Blacks default on 401k loans at far higher rates than whites do

Evidence

There is one alternative to a costly withdrawal: a loan from the retirement account. The proceeds from a 401(k) loan are tax-free, because you are obligated to repay them, and because they do not constitute income, they don’t come with the 10 percent penalty. The problem is that the default rate is high: 80 percent for blacks, and 71 percent for whites. Employees default on loans if they quit their job (or are fired) and do not pay off the loans within sixty days. At that point, the loan is converted to a withdrawal and the employee is hit with the penalty. — Dorothy A. Brown, The Whiteness of Wealth, 401

Categorization

• XREF: Connects to the reader’s frame of specific race-neutral provisions with precise mechanisms; the 401k loan-default mechanism hinges on job stability.