401(k) Loan Calculator
| Vested balance | IRS maximum loan |
|---|---|
| $15,000 | $10,000 |
| $20,000 | $10,000 |
| $40,000 | $20,000 |
| $60,000 | $30,000 |
| $80,000 | $40,000 |
| $100,000 | $50,000 |
| $150,000 | $50,000 |
A 401(k) loan is the cheapest-looking money you will ever touch - you borrow from yourself, the "interest" lands back in your own account, and no credit check exists. The IRS ceiling: the greater of $10,000 or 50% of your vested balance, capped at $50,000, repaid within 5 years in substantially equal payments at least quarterly (longer terms only for buying a principal residence). Enter your numbers and this page shows the real monthly payment, the interest you pay yourself, and the cost the brochure leaves out.
The left-out cost is opportunity. Every borrowed dollar leaves the market for the life of the loan: $20,000 borrowed for five years at 7% plan growth is roughly $8,000 of gains you never got - a number that usually dwarfs the interest you "paid yourself." And the tail risk is sharp: leave that job and most plans demand the balance fast or recharacterize the loan as a distribution - taxable, plus the 10% early-withdrawal penalty under age 59 and a half.
How to use
- Check your plan's loan policy first - the IRS sets the maximum, but plans can be stricter, and administrative fees ($50-100 setup, sometimes annual) come on top.
- Enter your vested balance (not the total - unvested employer money cannot back a loan), the amount, your plan's loan rate, and the term; the calculator caps the amount at the IRS ceiling automatically.
- Read all three outputs before deciding: the payment (it is payroll-deducted, after tax), the interest that returns to you, and the growth gap - then compare against the alternatives in the FAQs.
Frequently asked questions
How much can I borrow from my 401(k)?
The IRS formula: the greater of $10,000 or 50% of your vested balance, capped at $50,000. A $40,000 balance allows $20,000 (the IRS's own example); a $15,000 balance still allows $10,000; anything above $100,000 vested hits the $50,000 cap. Your plan may allow less - the ceiling is a maximum, not an entitlement.
What are the repayment rules?
Within 5 years, in substantially equal payments that include principal and interest, at least quarterly - almost always via payroll deduction. Only a loan used to buy your principal residence may run longer. Miss the schedule and the loan defaults: it is treated as a distribution, taxable in the year of default, with the 10% penalty if under 59 and a half.
Is the 401(k) loan interest double-taxed?
Partly, yes - the honest framing: you repay the loan and its interest with after-tax payroll dollars, and the balance (including that interest) is taxed again when you eventually withdraw in retirement, for a traditional 401(k). You do earn the interest for yourself, but you pay tax on it twice, which is a real cost even at a comfortable rate.
What happens to my 401(k) loan if I quit or get laid off?
It accelerates. Most plans require the outstanding balance shortly after separation - commonly by the tax-filing deadline for the year you left - or they report the remainder as a taxable distribution with the 10% penalty if you are under 59 and a half. Roll the balance into an IRA or repay it before the deadline and the damage is avoided; this is the single biggest risk of the whole structure.
Is a 401(k) loan better than a hardship withdrawal?
Usually, yes. A loan repays yourself and returns the money to your account; a hardship withdrawal removes money permanently - taxed, penalized under 59 and a half, and irreplaceable (your contribution limit does not reset for it). The loan's weakness is the separation risk and the market gap; the withdrawal's weakness is everything else. Compare both against borrowing from anywhere else first.