401(k) savers keep contributing as fewer tap retirement loans, Bank of America finds

Americans continued to prioritize retirement savings in the first quarter, even as some participants leaned on workplace accounts for financial support, according to Bank of America's latest Participant Pulse report.

The average 401(k) contribution rate rose to 7.3% as of March, while the average participant contribution reached $2,150 during the quarter, up from $1,470 in the fourth quarter and modestly higher than the $2,080 recorded a year earlier.

Among baby boomers, savings rates were particularly strong. The report found that 45% of boomers contributed more than 7% of their pay to their retirement plans.

Average account balances held relatively steady at $112,070, compared with $113,590 at year-end 2025. Participants in plans featuring both automatic enrollment and automatic contribution increases accumulated significantly larger balances, averaging more than $170,000.

Retirement borrowing declined further in the quarter. Just 1.9% of participants took a loan from their workplace retirement plan, down from 2.3% in the previous quarter. However, the average loan amount climbed to $10,400 from $9,300.

At the same time, loan defaults ticked higher. As of the first quarter, 10.5% of participants with outstanding loans were in default, compared with 10.4% at the end of 2025. Bank of America said the increase reversed the downward trend seen over the past year.

Overall, 19% of participants currently have a loan outstanding, with Generation X leading all age groups. More than one in four Gen X participants carry a loan balance, according to the report.

Hardship withdrawals were largely unchanged. About 0.77% of participants took a hardship distribution during the quarter, consistent with the prior quarter. The average withdrawal totaled $5,270, roughly in line with the $5,440 reported in the fourth quarter.

While hardship activity remained stable, fewer participants taking distributions used them for hardship purposes. In the first quarter, 6.7% of all participants who took a distribution did so as a hardship withdrawal, down from 7.4% in the prior quarter.

The report also highlighted continued engagement with health savings accounts. Average HSA balances slipped to $5,400 from $5,600 at year-end 2025, but account holders directed more of their contributions toward future savings. Thirty-nine percent of contributions were saved, while 61% were spent on current healthcare expenses.

Bank of America's findings are based on employee benefits data from more than 4 million participants with positive account balances as of March 31, 2026.