribut perion for mission. 40For 1(k )p P ea rm rtis icsi ipa ons, nts ................................ please contact EBRI a................................ t permissions@ebri.org ............... . 18
prior loan and taken out a new lower Yloa earn w s ofit T hin en utrhe e year, but it is not possible to distinguish between this
*Tenure g roups are based on participant tenure at year-end 2016. The tenure variable is generally years working a 19% t current employer and thus may
All 18% 22% 55% 6%
5 percent or less >5 percent to9% 10 >10 percent to >20 percent to >30 percent All
loans. This c of onsi eachst ye en art fsa rom m 4% 2 p0 le 1 6is t hd ro ra ug w hn 2 fr 02 om 0 w h the o w ong ere ioing n 401 (ckolla ) pla bn or s a atlliv ow ei n egff p or latn, ltohe an sE .mployee Benefit Re18% search Institute
Aggregate 401(k) participant l7% oan amounts as a percentage of total 401(k) plan assets in plans allowing loans, plan-year
20%
Year of New Loan
40 4 the or 15 0 1 1( p ir (k ak c y ) Pl )a S ing -p p oa u la ac rn t c ns ity he eLo :- m a g Ts a a e b n off ne inv uActi la r— e a tist o m tme e n v-e s ity c a ha fnt rnin o V m nge a ag d rie Eful v B s is s R - e in a with Irs /na I- C 40 to I ly P1( si Pa a cre s of k trta i) rtic c-ip pin a la a ip n n c tp a -o - D a nt a llire c rte c c ic Ag ctiv oun ipa tee e d, nt tR Inv T -b e ’e s ta nu ie rlif la e sm tme re, nc ec ey e n a nt c ts nd le - P2016 trus l a of n 4 0 D 40 ts 1 -a20 (t( k 1( aCIT ) Pl 2 C k0 ) os . la l p ) e n la c atAcc nd n ion loa re P ou rta n ont jil e us cstBal a eg pa ea ra m nc te us e ly t m exa ana mgine ed a loa ccns oun for ts a
overstate years of participation in the 401(k) plan. percent 20 percent 30 percent
activity and ongoing paydown of an existing loan.
A participant was catego14% rized as taking multiple loans if, after the first year a loan was ob 14% served, the participant was
US Dep 4artment of Labor, Employee Benefits Security5 Administration. 2023b. Issue Snapshot – Borrowing Limits for
*Account balances are participant account balances held in 401(k) plans at the participants' current employers and are net of plan loans. Retirement
Source: Tabu >l0 a ttio o n 2s from EBRI> /IC 2 It o P a 5rticipant-Dir> e5 c tte od 1 R 0etirement > P1 la 0n t o D 2 a0 ta Collectio >n 2 0 P tro o je 3c 0t >30
(EBRI) and the Investment Company Institute (ICI) 401(k) plan database.
Fi gure A9, 401(k) Loan Incide $nc 10e ,0 0 in EB 0 or lRI ess /ICI 40 >1( $1k 0), 0D 0a 0 tta obase and >$2C 5onsi ,000st toent LoaG nr-e E aligib ter th le a nSample ......................... All 19
3.0% EBRI/ICI 401(k) Database 25%
Report Availability: This repor 16% t is available on the internet at www.ebri.org
2 1
( sa SMAs mple ). of ICI consi has st off eic ne t sp in artW ica ipa shing nts ove ton DC, r tim Brus e. Thi sels s r , L eo pnd oro t n, ana and lyze Hs ong 40 1( Kon k)g p a la nd n loa carrie n usa s out geits for inte a sa rna m tional ple of w2.2 m ork thro illion ugh ICI
Note: CoThe nsiste pn etr p ca ernt tica ip ga en tof s aloa re 4 n0 -1 e(ligib k) plle an 40 pa1( rtic ki) p a p na ts rt ic wiipa th ant ccs w ounit t h loa bIa nlia tn ia ns cle L sa o a t a tn y t e h Ra e a rte - in o ed *nd of 20 ea16 ch yw ea ars si from m ila 20r1 6 b e th tw roe ug eh n 2t0 he 20 .e L nt oa irn e- eE liB giR bI le /I CI
savings he olb ds ie nrv ple ad n sa L t a ota a n p ny rbe a v p la io o nu int cs e a ew s m ith a p lso ha y ae rh e r s ig o fo he tr h e rr o ty lo le e ta d a l r a o-c v e c end o r uin n loa tt o b aIn lR a n A b cs a e la a frnc o e r c e no o tha n ts iin sn c telu n the td le od ap . n rior -eligib yle e a 4r 01((w k)he plathe n pa r rtthe icip ap na tsrt w ic itip h n ae nt w lh oa an d s ,p a yid ea ro -eff n da prior
Participa C nt on s w sistit eh M nt Lo ult aniple -Elig P ibla len Loa Sampns le (last updated April 2 Y 1 e, a20 rs 23 of ) T. eA n29% u vra eila * ble at https://www.irs.gov/retirement-
$25,000 $100,000 28%$100,000 15%
27% 21%
7%
Holden, Sarah, Daniel Schrass, and Elena Ba25% rone Chism. 2021. “Defined Contribution Plan Participants’ Activities, 2020.”
participants are partic 2i.p 3a % nts in 401(k) plans allowing plan loans. 26% 25% 22%
Globa • l. Loan payoff – a participant with no loan balance at the current year-end but a positive outstanding loan
40 consi 1(2 ks .) 5 t e % dnt at a loa ban se -eligib and le the 40 c1( onsi k) st pla en nt p loa artnic -e ipa ligib nts le — sa pam rtp icle ipa and nts w 24% shho ow e m da tint hea ine sam de a p cc aount ttern o s in e f loa ac n a h ye ctiv arit y b ebty w e pe an 2016 rticipant a nd
0% 21%
Fi loa gn ura end A 10 ha, dL a oa loa n I n nc ba ide lanc ncee ob f yz e 40 ro1( , o k 4% r ) the Par ind ticipa ivid nt ua A l g he ad ................................ tak 21% en out a new or ad................................ ditional loan and20% the co ............................ mbined balance 19
Prior EBRI/ICI 401(k) plan 29% database resea24% rch ha21% s found that 401(k) plan loans are widely available but typically about
Total Account Balance* 19%
Note: Thep cla on ns si/i stss en ue t lo -sn ana -ep lish gibot le- s ba or mrpow le iing s 2.-2 lim mit ills io -n for 40 -p 1a (kr)t ic plipa an p nt as rt- ic w ip itah n-tm s w ult ith iple ac- cp ola unn t- b loa alans nc. e s at the end of each year from 2016 through 2020 who
17% 18%
*The initial loan ratio is the ratio of the loan amount to the total account balance at year-end 2017. Total account balances are
ICI Research Report 14% (February). Ava16% ilaZe ble ro at https://www.icO i.or neg/pdf/20_rpt_recsu Twro veyq4.pdf. Three
Source: T abulations from EBRI/ICI Participant-Directed Retirem20% ent Plan Data Collection Project
balance at the prior year-end.
