IX. Results
S. defined sum plans. DC retirement levels symbolizing an ever growing small fraction of us domestic wide range are utilized by team so you can each other loans old-decades retirement protection, in order to help cover latest practices demands. The plan mortgage feature is amongst the preferred but really understudied pre-later years exchangeability attributes of 401(k) arrangements.
Which papers has explored the results out-of manager plan loan plan, and then we conclude that loan construction can also be and comes with a keen financially significant effect on participant borrowing from the bank. In our dataset, one-fifth from plan people had financing at a time, if you are nearly forty % performed very more a four-12 months months. Users which borrowed far more was basically also likely to be more youthful and you may liquidity-restricted, in line with an excellent lifecycle model of saving and borrowing from the bank. Yet , conditional on borrowing, it had been large earnings/wealth professionals just who lent big portions of their 401(k) membership.
More twenty years before, Nobel Award champion Franco Modigliani patented a strategy to own giving 401(k) credit cards for the purpose of developing it easier for professionals in order to withdraw off their old age levels to fund quick-name practices need (Vise, 2004)
Employer-computed bundle mortgage coverage also got a material influence on credit choices. Continue lendo “As the concept of 401(k) playing cards withered around issue, you to offer emphasized the new twin-mission nature of U”