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YOU ARE CORRECT
B. – For a vacation
A new study by Greenwald & Associates and Custodia Financial, “Missing Voices: What 401(k) Borrowers Can Add to the Loan Program Conversation,” found that participants are using the loan feature largely for “financial firefighting,” rather than for discretionary expenses such as vacations. The top three reasons participants report taking a 401(k) loan are to:
• Make ends meet (25%)
• Pay off credit card debt (23%)
• Cover out-of-pocket medical expenses (22%)
The picture that emerges from the research about the average borrower is one of a financially vulnerable participant borrowing as a last resort to cover a significant emergency expense—beyond what a typical “emergency fund” could cover—rather than to fund discretionary spending.
To learn more about the research, click here.
INCORRECT – The correct answer is B. – For a vacation
A new study by Greenwald & Associates and Custodia Financial, “Missing Voices: What 401(k) Borrowers Can Add to the Loan Program Conversation,” found that participants are using the loan feature largely for “financial firefighting,” rather than for discretionary expenses such as vacations. The top three reasons participants report taking a 401(k) loan are to:
• Make ends meet (25%)
• Pay off credit card debt (23%)
• Cover out-of-pocket medical expenses (22%)
The picture that emerges from the research about the average borrower is one of a financially vulnerable participant borrowing as a last resort to cover a significant emergency expense—beyond what a typical “emergency fund” could cover—rather than to fund discretionary spending.
To learn more about the research, click here.
#1. Which of the following is NOT a top three reason why participants take a 401(k) loan?
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