Defaults on 401(k) loans reach $37 billion a year

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http://www.latimes.com/business/la-fi-mo-401k-defaults-20120716,0,5426757.story

Americans are borrowing huge amounts of money from their 401(k) retirement plans -- and then having big trouble paying off their debt, according to a new study.

Defaults on 401(k) loans have totaled as much as $37 billion a year in recent years, far higher than previously estimated, according to the analysis Monday by two researchers.

The default rate was estimated to be 17.4% in the 12 months through May. That's down slightly from the 19.8% peak in mid-2010, but up dramatically from 9.7% in mid-2008 prior to the global financial crisis.

The study was written by Robert Litan, a researcher at the Kauffman Foundation and the Brookings Institution; and Hal Singer, a managing director at Navigant Economics.

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