Stock Purchase Plans and 401(k) Loans

New research by Fidelity Investments finds that employees are less likely to borrow against their 401(k) plans when companies also offer an employee stock purchase plan, and when they do, they tend to borrow less. The effect is largest in companies with 500 or fewer employees: companies with a 401(k) plan alone had 23% of the work force with outstanding loans, versus 14% of employees at companies with both a 401(k) plan and a stock purchase plan. When they have the choice, employees tend to cash in their company stock instead of borrowing against their 401(k) plan.