Borrowing from Yourself: The Determinants of 401(k) Loan Patterns

Published: 2010
Project ID: UM10-10


This project proposes to evaluate the economic rationale for 401(k) plan loans and the empirical determinants of loan patterns. We will show how plan design and participant characteristics contribute to borrowing from one’s pension, as well as default and repayment behavior. This research will be useful to employers in developing plan design, and also to employees seeking to enhance their retirement preparedness. The analysis relies on a rich dataset provided by Vanguard, which covers over 900 defined contribution plans and 2 million plan participants.