Bank of America Merrill Lynch’s new data on 401(k) plan sponsor clients and plan participants shows that new loan issuance transactions are at record lows, while hardship withdrawals and total distribution amounts are at record highs.

The report shows that new loan issuance transactions fell by 4% to 100,600 in the first nine months of this year. At the same time, the total amount borrowed stayed the same as the same period as last year at $820.9 million. Both numbers represent record lows for the first three quarters of the year since 2007, when BofA first began tallying the data.

By contrast, hardship withdrawals rose 8% to 27,500 in the first three quarters of this year, while total amount distributed increased by 2% to $114.4 million. Both represent record highs for the first three quarters since 2007.

Taken together, the decline in new loan issuances and the rise in hardship withdrawals are positive signs for the economy, Kevin Crain, head of institutional retirement and benefit services, said on Friday.

That is because the moderate decline in loans is even more dramatic when compared to the double-digit increases that area was seeing in the years surrounding the financial crisis, Crain said. Those loan rates flattened last year, followed by their decline this year. The numbers for hardships could also indicate that area is beginning to flatten, according to Crain, which could point to an upcoming decline in hardships.

“Hardships is a year behind the loan trend,” Crain said, and with the positive savings behaviors and the economy potentially improving “you would see those hardships take that same turn in a reasonable time period going forward to have less hardships than there were before.”

BofA released the data on Friday, which measures activity through Sept. 30 of this year. Overall, the report cites a higher trend of positive savings actions among 401(k) plan participants:

-- Almost 1.5 million participants are actively contributing to their 401(k)

-- More than 119,450 employees began or increased contributions in the third quarter, up from 98,000 for the third quarter of 2010

-- More than 478,700 employees began or increased contributions so far this year, versus 331,150 for the first three quarters of 2010

-- 72% of plan participants started or increased contributions in the first three quarters of this year, while 28% either decreased or stopped their contributions. That marks an increase from 2010, which saw 67% of plan participants starting or increasing contributions and 33% stopping or decreasing contributions.

BofA’s retirement and benefit plan services business works with about $85.8 billion in total plan assets and more than 2.65 million plan participants that have at least some money invested.

“This reporting is critical to us because it really speaks to the ultimate owner of what goes on in the plans, which is the employee,” Crain said, “and what is going on there and what we are doing with the company clients to help them.”