2020 and were in plans offering loans. 6
age, tenur Ave e, raa gnd e 401(k) plan a Ocnclount y loan b in a la 20 nc 17e (see Figure A9). MOv ultie pr lea ll, 19 p loans ercent of loan-eligible A 40 ll 1(k) participants
6 exceeded the prior year-end balance). We are unable to observe loans that were initiated and paid down in the same calendar
were in 401(k) plans allowing plan loans. For a description of the loan categories, see the call out box on page 6.
one in fiv particie p ap na t r atcic cipa ounnt t bs a lha ancve 18% e s a hn o eld iut n st 40a 1nding (k) plan loa s atn in the p a 18% any rtic o ipne ant sy' e ca ur rr.e nSna t emp psh loyot ers s of and40 inc 1( luk d) e p p 35% lla ann p loaa nr st.ic Ripa etirnt em s’ enloa t sa n a ving cs tiv ity
For 2e .0 xa %mple, see Holden, 10% Bass, and Copeland 2022.
*Age and tenure groups are based on participant age and tenure at year-end 2016. The tenure variable is generally years working at
17%
Figure A11, Loan Incidence by 401(k) Plan Participant Tenure ................................................................................ 20
Table of Contents
*Total account balances are parti16% cipant account balances held in 401(k) plans at the participants' curr16% ent employers and include
M 2% edian
had outstanding 1% loans at year-end 2016 compared with 18 p Ye ea rc rs e nt Af te of r L po aa rt nic Iipa nitia nt tis in t on he consistent loan-eligible sample.
US year, Gh e a ene s ld w irna e l Ac p lll aa nss c a ount ad t d piti re ing o vina ouOffi s l loa em cn p els . o yw 19 ehe rs 97 o re r. r“ the o40 lled 1( to ok ta ve ) rl P iloa n etns on IR ion P bA asla a nc la ree ns n o d: te L ic noa re clu a n P d se edd r . ov fro ism ions ye aE rnha -endnc to e yPeaarrt-ic eipa nd.t ion but May Affect
Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project
fin d that pla >0 n loa to 2n usage ha >2s t o b e 5en declin> ing 5 toin r 10ecent ye >a 1r 0s (F to 2igur 0 e 1). >A 221% m 0 tong o 30 plans allow >3ing 0 loans, totaA l 401( ll k) loan
current employer and thus may overstate years of participation in the 401(k) plan. 14%
Loan Category 18%
Holden, Sarah, Daniel Schrass, and Elena Barone Chism. 2023. “Defined Contribution Plan Participants’ Activities, 2022.”
7 16%
plan loans. Retirement savings held in plans at previous employers or rolled over into IRAs are not included.
• 1 .5%Initial loan balance – the outsta 14% nding balance of a new loan. It is possible that this is not the actual initial
A p • a rticip Whi ant le th seeke lik ing aeli hah rd oso hip d of havi withdraw na gl a mus pla t n de lo mo ans n in tra a ten fina y gi nc via en l ha yr ea dsr hip is r and elativ gene ely rall lo y face w, m s a o r 10 e pa perc rti ent cip 1 pa .e 2n na %ts lty on
Background ................................ 11% ................................................................................................ 12% ........................... 4
I Inc n b om ot No h sa e te Se : Tm c he ur p s le it ay s, m for p40 le i1( Som s c ko )n e p s.” la ist n e L n e loa tt ltoen a arn -Re ec litg p iv ior bit ley t , 4ha 0 G 1A (d kO/H )a p lhil aE nlH - psh S ar-t98 a icp ipe -a 5 (Oc d n tp s a wth t tob e o rtn, o eork )w . ait W n h e aw tsh he loingt ahighe n in on, 20st 1D 7 C p . N e : r e US c we lnt oG aa e ng s ne e as of r re a lo A bloa sce croun v n e-de fligib toing r le Of fice.
Figure A12, Loan Incidence by 401(k) Plan Account Balance ................................................................................... 20
16 balances also have fallen over time, from a little over Y 2 p eae rsr c of e nt Te of nura essets in 2000 to a little over 1 percent in 2020.
Note$ : 2 T,h 0e 0 0 c o on rsiste >n $t2 l,o 0a 0n 0- e to ligibl> e $ s5 a,m 00 p0 le t o is 2.> 2$ m 10 il,l0 io 0n0 4 t0 o1(k >)$ p 1l5 a,n 0 0 pa 0r tto icip> a$ n2 ts5 ,w 0i0 th 0 a to cco > u$ n5 t 0 b,a 0l0 a0 n cto es a> t $ th 1e 0 0 e,n 0d 0 0 of each y A ela l r from
IC I S e Re e d sea iscrus ch Re sion p in or“B t ( aMa ckgrro ch) un . d A” va ab ila ov be le a a nd t w no wte ws .ic 9 i.or and g/f 10. ile s/ 2023/22-rpt-recsurveyq4.pdf.
Note: The sample is consistent loan-eligible 401(k) plan participants who took a new loan in 2017. New loans are observed for
loan balance, as an individual may have initiated the loan during the year and started to pay down the loan.
the ta 1 xabh lea p do lo rtion ans o a f the t s o w m ithd e po raw in al. t bet Prior w to een pla y n ea yea r- r en 201 d9, 2 0 if 1 a6 p la an n d a y lloea werd - en load ns 2 , 0 p2 arti 0.c ip Ov ae nts ra ll, 29 p generae lly rc w ent ere of re40 quire 1(kd) to
individuals with a postive year-end 2017 loan balance and no year-end 2016 loan balance. The initial loan ratio is observed at year-
Total account balances are participant account balances held in 401(k) plans at the participants' current employers and include plan loans.
401(1 k.) 0 % participants with outstanding loans among participants in their 40s, or participants with more than 10 to 20
Availa 20 b 1le 6 ta h Lt re o w s us gw h w 20 .g 20 a o.g w $h 5o ,ov 0 w 0e /a 0res sets in 40 $/h 1 1(0 ke,)hs 0 p 0la 0 -98 ns - a5.p llo $ w 1d i5 nf,g .0 0 pl0 an loan $ s2 . 5 T ,h 0e 0 0 figure r$ e5 po 0r ,t0 s0 t0 he perc 1e 0n 0t,a 0g 0e 0 of participants in the sample who
Loan Usage Among Consistent Loan-Eligible 401(k) Participants, 2016–2020 ............................................................. 5
Note: The sample is consis2 te 0n st loan-eligible 43 00 1s (k) plan participa 4n 0ts s who took a ne5 w 0 s loan in 2017. Ne6 w 0 s loans are observA ed ll for
individuals with a postive year-end 2017 loan balance and no year-end 2016 loan balance. The initial loan ratio and total 401(k)
end 2017.
ta 17ke R *a A e g loa tie re I an m tn d is e b n te e tt fo n s he u are re v in fir g the gro s st u h y p e ob s lw d a ser e in re r e p b v la a p a n se ts e ion o rmitt d a to p nre e p f t v a d io rt he to u ici s p ta e ne am nktw p e a l o ga out y e e ha a rs nst r d od r a te s ro nding n hip lu le re d w a o tit v loa e yhd e r a inn r-e ra to , w n Ia R da t A l. 2y s 0 e Th 1 aa 6 re .r e T - n e h Bi oe nd. t p itn e a cl n rtis u u d re e a d vn a . riBu abd leg ie s t gAc ene t ra olf ly2018 years w ad od rki end g a a t ne curre w nt
participants in the sample had an outstanding loan at some point in the five years analyzed, compared with 18
Partici werep o ab nts ser v w eho d w io th nly a lo to ao n k a ta y le oaa rn -en in d 2020 for at le aa re st a ols ne o yse eap r a in ra tte hed s o am ut plb ee p ce arus iode . it is not possible to observe them in any years
Two ir ne dc ive idnt ua lsi s g wnif ith ic a a pnt os tp ivolic e yey a rc -e ha ndnge 201s lik 7 loae nly b aha lanv ce e inf and lue nonc yee ad r- e40 nd1( 20 k1)6 p lo la an p n baa la rt nic ce ipa . Th nt e s’ iniloa tial n a loanc t aiv mit oy u. ntP ir sior ob ste o rvt ehe d a t year-
y ears of tenure, or participants with 401(k) plan account balances of more than $25,000 to $50,000 (see Figures A9 to
account balance are observed at year-end 2017. Figure A12
Holden, Sarah, and Jack VanDerhei. 2001. “Contribution B Age oe f ha Pav rtior ici pof an40 t 1(k) Plan Participants.” Investment Company
0.5% Account Balance
employer and thus may overstate years of participation in the 401(k) plan.
