Chapter 9

Plan Loans, Vesting, and Retirement Age Selection


Sometimes unexpected events occur. Rational people are aware of this. Some of these seemingly rational people are less likely to save for their retirement using a tax-deferred vehicle, like an employer-sponsored plan, because they are concerned that this money would not be available if an unforeseen emergency presents itself. One way to minimize this inhibition to saving is to offer access to loans from their retirement assets. Certain limitations apply, and it is not recommended to take a plan loan, but its existence may help encourage higher levels of plan participation.

At one time, it would have been possible for an employer to say that they would provide their employees ...

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