Question: We are interested in any data you have regarding employees who take loans from their account. Specifically, do they tend to stop or reduce their current contributions while paying back the loan?
Answer: According to Principal’s recent research report, “401(k) Loans: Debunking the Myths,” participants borrowing from their account continue to save for retirement while paying back their loan. A strong majority, 83%, continued contributing to their retirement account at the same deferral rate as before taking the loan, whereas only 4% stopped deferring. The survey cites this as a strong indication that many participants can manage their short-term financial needs while keeping their long-term retirement goals.