New SLooa urc ns e: A Ta m bu ong latio n Csonsi from s tE eB nR t IL /IC oa I P na -rE tiligib cipan le t- D 40 ire1( cte kd ) R Pe atr irte ic m ipa entnt Ps, 201 lan Dat7 a – C2 o02 llec0t io ................................ n Project .............................. 8
provis 2 ion (IRC section 401(k)(14)(B)) that a participant is no longer required to take a plan loan before taking a hardship
percent at year-end 2016.
S en od u r2 c0 e1 : 7 T .abulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project
followN ing ew loa loan n s init areia ob tion serv to ed ffo or llio nd w iv ithe dua ls re w pia thy a me pont sitip vea y tte earn r-en fo d r lotaho n bsa el aloa ncen is n. a given year and no loan balance at the prior year-end.
B A1 ipa 2)r S .t o is ua rc n B e: T ud abg ue latt io Ancst fof rom20 E1 B8, 401( RI/ICI Pak rt)ic p ipla an n p t-Da ire rt cic teipa d Rnt etis w reme en re t Prle aq n ui Dr ae tad C to o lle tc atk io en a Pny roj ea cv tailable loan from the plan before
Lo an Incidence by 401(k) Plan Account Balance
Institute Perspective 7, no. 4 (October). Available at www.ici.org/pdf/per07-04.pdf.
Note: The consistent loan-eligible sample is 2.2 million 401(k) plan participants with account balances at the end of each year from 2016
• Wha Loa t’n s ba Ins lan ide ce – the dollar amount of the outstanding loan at year-end. The relative magnitude of the loan
Figure A6
distrib 0.ution 0% (but a plan may continue to include the requirement), effective for plan years beginning after December 31, 2018.
Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project
• Over the five years ana 7lyzed, the increase in loan usage was largest for younger participants or
Initial Loan Amounts .......................................................................................................................................... 8
requesting a hardship withdra 2w 01a 7l. The Bipartisan B 20udg 18 et Act of 2018 e 2xpa 019 nded hardship w2 it0hdr 20 awal availability in
18 tN ho ro te u:g T hh 2 eP 0 co e 20 rn c w s ein h so tte a w n gte e lre oo a fin n c -e o 4ln 0 ig 1 si(k) ib slt ee p s n la a t n m ls op a a ln e ll - o ie s w l i2 ig n .i2 g b lm p el ia l4 ln i0 o l1 n o( a 4 kn 0 ) s 1 p .(k) lT ah n p eF lp a fiia n g g r u tp u ire c a re irt p re i ci aA p n p o8 ta rt sn s tb s ty h w ea i tp c he c a rce o cco un ntu ta n b gta e b l a a on lfa c pn a e ce rt a is ci t p a ya te tn a htr e s- e e in n n d td h e 2 o f0 s e 1 aa 6 m ch ,* p ly y ee e w a ar h r- fo ro e w n m d e re 20 16
*Age groups are based on participant age at year-end 2016.
Some of this pattern is a result of the impact of dollar limits on loan amounts, which will impact larger account balances.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
outstanding is calculated as tA he g loa e D n b ista rla ibnc utei o an s a fo sh r 4 a0 re 1 ( ok f th ) Pea r tot tic ail a pa cn coun ts t balance.
The SECURE 2.0 Act (§602) conforms the rules under 403(b) plans, by adding a similar provision in IRC 403(b)(17)(B),
throuth gh o 20 s2e w 0 whit o h w lo ere w in er 401j (k) ob pla ten ns au llr oe w in a gs p th laney loa a nsg . M ed ed in ia Yn eto s a r in lo o y f e N n ae rs g w er o L no ea ten tn hrou ugrh e a thre n ed in h clig ude h b er otha ic nd cio vid u un alt ba s who lan paic des off their
observed with a loan at year-end 2016 and for at least one year in the sample period.
Internal Revenue Service. 2022. Coronavirus-related relief for retirement plans and IRAs questions and answers (last
several ways, including dropping Acc the ou rn etq B uir aelm an ec nt e tD ha is t ta r ib pa urttiic oipa n fnt or fir 40 st1 t(a kk ) eP a ad rv tia cnt ipaa gn et s of a plan loan before taking a
Num “40b 1( er k )of Pla Loa n As nsset A ................................ llocation, Account................................ Balances, and Loan Ac ................................ tivity in 2020” report................................ ed year-end 2020 account .............. 11
See Internal Revenue Service 2023c and US Department of Labor, Employee Benefits Security Administration 2023b for loan
Note: The consistent loan-eligible sample is 2.2 million 401(k) plan participants with account balances at the end of each year from 2016
Percentage of 401(k) plan participants by age* and sample group, year-end
loans and individuals who took out new or additional loans.
effective for plan years beginning after December 31, 2023.
* So Ag ue rce , te:n T u are bu , a lan tid o n as cco fro um nt EB balR aIn /Ice CI g Pa rort uip cis p a an re t-D ba ire se ct d e o dn R p ea tirt re ici mpe an ntt Pl ag ae n, D tea ntu are C,o a lln ed ct a iocco n Pro unjte b ct alance at year-end 2016. The tenure variable
available fo 8r loans. For example, among participants in their 20s at year-end 2016, 7 percent had
upd Appendi ated August x: A 19 bout , 2022 t)he . Av a E ila A B vb e R le raI ga/IC et : an ht dI tm p s:/ 4 ed0 i/ww a1 n a (ck) w c.ir ou s.g Da nt bov at Ye la abas /n na cer ew -En bsr ye oom/ s d aand Co mpc leor gona roupv n , ir ys us eis ar--rt ee n e la dnt ted -Loan relief-for -E-li r M egib e tir meo: m le ent -plans-
hardsh thro ip ugw h it 20 hdra 20 ww hoa w l.e re in 401(k) plans allowing plan loans. For a description of the loan categories, see the call out box on page 6.
• b alaA nc T co cetal a ou , a nt ss B c ec a t o la au lloc nc ne t ba a tion, lan ac ne d – loa the n a su ctm ivit of y rte he su lt cur s for rent the ye a ErB-RI end /IC 40 I 40 1(k 1( ) k p)la dn a atacb ca oun se,t w bhic alah cons nce and ists of the c aur la rr eg nt e
limits.
Note: Loan-eligible 401(k) plan participants are those in 401(k) plans allowing plan loans.
Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project
is generally years working at current employer and thus may overstate years of participation in the 401(k) plan.
