People default on loans they have taken out from their 401(k) plans all the time, and those numbers have been increasing since the recession started in 2008—to the tune of $37 billion per year, according to a new report by Navigant Economics.
"401(k) Loan Defaults: How Big is the Leakage and What Can Policymakers do to Preserve Americans' Nest Eggs?" found that as of 2009, between 89 and 95 percent of 401(k) participants belonged to a plan offering loans and between 20 and 28 percent of those had a loan outstanding at some point in the past three years.
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Recent research by the Plan Sponsor Council of America showed that loans made up 2.5 percent of total plan assets among plans with a loan option in 2010. Most people who withdrew money from their retirement accounts did so to take care of an emergency, pay down debt or use for day-to-day expenses.
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