The percentage of 401(k) participants with loan balances has remained steady in recent years, staying at 21% in 2013, the same level as in each year since 2009, according to a report issued Thursday by the Investment Company Institute and the Employee Benefit Research Institute.
The highest percentage of participants taking loans are people in their 40s, workers with 10 to 20 years' tenure at an employer and people with salaries in the $40,000 to $60,000 range, said the report, the latest annual collaboration between EBRI and ICI.
“Overall, loans from 401(k) plans tended to be small, with a sizable majority of 401(k) participants in all age groups having no loan outstanding” in 2013, the report said. “For example, 88% of participants in their 20s, 73% of participants in their 40s, and 86% of participants in their 60s had no loans outstanding at year-end 2013.”
Among participants with 401(k) loans, the median loan balance was $7,421 last year, up from $7,153 in 2012 — but still below the peak of $7,495 in 2007, the report said. The ratio of loans outstanding to participants' remaining account balances dropped to 12% last year from 13% in 2012. The highest ratio was 16% in 2008.
The report also noted:
- Average account balances rose to $72,383 last year, up from $63,929 in 2012.
- Seventy-one percent of 401(k) plans included target-date funds in their investment lineup last year, and 15% of total plan assets were invested in target-date funds.
- Seven percent of plan assets was invested in company stock last year, the same as in 2012.
The latest report is based on an ICI/EBRI analysis of 72,676 401(k) plans with $1.9 trillion in assets covering 26.4 million participants.
Sarah Holden, senior director for retirement and investor research at ICI, could not be reached for comment by press time.