Loan Payoff ......................................................................................................................................................12
Figure A4
1
8 outstanding loans at year-end 2016. However, when the five years analyzed are considered altogether, 21
4 a nd Th 01 -eSo ir N( Bi a eu k) s w p rce (- y a lq oe rtis a ue :P a n Ts r alan st a - b a e n u re ions nd la Bud otb io 2 P s- n 0 ea g sar 1 rvnd e 6 f ero t ) dt - m Ac fo a icipant r ns EB t in o dw R if vIie /d 2018 IC r us a I . lPa s s w rt 2016 a i tils h ci a p o a pe n oli ts-D mina itiv ire e y ct ete e ad r-e d 2017 R nthe e dt ilre oa m s nix e ba n -m lta Pl no ce a nth n i n D 2018 a a s tg us aiv C ep n oe lylns e ea ct r ion ia on nd Pro o nf o 2019 c jle oo ct antrib n balaution nce ats th 2020 a efte prio r r ta yea kr-e ing nd 2016–2020 a . hardship
Num crb oss er y e sect of ar-L e ion o oans nd loa f 11.5 m n balanc illion 401 e. (k) plan participants. This paper presents a longitudinal analysis of 401(k)
Sources: Tabulations from EBR Ye I/ICa I r Pa -En rticid p a2 n0 t-D 16 irected Retirement Plan Data Collection Project and Depart Ye mea nr t -En of Lad b o2 r 0 F2 orm 0 5500
19
Figure A2
2 Note: The consistent loan-eligible In si atm ia pll eL is o 2 a .2 n m B illa ioln a 4 n 0c 1e (k) sp b lay n p4 a0 rti1 ci( pk a) n tP s l w a itn h aP cco ar utnic t bia p la ann ce t sA ag t te he end of each year from 2016
For average and median initial loan balances at year-end 2017 by participant age or tenure, see Figures A4 and A5 in the
W ith the ponse ercetnt of of fin pa anc rtic iaipa l stnt re sss in t es r he eir la t20 ing s ha to d the ta k CeOVI n out D- 19 pla p na lo nde anm s. ic, policymakers acted to provide penalty relief and
AppeT ndix: ota$ l 2 acco ,0 A0 b u 0out n to bra lle t ahe s nce s sE a B re RI pa /I rtC iciI p a40 nt a 1( cco 1% k) u nD t ba atla anb ce as se hea ld2% nd in 4 C 01onsi (k) plst ane snt at 2% th Leoa pan rt- ici Epligib ants' le cu rre 2% 40 n1( t em k) p loP ylea rsn P and a 1% irntcl ic uipa de pnt lan s l........................ oan15% s. Retirement 13
withdrawal. See Dold 2018, Joint Committee on Taxation Ave 201 rag 9 e( p 4p0.1 104 (k) – Pl 105) an ,A a cnd co u Inte nt B rna all aR ne cve enue Service 2023d.
research files
EBRI/ICI 401(k) Database
participants who maintaC ine on ds ia sc te cnt ount s each ye Con ar s ifr stom ent 20 loa16 n- through 2020 and were C in on 40 si1( ste knt ) plans offer Cing onsp isla ten nt loan-
For ctonsi hrougst h e 2n 02 t 0loa whn o- w eeligib re elle igi b4 le 01 to( tk a) ke p lla oan p ns.articipants who took a new loan in 2017, they could have taken another new
savings held in plans at previous employers or rolled over into IRAs are not included.
Initial loan balance among consistent lo L ao n-a en lig H iblies 4 to 01 r(y k )b py ar tT ice ip n au ntrse with new loans by age,* year-end 2017
appendix.
Consistent loan-
e Int xpa er •nde na l Re d New avce cnue elo ssa tn S o e sr r ten e vic tiree d . m ed 20 ent 23 to a a be m . ccTop ounic o ts unde d Nes o. t r 55 relativ 8 A thed d Cit e to or iona ona a l Ta v cir cus o x o u A n n Ea id, t ba Re rlan lylie Df, a c is es trnd ibut an Ed ions c dec onomi Fr rom ea c Se s Re ed cur t ov irit eym er A ec nt ti t m (P Cla e. Ans R The E S OtA he m cte r) d , ian
>$2,000 to $5,000 10% 12% 16% 17% 15% 27%
EBRI/ICI 401(k) participants, eligible participants, EBRI/ICI 401(k) participants, eligible participants,
A majority of consistent loan-eligible 401(k) participants who had a loan at some point between year-end 2016 and
The E So BuRI rce /I : C TaIb 40 ula1 tio (n ks) fd roa m ta EBR base I/IC , I w Pa hic rtici hp a is n tc -D onst irectr eu dc Rte etd ire fr mom ent Pl the an D aad ta m Cini ollst ect ra iotniv Pro e r je ect cords of 401(k) plans, represents a large
loaE n (ha B loa RIns /I vC ing . IThi 40 ps long a 1( id k)off t D ita udina the ab a ini se l a tia ................................ na l loa lysin s t frrom ack s 20 the 17 )a or cc oun a ................................ ddtit b iona alanc l loa es of ns in subse 2.2 m................................ illion 401 quent y(e ka ) rp s (whic lan pah w rtic ................................ ipa e rnt efe s w r tho o aha s m d ultiple .13
The Bipartisan Budget Act of 2018 also changed flexibility with regard to nonhardship withdrawals, providing tax relief for
Note: The consistent loan-eligible sample is 2.2 million 401(k) plan participants with account balances at the end of each year from 2016 through 2020
Percentage of consistent loan-e E liB gR ibIl/eI C 4I0 4 10 (k 1)( k p)l an par C tion cips a in stte snt w ipa th lro tia c n is pa bnt y s te , nue re li,gi ybl eae r- e pa nd r t2 ic 0i1 pa 6–nt 20 s2 , 0
Than IRAs da (la tast ba upd se ated Apr2016–2020 il 6, 2023). Available at 2016–2020 www.irs.gov/taxtop da ic ta s/ ba tcs 5e58. 2016–2020 15 2016–2020
Age e 20nacted >ne on $5w ,Ma 0 0loa 0r c to n b h 27, $1a 0la ,020 nc 00e 20 a. t For yea indiv r-e 16% nd idua 2017 ls afor ffe cp 18% ta erdt ic bipa y Cnt OVI s w Dit 22% -h l 19oa , the ns C wA ho REd 23% S id Ac not t t eha mp ve or a a 24% rloa ily n b elim aina lanc te ed 31% a tthe ye 10 ar- e pnd ercent
y e A arlon -end ge r 20 time 20 w fram eree ob foser r revpeady me taknt ing ma aty le ap ap st ly one if the ad pdait rt iona icipa l nt loa us n d esu the ring loa tha n tto t im purc e p ha ersio e d a. p rim Ova ery ra ll, 55 residep nc ee rc ( esnt ee of Inte the rna l
cross w h sect o weion, re in 4or 01 (k) sn pa lap nsh s aot llow , iof ng p40 lan1( lok an )s p . lans at the end of each year. It is a cross section of the entire population of
accounts in the year-end 2016 EBRI/ICI 401(k) database and each subsequent year through year-end 2020, and
loans). Also, they could have either paid the loan off during the sample period without taking a new or additional loan,
those affected by the 2017 California wildfires, da build taba ins ge on disaster reli2016–2020 ef included in the Disaste 2016–2020 r Tax Relief and Airport and
Initial Loan Balance
Sample of Consistent Loan-Eligible 401(k) Participants, 2016–2020 ......................................................................13
Loan Payoff
20s p enalty > on 20 $116 e 014% ,a 0 r0 w ly 0a tw s 16 p o it $hdra 15,0e 0 w r0 ca els nt fr of om 10% the 21% re ttir ot eam l a ent cc ount acc 21% ount bala s; t 11% nche e. B ay c 24% t20 als 20, th o cont e 14% a aine ve26% rd a g op e tloa iona n l p barla ov 27% nc 4% ise ions for inc those rea33% si png artic re ipa pant y4% m s ent
Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project
sa Rem vepnu le ew Sho ervtic ook a e 202 t 3c le). ast Ea one rly re loa pon took rting o n mthe ultiple two loa diffe nsre (Fi nt gty urpee s 3) o. f N pe av rticip erthe ant le ss loa , ns the fo run epd e a tha t-loa t the n 401( bulkk o ) f pthe lan p loa an rtic acip tiv aity nts
401(k) plan participants, and it represents a wide range of participants—including those who are young and individuals
or the who y could were ha in 401 ve pa (id k) tp he la ns loa offe n dr ow ing n e pla ac n loa h yens ar w to itp hout artic p ipa aynt ing s. it off (which we refer to as a single loan). Overall,
Airway Extension 2016 Act of 2017. The Setting Every $ 7 Commu 5,358 nity Up for Retire $7me 8,0nt 08Enhancement Ac$ t 8 o9f ,1 2019 00 (SECURE Act)
Age Average Loan History Median
Internal Revenue Service. 2023b. Publication 575 (2022), Pension and Annuity Income (last updated April 13, 2023).
