IX. Conclusions

S. outlined sum plans. DC advancing years profile symbolizing a growing fraction people home wealth are increasingly being used by team to help you both funds online small loans dated-decades old age security, and also to let security most recent application requires. The master plan mortgage function is one of the preferred yet , understudied pre-senior years liquidity options that come with 401(k) agreements.

This report have browsed the results away from workplace plan loan plan, and we also conclude a loan construction can be and you will has an economically important impact on new member credit. Inside our dataset, one-fifth away from plan professionals had financing each time, when you find yourself nearly forty per cent performed thus over good five-year months. Professionals whom borrowed way more have been and probably be young and you may liquidity-limited, in keeping with good lifecycle make of protecting and you can credit. But really conditional on credit, it had been higher money/money players which borrowed huge portions of their 401(k) account.

Over two decades back, Nobel Honor winner Franco Modigliani patented a method getting providing 401(k) credit cards with the objective of creating it more convenient for pros so you’re able to withdraw using their later years account to cover brief-title consumption means (Vise, 2004)

Employer-computed plan loan rules and had a content influence on borrowing from the bank behavior.