Loan Leakage: Preventing Loan Defaults from Draining America’s 401(k) Accounts

Continuing our quest to Define a Retirement Plan Standard of Excellence, we would like to continue our discussion about the impact on participant’s retirement savings due to loan leakage.

This recent article by Deloitte outlines America’s $2 trillion retirement loan dilemma.  The article articulates various mechanisms to prevent loan leakage, illustrates the impact on individuals, and addresses the increased fiduciary risk associated with loan leakage.

Retirement Plan Sponsors and professionals offering services to qualified plan sponsors should evaluate current loan policies and utilization and take appropriate action, if necessary.