Figure A10
>$15,000 to $25,000 24% 24% 26% 27% 29% 35%
30s Participant loa 24% ns from 401(k) pla 23% ns generally must be 24% paid back within fiv 24% e years, and smalle 20% r loans tended to be 21% paid
flexibilityha and d fa elle xpa n to 4 ndingp a ec rc ce ent ss of to tD he C p tot laa n a l accccount ount b ba ala lanc nce es for . The in c-ha ser nge vic ein t wit he hdr loa aw n sha als—rte hr roug efleh cor cts bot ona h v cha irus nge -res in loa lated n
Age and Tenure Increase for Consistent Sample ..............................................................................................14
was not to purchase a principal residence—in plan year 1998 (the last year this detail was published), only 2 percent of 401(k)
represented only 16 percent of the overall sample (55 percent of 29 percent with any loans over the five years).
who are new to their jobs, as well as older participants and those who have been with their current employers for many
One loan pre-2020 — One loan pre-2020 —
a pro mong vide dc onsi tax re st2020 li ee nt f fo loa r w n-ithd eligib raw lea ls 40 re 1(la kte ) pa d to rt ic qipa ua 8li 7 nt fie ,0s w 4 d0 bho irth to ook r a d ao ne ption w lo d 1a is 5n in 8 trib ,36ution 12017 s , (50 QB O pADs erce)nt . S 1 8 e took mu 2 e, 4 Inte 52 rna ltiple l Re v loa enu ns e (Ste hrv ati cis e,
20s $3,597 $2,007
Although many new loans tended to be small relative to the total account balance, some participa 20nts took out a more
W Avhil aila e b the le alik t w elih ww ood .irs.go 9of ha v/pub vinglic aa p t10 ions lan L loa /p575 oa n in n I.n ac ny id e gn ivc en ye e bya r 4 0 is1 r(e kla ) tP iva erly ti c low ipa , n the t A 40 ge1(k) participants with loans change
>$25,000 to $50,000 26% 26% 27% 28% 29% 36%
40s back more q25% uickly. For loans ini28% tiated in 2017, the late29% st payoff date would 24% generally be in 202 26%2. Since our samp27% le
d Ne istrw ibut Loans ions amount (CRD s ( As) m thr — o oug a ng nd h p loa C ao y ns m ns .ent is s tor ent ne w Loan /additiona -Elil loa gib ns le ) a4 s 0 w1 ell a (k) s c P ha ar nge ticipant s in the tot s, al a 20 cc1 oun 7– t 2 ba 0 la2 nc 0e (through
plan For partici all figur pant loa es in t ns ohis uts ta rend por ing t, w com erep mo one rtg nta s m ge a loa y ns not to a d pd a rticip to the ants tot (a se lse pTab resent le D7 ed in b e Pc riv aus ate e P of ens round ion Ping. lan Bulletin Abstract
Years of P Te ar nu tic ripa e nts in their 40s werepa bot id h th off e most likely to ta pa ke y ing any do loa wn n (Figure 2) and the most likely to have multiple loans
Multiple loans Only loan in 2020
years.
t 2022, ook a 40 2023a, not 1(he k) rP 2023b loa lan Ac n a,t ca oun som nd 2023 te B p aoint la f.nc e bs I etw nc ereen 2018 ase for aC nd onsi 20 st 20 ent ) a Sa nd m50 ple p ................................ ercent took a single loa ................................ n (that is, did not ta.......... ke an 14
30s 6,854 3,227
su from bst a ynt eaia r l sha to yera er. . Ov Thu ers, m all, 20 Peor rce ep np e ta a rg c re e tic nt oipa f c of ont nne ss ha isw te n lo d t a la ons aloa n -in 201 en liga ib tl e som 7 40 a1 ce (c k ount p ) oint plan e d p da ur for rtiing c ip m at or nhe ts e b fiv ty ha a en 30 p g y ee ,*a yre s a a err-n c ee a nnt ly d ze of d t(he 29 tp ot ea rc l a ent cc)oun tha tn
50s >$5025% ,000 to $100,000 29% 25% 26% 29% 26% 25%26% 27% 32% 34% 32%
ends at year-end 2020, we do not observe loan payoffs for most new 2017 loans. Indeed, only 27 percent of new 2017
loan interest payments, contributions, withdrawals, and asset appreciation/depreciation).
of 1998 Form 5500 Annual Reports, available at US Department of Labor, Employee Benefits Security Administration 2023a).
Because a cross-sectional analysis looks at a snapshot of all loans, it includes new loans, additional loans, and loans
>0 to 2 (Figure 3). Among those in the13% ir 40s who took at least one 30% loan, 59 percent took mult46% iple loans, compared with 49 11%
Median 401(k) Plan Account Balance
a Int dd eit rna iona 40s l Re l loa ven nue aft S ee r r20 vic17 e. )20 . 23c. Retirement Top 8,9ic 62 s – Plan Loans (last updated April 18, 20 423 ,26) 1. Available at
9
balance at year-end 2017 (Figure 6). However, these large loan ratios tended to come from smaller accounts. At year-
60s 40 for1( ak ny 40 ) p 1( g >la iv $k 1 n p e )0 n 11% 0 P,a la y 0re 0n Loa t0 a icripa (for nt n Ac s’ exloa taiv m it np y a le Va c, 9% tiv 18 rie it 17% y s w p e erdit cg e h P e nt d aa drto t ic w ye ipa 18% n ar fur nt -e nd tA he 8% ge 2 r , 01 in 202 Te 6) n 18% ur (Fi 0, p eg , ur ae nd e r ha 2) 40 14% p . s p 1( As w 18% ka)r tP it ly la h singl r n Ac eflec ce o t- ing unt y18% e18% at rB he loa a la us nc n inc ee of ........................ ide C24% RD ncs in e, stea 17% d of 14
A coronavirus-related distribution (CRD) is any distribution from an eligible retirement plan (up to an aggregate limit of
loans were paid off by year-end 2020 (Figure 8). However, participants who took out a smaller share of their total
• Among 401(k) plan participants with loans, those with larger account balances tended to take
Although annual updates of the EBRI/ICI 401(k) database provide valuable perspectives of 401(k) plan account
that are being paid down. By using a longitudinal sample of participants, it is possible to analyze loans in the year they
>2 to 5 percent of those in their 20s and 13% 41 percent of those in the 28% ir 60s (Figure 3). 52% 7%
21 2016 $16,836 $22,916 $27,715
50s 9,884 4,966
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-loans.
