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PRESS RELEASE: T. Rowe Price: 401(K) Loan Usage Reaches Nine-Year Low




The use of 401(k) loans reached a nine-year low of 22.5% in 2018, and continued a steady six-year decline of nearly 10%, according to T. Rowe Price’s annual participant data benchmarking report, Reference Point. The report also found that the percentage of participants who took a hardship withdrawal fell for the ninth consecutive year, declining from 1.9% in 2010 to 1.3% in 2018. Meanwhile, both loan balances and the average amount of hardship withdrawals increased.

“Overall, we’ve seen an increase in positive participant behavior; however, there are still opportunities for continued improvement,” said Kevin Collins, head of Retirement Plan Services at T. Rowe Price. “Changing employee behavior requires simple solutions and engaging them in a way that motivates them to act. Plan sponsors can provide this support through plan design and by integrating financial wellness programs into their plan offering. We’ve seen firsthand the positive impact that approachable and easy-to-use resources have on employee behavior.”



  • Participation declined slightly. The participation rate dropped by nearly 2% from 2017 to 2018. Plans that did not have auto-enrollment saw participation drop at more than twice the rate of those without auto-enrollment.
  • Auto-enrollment continued to significantly impact positive participant behavior. Participation was over 40 percentage points higher in plans with auto-enrollment compared with plans without it.
  • Pretax deferral rates continued to rise. The average pretax deferral rate increased slightly to 8.6%, reaching the all-time high for a second year in a row.
  • Employer match increased. Plans offering a 4% employer match surpassed those offering a 3% match for the first time. The reduction of the corporate tax rate due to tax reform may have contributed to the increase.
  • Plan adoption and participant usage of target date products reached an all-time high. Plan adoption of target date products reached an all-time high at 95%. Participant usage also increased in 2018 across all age groups but was highest among younger workers. Additionally, the percentage of participants with their entire account balance in a target date product has grown by 20% since 2014.
  • 401(k) Roth contributions increased. The number of participants making Roth contributions increased by nearly 10% compared with 2017; however, overall usage remains low at 7.6%. Millennials age 30–39 are using Roth the most, at nearly 10%, with younger workers age 20–29 following at 8.8%. In 2018, nearly 75% of plans offered the Roth option.

“We are dedicated to helping advisors and plan sponsors design plans and implement strategies that are beneficial for all participants,” said Collins. “The overall progress we’ve seen in participant behavior is a testament to the commitment plan sponsors have to their employees’ retirement success.”



Data are based on the large-market, full-service recordkeeping universe of T. Rowe Price Retirement Plan Services, Inc., retirement plans (401(k) and 457 plans), consisting of 657 plans and over 1.8 million participants, from January 1, 2007, through December 31, 2018.



T. Rowe Price Retirement Plan Services, Inc., has been a retirement solutions provider for more than 30 years and serves more than 2.1 million retirement plan participants in more than 4,600 plans, as of December 31, 2018.



Founded in 1937, Baltimore-based T. Rowe Price Group, Inc., is a global investment management organization with $1.08 trillion in assets under management as of March 31, 2019. The organization provides a broad array of mutual funds, subadvisory services, and separate account management for individual and institutional investors, retirement plans, and financial intermediaries. The organization also offers a variety of sophisticated investment planning and guidance tools. T. Rowe Price’s disciplined, risk-aware investment approach focuses on diversification, style consistency, and fundamental research. For more information, visit, Twitter, YouTube, LinkedIn, Instagram, or Facebook.