Benefits and Compensation

Outstanding Plan Loan Amounts Grow, Fidelity Reports

The percentage of 401(k) plan participants borrowing from their retirement accounts has remained steady amid record levels of savings in the accounts, but one data point from Fidelity Investments’ latest quarterly analysis of the thousands of accounts it manages could be cause for concern.

According to the retirement plan administrator for 13.5 million 401(k) participants, the average plan loan amount continues to increase. While the percentage of participants initiating a plan loan (10.1 percent) and the percentage of loans outstanding among all accounts managed by Fidelity (21.9 percent) are little changed over the last several quarters, the average loan amount had risen to $9,720 at the end of the second quarter of 2015. That’s up from an average $9,630 at the end of the first quarter and $9,500 a year ago.

The fund manager suggested in a July 30 press release on its latest quarterly analysis that higher retirement savings balances could be contributing to growing loan amounts.

The average 12-month total savings amount — combined employee and employer contributions — in the 401(k)s Fidelity administers jumped to $10,180 at the end of the 2015 second quarter from $9,840 at the close of the previous quarter, the first time this average amount has surpassed $10,000, the investment firm said.

The average 401(k) balance reached a new high of $91,800 at the end of the first quarter of 2015, but slipped a bit to $91,100 at the close of the most-recent quarter. Average individual retirement account balances managed by Fidelity increased to $96,300 at the end of the second quarter, up from $94,000 the quarter before and $92,500 a year ago.

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