These See H sn oa ldp esh n, ot Ba s r sse , vae nd al b Cop roa ed la nd tre nds 2023. in 401 (k) plan loan activity, but they do not provide insight into the lifecycle of
Year-End Memo:
All 18% 20% 21% 22% 22% 29%
Median e loa caum nd ge ns ula 20 . A 17 tiv t , y ee 30 loa ar 45 -p n inc eend rce 20 ide nt 20 nc of , e ne 16 isw p highe loa erc 46 ns ent st fr for of om loa m 40 idd n1( -ele k ligib ) - ap gla le ed n 40 p aa c 1( 45 c rt o kic unt )ipa pla s w nt n p s, r ita h ris t tic ot ing ipa al b fr nt 45 om as ha la nc 21 d e s of p loa erns c$1 e nt out 0,00 of stp 0 o a 50 a nding rr tic le ipa ss , c nt w os in t m erp ea m rhe eor dir e w 20 titha h 18 s49 n 30 at
$100,000) made on or after January 1, 2020, and before December 31, 2020, to a qualified individual affected by COVID-19.
account balance were more likely to pay off the loan by year-end 2020. By year-end 2020, 39 percent of participants
smaller loans as a share of their total account balance. At year-end 2017, 64 percent of participants
>5 to 10 b Re ala fenc ree nc s, a es ................................ sset allocation, and 18% loa ................................ n activity across wide................................ cross 21% sections of part................................ icipants, 57% cross-sectiona ........................... l analyses are4% not21
I andivi re ini dtua iatls ed w . ho Thit s se ook mu ction foc ltipleus 40 es on 1(k) ne plaw n loa loans ns— te tha nde t d is ,t o posit take iv e sm loa alle n b r ini alatnc ial loa es ans t y . eM aor r-e end tha wn ha herelf ( the 58 p p ae rr tc iceipa nt)nt of did
2020 17,961 62,134 76,649
60s 9,942 4,840
loan activity A ge for a given 401(k) plan participant. This report serves to explore 401(k) plan participants’ management of
2016 2017 2018 2019 2020 2016–2020
*Age grp 22 ou ep rc se ant re of baste he d otn ot paal b rtic aila panc nt e a. gThi e ats figur year-ee n dfe 2ll 01t6 o . only 4 percent of new loans from accounts with total balances greater
p y A e eCR a rc re -D e nt nd is an t20 o y t e 16 sa ub r t -je o end c 34 t to 20 p e the 19 rce ( 10 nt Fi gp of ur erc p e a e1) r nt tic . e C ipa aRD rly nt s, lik w s in t ithd ehe ra loa w ira ns 40 l p , s, b e cn aa n b lty efor ,e ae rn e d fp a a the lli id ng int tatxe o o 18 s a ma r e pte y irr e b cm e e nt e pnt a fior d a o cp v ca e ount r r ta ic ipa thre ; how nt es in t -y ee va er rhe , punl eirriod 60 ike s. A s ta loa r ting ns,
w it Sh ne ee Hw o *A ld 20 ce cn o 17 u an nd tloa b a V ns la anD n c tha ee rhe gtr o au i cp2001 csount are; e bMu a ds for e nn d e o5 p ll n, pS a eu rrtnd c ice ip é nt a n, nor ta a nd c le c ss o Tay u n of tl o btr a he l2000 an irc e tot ;a ta a nd y l a ea cUS rc -e ount nG d e 2ne 0b 1a ra 6la . l A nc Accc e co o u ha un ntd ting b a ful la ly n O c ff e ric e s p e aa r1997. e id p a the rti c ir ip loa ant ns,
Older 401( wit kh ne ) parw tic loa ipans nt s w and ho tot ha al a d loa ccount ns w b ea re la m ncor es g e lik reealy te tro tha han $ ve 10 tak0,00 en o 0 ne took o loan ut and 10ful pe ly r cp ea nt id or it off d less ur of ing thet irhe a cfiv count e
>10 to 20well suited to examining the im 19% pact of consistent participat 17% ion in 401(k) plans. Cross s61% ections change in compositio 4% n
c I not nt onsi e ha rna stv el Re ent a loa v loa enue nn b -eligib a Sla er nc le vic e 40 e a . t1( 20 the k23 ) p p da r. r io t Re ic r ipa y tir ee a nt m r-s w e end ntit — P h ne la wns itw h a FA loa Qs Re spe nsc in 201 iag l foc arding us 7 w on H ho ane rtdook mu sh w ip loa D ns is lt tiple in 201 ribut loa ions 7. ns (ha last d a upd n ini atte iadl ye Apa rr il 18, -end 2017
All 8,016 3,739
their 401(k) plan loans, including exploring the magnitude of the loans, the paydown and payoff process, and whether
Notes ..................................................................................................................................................................23
20sNote: Consistent par7% ticipants11 are 40 11% 1(k) plan partici14% pants with acco17% unt balances at 18% the end of each21% year
Note: Cin t si toha he n m the sn $100 y ila is tm e ry n a e p ta y a a p c r tha a c ,00 tthe o re tu r iv cn is o n 0. C e i tp d a c b isur n atri onv tla sr b n b e ser a c ution nt e re ers v sely, 4 t e h a 0e d x im 1 w l (d k b a )c iy s n onsi p p re t 4 llic a e 0 n c nur 1 a e st ( p t k iv a ion e )e e r n tp , d it c ls. a .w i loa p n In it a sh mi n a n a tts - d e td w hligib d iti e it- h o p t e n, a ale nur rc t ic a c40 o ip CR e ua n 1( w n tD tk b o s) a ma 'r c lkp au e n a y rrc rr s ha e b e tn ic s et ipa a re ev tm ing p tnt h p ae lid o s w y e t he e to nrd it s h la a o highe an fn e d e a r li a g cg r h e st e i b r y n le ob e b ea a tre r ser la ofr ftire nc o pv m la e e me n s w 2 d 0 lo rnt 1a a 6 ho n t a e tsh c s of .t r c o ook ne R o u e un g tic h rum e t 2 m w 0w e 2 ithi ula n 0 tloa . n t Liv o thre ns a en loa -in 201 e el ig n yie ba lers 7
c yom earp s a arna edly w ze ith d. 16 Inde pee rd ce , nt 35 of pepra cr etnt icipa of nt consi s wit sth ne ent w loa 2017 n-eligib loale ns 40 tha 1(tk ) w p ea re rt ic gripa eant ter s tin t han he 30 ir 60 pes rcw ent ith loa of the ns ir ha tot d a ta l k 40 en 1(one k)
>20 to 30 balance as a loan com21% pared with 16 percent of those 16%with balances of $10,00 59% 0 or less. Similarly, those wit 4% h
from year to year because the selection of data providers and sample of plans using a given provider vary, and because
loa 2023 n b ). aA lavnc aila e b of le$2 at, 500 https:/ or /w less w w (Fi .ir gs.go ure v 7/r ). eA tir m eong ment p-aprla tic ns ipa /rnt ets w irem ho ent took a -plans si -fa ngle qs- rloa ega n, rd20 ing p -ha ercre dnt sh ip took a -distrn init ibutions ial loa . n
*Age groups are based on participant age at year-end 2016.
they engage in m fromult 20 iple 16 t h or ro u re gh p e 2a 0t 2 0 loa . Ln oaa nc -e tiv ligit ibyle . participants are participants in 401(k) plans allowing plan loans.
