Bank of America 401(k) Participant Pulse Report Shows Volume and Dollar Amounts of 401(k) Loans and Hardship Withdrawals Decreasing

CHARLOTTE, N.C. –Global Coalition on Aging member Bank of America today launched the 401(k) Participant Pulse, a new quarterly report series providing timely insights into plan participants’ confidence and sentiment toward retirement planning and overall financial wellness.

Drawing on data from the company’s proprietary financial benefits programs, which include more than 3 million 401(k) plan participants, the new report analyzes activity across 401(k) loans, hardship distributions and overall contribution rates, and aims to help gauge the extent to which short-term economic trends may be impacting consumers’ long-term financial planning.

“We are deeply committed to understanding how current financial realities are affecting consumers’ long-term financial health and planning,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions at Bank of America. “Long-term retirement planning is a critical metric when considering an individuals’ financial wellbeing, as well as the economy as a whole.”

The inaugural 401(k) Participant Pulse reveals:

  • Contribution rates down slightly in 2022. The average plan participant contribution rate dropped slightly from 6.6% at the end of 2021 to 6.4% at the end of 2022, suggesting consumers may have been a bit more focused on short-term financial needs last year.
  • Fewer participants taking loans, but defaults rise slightly. In Q4 2022, 60,789 participants borrowed from their workplace plan, which was a decline of 12% from Q3. Loan defaults rose slightly to 15.9%. The average loan amount in Q4 was $7,500, the lowest average for all four quarters in 2022.
  • Fewer participants taking hardship withdrawals for immediate financial needs. Participants taking a hardship distribution declined in Q4 2022, with the average at 0.4% (down from 0.5% in Q3) and the number of participants totaling 12,350 (down 18% compared to Q3). In addition, the average hardship amount also declined in Q4 from Q3 by 8%.
  • Millennials lead the way in savings rates. Almost half of Millennials (47%) contributed 7% or more to their plan – more than any other generation. Meanwhile, Baby Boomers had the highest percentage of participants (43%) contributing 3% or less.
  • 30- and 40-year-olds drive borrowing. More than half of loans taken in 2022 were participants ages 30-49. Gen X (age 43-58) had more participants (3.1%) with loans in default at year end than any other generation.

Bank of America’s Retirement & Personal Wealth Solutions organization serves more than 25,000 companies of all sizes and more than six million employees as of December 31, 20221. Bank of America offers institutional client employees a range of financial benefit programs and solutions to help them pursue their financial future.


Source: Global Wealth and Investment Management Finance.

Investment advice on 401(k) assets is only provided to plan participants through certain investment advisory programs as directed by plan sponsors.

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