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Researchers : 401(k) Loan Defaults: Who Is at Risk and Why?
Complete Description:Many 401(k) retirement plans allow participants to take loans from their accounts before they retire. However, if they have not paid them off before leaving their jobs, they must pay them in full immediately. Based on a large dataset from Vanguard, this study is the first of its kind to quantify how many people take out loans and, of those, how many default. It proposes changes in retirement policy to reduce the financial risk posed by these loans, particularly for vulnerable groups.
Date Published:Thursday, December 1, 2011
Author:Timothy (Jun) Li, Olivia Mitchell, and Stephen P. Utkus
Funding Agency: Social Security Administration, FLC - RAND
Type: Brief;
Language: English
Audience: Researcher