1230s 17% 20% 23% 24% 25% 30%
participants are p sa arvtiin cg ip sa h ne ts ld i n in 4 p 0l1 a( nks) a ptl ap nrs e va io llu os w ie nm g p pllo ayne r lo sa o nrs r.olled over into IRAs are not included.
o wf ethe re m da or te e o lik f the ely tdo ist trib ake ution a sm . S ae ll sha e Inte re rna of l t Rhe ev e tot nua el b Se arv laic nc ee 2022. . Nea rly 40 percent of new 2017 loans were 5 percent or less
inc idence. Loan activity also tends to rise with 401(k) participant account balance peaking among 401(k) participants
Initial Loan Amounts
>30 loa accn p ount rio b sm r atla o anc lle 20r e 20 .a c a count nd com s tepnde let29% ed ly t o pabid e it m or off d e lik ureing ly to the ta k sa e m 18% ap la ler g pe err iod sha,r c eom : 57 p apre erdc e w nt ith 11 p of 48% those erce wnt ith of ne those w loain t ns a he nd ir4% 20s
401(k) participants join or leave plans. In addition, the analysis can only cover a snapshot of an individual's 401(k) plan
Account balances are participant account balances held in 401(k) plans at the participants' current
amount No of te: $2 The ,5 c 00 on s or is tle enss t l. oa Cn onv -elig eib rsely, ind le sampleiv is idua 2.2ls m w illiho on 4 took a 01(k) p lsi an ngle par tloa icipn an ov ts e wri th the ac c po eurn io t d b aa la na ncly es ze ad t tw he e r ee n dm oor f ee a clik h ely to
40s 23% 25% 26% 27% 27% 34%
Note: The consistent loan-eligible sample is 2.2 million 401(k) plan participants with account balances at the end of
Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project
of L woa itth a he n a ctm c ot oun ount al 40 t s t b1( ae la knd ) nc ae tco s b co dunt e ec tw lin b ee a e la n $25,0 re nc lae tiv aet00 tyo e a a the nd r-e nd t$5 ot 0,00 a 20 l a 17 c0 c oun for befor ta c be caount la tanc pes w e r ing in t ith mor off he y ae m e aong rts ha a ft n $10 40 er1( the k0,00 ) p ini ar 0, co ttia icl loa ipa m nt p n w s w are ad it s t h hig w ait kh en. he 7 p rA e s rcent
New 401(k) plan loan balances tended to rise over the time period analyzed, though typically falling as a percentage of
All I (nt Fig eur rna e ye l Re 3) ar . frv A oe m si nue e2 m m 0ila 1 p S 6 lor e y t h rp ev rra o s ic t u te a ge n . hrd 20 n i 2 a 0r23 2 s ob e0 18% n e w e. h ser t D o o fis w v pa e e la rst d e n e b iln o ry a 4 Re n 40 0s 1lie .(1( k R )f B e k p t)il r a ill e p n m la s I nc e n p a nlltlude o s a w a r 22% in v tiic s Re g n g ipa psla h n nt te ir ll o e dta m e in n nur e s p .nt lae nP s a la nd an D t p40 re is v1( ito ru ibut ks) e 55% am ion a cc poun loynd et r sb L o a oa rla ro n O nc llee dp (tsee ions Fi (g laur ste 6% s A2
balances of $10,000 or less at year-end 2017 took out more than 20 percent of their balance, compared with
a In cc2020, ount a dte fine a point d co ntrib in tim ution e. Si (nc DC) e loa plans n re te cnd ordk to eebpe e rs a m idult entifie iyeadr 5. pr8 oc pe ess rce — nt wo itf h a DC n init plania pl loa articip n a ants mount taking ge ne CRrDs ally . For paid down
Figur have lare gs er initial year-end 2017 loan amounts. Among 401(k) participants with new 2017 loans who only took a single
each year from 2016 through 2020 who were in 401(k) plans allowing plan loans.
50s 20% 21% 22% 22% 21% 29%
13
18
discussed above, the median ratio of loan balance to total account balance at year-end 2017 for new loans initiated in
b for ala anc cce ount s. s w Neo v it v e h $ errt he in 10 to le ,000 Iss RA , sloa or are n le n ass octt .iiv nc itly u dw ed a.s not observed for a clear majority of the sample of consistent loan-eligible
the total account balance. At year-end 2017, the average balance for loans initiated in 2017 was about $8,000,
update Sd o uA rc pe r:il 21, 202 Tabulation 3) s . frA om va E ila Bb Rle I/I C aIt P ht art tp ics:/ ipa/ww nt-Diw re.ir cte s.go d Re vt/r ire em tir ee nm t Pela nt n- D pa la ta ns C /disa ollectst ioe nr P -rre olie jecft-bill-includes-retirement-plan-
and A3). 14 percent of those with balances of $100,000 or more.
ov Loan Us add eirtional the c d our is age cse ussof ioA n, m m s ult eo eiple ng Ho ld yC e ea n, o rs ns S — chra ais nd t s s e si , nt nc and e Loan d Chis iffem re- nt 2021 E in lid gib a iv nd idua le 202 ls4 3m 0 . a 1 y( tk) ake P out ar loa ticipant ns in anys , giv 2e0 n ye 16a– r,2 it0 is2 im 0 portant
Note: Theloa con n, sis 40 teS np o t e u lo r rc c ae e n:-nt e T l ia g ha b ib uld le a ta s io a n init n m sp flre oia m isl ye E 2B .2a R m rI- /Iie C llnd iIo P n a 2017 4 r0 ti1 c( ip ka ) b n pa tl-a lD a ninc rp ea ce rtt e iof c di p R $1 ae ntt0,00 ir se m wie t0 o h n ta P c r c la m o nu or n Dte a b t, a ac lC a om n oc llp e ec s at ria o e tn d t h P w er o it e jh e nc d11 t of e pa ecrh c e ynt ea rof frop m a r 2t0 ic 1ipa 6 th n rt os ugh 2020 who
60s 12% 12% 12% 11% 10% 18%
14
Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project
40 201( 17k w ) p aa s 16 p rticipa ent rce s nt (71 (Fi pgeur rce es 4 a nt) and t any 5) . pOne oint y de ur ar ing lattehe r ( a fiv t e y eyaera -e rs nd an 20 aly 18 ze )d , .this E v ha en for d de cp lin aretd ic ipa to 12 nts in t perche ent ir ( 40 Fis, a gure b out 5).
