Sen. Herb Kohl (D-WI) and Sen. Mike Enzi (R-WY) announced legislation Wednesday that aims to protect Americans’ retirement savings.

As the recession has worn on, many Americans have had to use their employee-sponsored 401(k) plans as “rainy day” funds to take out loans, according to the legislators. The senators cited a recent Aon Hewitt study that found 28% of participants in contribution plans had an outstanding loan. Kohl, who is Chairman of the Senate Special Committee on Aging, said as the frequency of retirement fund loans have gone up, the amount of money people are saving for their retirement, and therefore paying privately for long-term care services, has gone down.

Sen. Kohl himself recently announced that he plans to retire in 2012, though as a multimillionaire and one of the richest members in Congress, he is not expected to have worries about economic hardship.

“The gap between what Americans will need in retirement and what they will actually have saved is estimated to be a staggering $6.6 trillion,” Kohl said. “While having access to a loan in an emergency is an important feature for many participants, a 401(k) savings account should not be used as a piggy bank.”

Kohl and Enzi’s Savings Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011, or SEAL Act, puts a limit on 401(k) loan practices that provide easy access to retirement funds but add costs and fees. The bill extends the rollover period for plan loan amounts; lets 401(k) participants continue to make elective contributions during the six months following a hardship withdrawal; lowers the overall number of loans that participants can take at one time; and bans products, such as the 401(k) debit card, that promote leakage.