Commentary: In 2013 Time magazine reported that one in four Americans tapped into their 401(k) account. Research from Fidelity indicates that 22% of participants in plans they administer have an outstanding loan. This is troubling because the high rate of 401(k) plan loan defaults results in annual leakage of around $6 billion per year. Boston Research Group reports that 45% of 401(k) participants who leave a job take a distribution of their account balance. Significant amounts of participant balances are leaking out of 401(k) plans and not being replenished, with potentially disastrous results.
What is leakage?