Figure 1, Snapshots of 401(k) Plan Loan Activity ...................................................................................................... 5
representing 18 percent of the total 401(k) account balance, and the median amount was about $3,700, representing
distribution-and-loan-options.
were in 401(k) • p lans Par alloti wc in ip g a pln ats n l w oanh so . w Tenere ure g o ro bus perved s are b ta asek din on g p m artu iclt ipip anle lo t tenu a rn e s a between t year-end 2 y 01ea 6. T rh -en e ted n 2 ure 0 1 va7 ri a abn led is y g ea enr e- ra en llyd y 2 ea0 rs2 w 0o rking at
to follow a consistent group of participants to understand 401(k) plan loan usage. This paper provides an analysis of
with multiple Al lloans. Overall, 40 18% percent of par 20% ticipants with ne 21%w 2017 loa22% ns had an init22% ial year-end b29% alance of $2,500 or
B 10ecause loans tend to be paid down over multiple years, a snapshot of loan usage at year end does not provide a
For a summary of CARES Act changes related to DC plan distributions and loans, see Internal Revenue Service 2022. For 16
19
Thi Wits figur h changing e cont rinu ulee s dt ha to td e exp clia ne nde , to d 6 p acce erss ce tnt o 40 at 1 y(eka)r - pe la nd n loa 2019 ns a (a nd nd 4 p witehdr rcea nt w a als t ) y e aa s C r-eOVI nd 20 D-19 20 . hit Loa the ns Unit initia etd e d St in 2 ates, 018
two-thirds were not observed with a loan balance between year-end 2016 and year-end 2020.
current em 16 pl op ye er r cae nnt d tof hust he ma t yot oa ve l 401( rstate ky)e a arcsc ount of par tb icaip la anc tioe n i(nFi tg he ur 4e 0 1 4() k.) p lW anhil . e the dollar amounts rose each year for loans initiated
tended to take smaller loans. Among participants with new loans at year-end 2017 who were observed
loan usage among 2.2 million consistent loan-eligible 401(k) participants in the EBRI/ICI 401(k) database over the four-
*Age groups are based on participant age at year-end 2016.
le com ss p ale nd te26 pic p te ur rc ee of nt tha hed lif ae n i cynit cle ia of l ye 40 ar1( -eknd ) p b laan p lanc ar et ic of ipa $1 nt 0,00 s’ loa 0 o n a r m ctor ivit ey . . In any given year, some individuals are paying
Figure 2, 401(k) Plan Participant Loan Usage During the Sample ............................................................................... 7
plan loans made to qualified individuals during the 180-day period beginning on the date of enactment (March 27, 2020), the
40 I ant nd 1( er20 k na ) 19 p l Re a rfollow tv iceipa nue nt ed s init S a e rsi vic m iae tila ing . 20 r ploa 23 att fns e . rTa n th only x Re r oug in 202 lieh ye f in 0 a D ais rr-a e est nd ide er20 nt Sit ifi 20 ua e.d t ions sepa (rla atst e ly upd and at e dd is p July lay 17 a d , iff 20 e23 rent ). A pa va ttila erb n o le f lo at an
Source: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project
in 2018, 2019, and 2020, the share they represented of the total 401(k) account balance rose in 2018 before falling in
takN ing ote:a T n a he d cd oit ns iona isten l loa t loan n -b ee lig tw ibe lee s n am ye pa ler -ie s nd 2.2 20 mi18 llio na 4 nd 01(y ke ) a prla -e nnd par20 tici20 pan , ta sb w out ith atc hr co eu en -tfif bt ahs lan ha ces d aa t n init the ial loan of
year period from year-end 2016 through year-end 2020.
down loans, others are paying them off entirely, and others are taking out new loans. This paper analyzes an extended
bill increases the dollar amount available for loans from qualified plans from $50,000 to $100,000 and increases the
17
a ht cttp ivs:/ ity/ww . Inde w.ire s.go d, 40 v/n 1( ek w ) sr poom/ articipa tax nt -rs w elieit fh loa -in-dis ns a st in t erhe -sit irua 20 tions s w.e re the most likely to have taken their only loan in 2020
20 Fig19 ur ea nd 3, 40 20 e1( n 20 dk o . )f A P eta a c y rt h eic a yipa r e-a ernt nd fr oL m 20 oa 217 n U 01, 6 for sa thrg o e loa u gVa hns 2 r0 ie ini 2s 0t b ia wy h t o e A d w g e e in 201 r ................................ e in 47, th 01(k) e p lm ane sd aia llo n r win ag t................................ io pla of n ltohe an sout . standing loa ............................. n balance to the 8
$2,500 or less. Among participants with new loans at year-end 2017 who were not observed taking an
time period to better understand how consistent 401(k) participants are managing their 401(k) plan loans over time.
percentage test limit for loans from half the present value of the participant's vested benefit to the entire present value of his
as they had aged into longer tenure and higher account balances: 11 percent of consistent loan-eligible 401(k) plan
Sample of So C uo rcnsis e: Tat be unt lati oL no s a frn om -Elig EBRiIb /IC le I P40 arti1( cipk) ant -P Da ire rt cicipant ted Retires m , e20 nt P 16 lan– D 2020 ata Co llection Project
t otal account balance was 16 percent, compared with 12 percent for loans initiated in 2020.
additional loan, one-fifth had an initial loan of $2,500 or less.
Fi or ghe urr e v4, este 40d1( bk e)ne Pfit lan I unnit deia r the l Loa pla n B n. aIn lanc ade dsiti ................................ on, for loans to qualifie................................ d individuals outstanding ................................ as of, or after, the d.............. ate of 9
p Thi ars p ticipa ape nt r s w extit eh loa nds p ns re v in t ious he ir w or 20 ks init exam iat ini ed ng the consi ir only ste n loa t pn in artic20 ipa 20 nt, s in t comhe pa rE eB dRI w/I ith 4 CI 40 pe 1( rcke)nt d aof tat bhose ase bin t etw he ee irn 201 60s 6 and
21
2020, by exploring loan usage among the loan-eligible portion of that consistent sample. Among the consistent 401(k)
e e e e e e e e e e e e e e e e e e e e e e eb b b b b b b b b b b b b b b b b b b b b b br r r r r r r r r r r r r r r r r r r r r r ri. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i. i.o o o o o o o o o o o o o o o o o o o o o o or r r r r r r r r r r r r r r r r r r r r r rg g g g g g g g g g g g g g g g g g g g g g g IIIIIIIIIIIIIIIIIIIIIIIs s s s s s s s s s s s s s s s s s s s s s ss s s s s s s s s s s s s s s s s s s s s s su u u u u u u u u u u u u u u u u u u u u u ue e e e e e e e e e e e e e e e e e e e e e e B B B B B B B B B B B B B B B B B B B B B B Br r r r r r r r r r r r r r r r r r r r r r rief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief ief A re • • • • • • • • • • • • • • • • • • • • • • • s e S S S S S S S S S S S S S S S S S S S S S S Sa e e e e e e e e e e e e e e e e e e e e e e erp p p p p p p p p p p p p p p p p p p p p p p cttttttttttttttttttttttth e e e e e e e e e e e e e e e e e e e e e e e mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe mbe repor r r r r r r r r r r r r r r r r r r r r r rr t12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 fro ,,,,,,,,,,,,,,,,,,,,,,, m 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 20 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 t2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 h3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 e E • • • • • • • • • • • • • • • • • • • • • • • B N N N N N N N N N N N N N N N N N N N N N N NR o o o o o o o o o o o o o o o o o o o o o o o.......................I 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 E9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 d0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 u cation and R esearch Fund © 2023 Employee Benefit Research Institute 22 18 14 13 17 16 20 19 15 24 11 23 12 21 10 9 2 3 8 7 5 6 4
