Most don’t borrow from their 401(k) accounts

By BenefitsPro

By Paula Aven Gladych

Most 401(k) participants won’t take loans from their retirement accounts, even if they have the option.

According to a report by the Employee Benefit Research Institute and the Investment Company Institute, 87 percent of participants in the 2012 EBRI/ICI 401(k) database were in plans offering loans, but only 21 percent of those eligible for the loans had one outstanding at the end of the year.

Of those who had an unpaid loan, the average balance was $7,153, compared with $7,027 in 2011.

Loans outstanding amounted to 13 percent of the remaining account balance, on average, at year-end 2012, down 1 percentage point from the end of 2011.

The report also found that the bulk of 401(k) assets, 61 percent, stayed in stocks through equity funds, the equity portion of balanced funds and company stock. Thirty-three percent were in fixed-income securities such as stable-value investments, bond and money funds.

Out of the companies in the database, 72 percent included target-date funds in their investment lineup in 2012. At the end of the year, 15 percent of the assets in the database were invested in TDFs and 41 percent of participants held TDFs.

At the end of 2012, all 401(k) plans held $3.5 trillion in assets and the EBRI/ICI database represents 44 percent of that total. It also covers 46 percent of the universe of active 401(k) plan participants and more than 10 percent of all 401(k) plans.

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