Older Plan Participants Less Likely to Take 401(k) Loans

February 27, 2007 (PLANSPONSOR.com) - One in five employees eligible to take a loan from their 401(k) plan actually did so in 2005, according to data from the Employee Benefit Research Institute (EBRI).

Among participants with outstanding loans at the end of 2005, the average unpaid balance is $6,821 and loan balances as a percentage of account balances for participants with loans stood around 13%.

Older participants were less likely to have outstanding loans than younger participants.

Ninety percent of 401(k) plan participants nearing retirement – those in their 60s – do not have outstanding loans from their plans, and for the 10% who do, the outstanding loans are small compared to their account balances.

Seventy-eight percent of participants in their 40s had no loans and 89% of participants in their 20s had zero loan balances.

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