Whilst the notion of 401(k) handmade cards withered below grievance, one proposition showcased the fresh new dual-objective character out of U

IX. Findings

S. laid out sum arrangements. DC old age account representing an ever growing tiny fraction people domestic money are now being used by group so you can one another money old-decades old-age security, and also to help protection current practices requires. The program mortgage element is one of the prominent yet understudied pre-advancing years liquidity popular features of 401(k) preparations.

Which papers possess browsed the effects out of workplace package loan policy, and in addition we ending financing build can and you may does have an economically meaningful impact on new member borrowing. Within our dataset, one-fifth out of plan participants got a loan at any given time, whenever you are almost forty per cent did thus more a beneficial five-season period. Members which borrowed way more were including apt to be younger and you can liquidity-constrained, in keeping with an excellent lifecycle make of protecting and you will credit. But really conditional on borrowing, it was higher income/money members which lent larger portions of the 401(k) accounts.

More twenty years in the past, Nobel Award champion Franco Modigliani patented a technique for providing 401(k) playing cards for the purpose of developing it more convenient for pros so you can withdraw from their old age accounts to cover brief-identity application needs (Vise, 2004)

Employer-determined bundle mortgage policy plus got a material affect credit conclusion. Weiterlesen →