401(k) Loan Calculator
Borrowing from your 401(k) is quick and avoids credit checks, but it costs more than the interest you pay back — the money you borrowed stops growing. This shows your repayment and what the loan really costs in missed growth.
What does this tool do?
401(k) Loan Calculator computes the result directly in your browser — Borrowing from your 401(k) is quick and avoids credit checks, but it costs more than the interest you pay back — the money you borrowed stops growing. This shows your repayment and what the loan really costs in missed growth. Nothing you enter is uploaded or stored.
Limits: you can borrow the lesser of $50,000 or 50% of your vested balance. Repayment: typically 5 years (longer for a primary-home purchase), via payroll deduction, at a rate usually prime + 1%. Real cost: you repay with after-tax dollars AND the borrowed amount stops earning market returns. If you leave your job, the balance may come due in 60-90 days — a trap if you're mid-loan. This models the opportunity cost so you can weigh it against a personal loan.
How the math works
The calculator uses three formulas. Nothing is hidden — you can check each one by hand.
1. Maximum loan
max loan = min($50,000, 50% × vested balance)
Set by IRS §72(p)(2) — the lesser of $50,000 or half your vested balance (IRC 2026 limits; your plan document is final authority).
2. Monthly payment (standard amortization)
payment = P × r / (1 − (1 + r)−n) where r = annual rate ÷ 12, n = months
This is the same amortization formula banks use for fixed-rate loans. If your plan charges 0%, the payment is simply principal ÷ months.
3. Opportunity cost (the real price)
missed growth = borrowed × ((1 + expected return)years − 1)
This is compound growth the borrowed money would have earned if it stayed invested. It is the cost most loan comparisons leave out.
Check the Math
Every calculator here is auditable. This page shows its work; you verify it in 30 seconds.
| Claim on this page | How to verify |
|---|---|
| Payment formula matches bank math | The amortization formula above is standard; compare a $10,000 loan at 7.25% over 5 years — we compute $199.19/mo. Any amortization schedule or spreadsheet PMT(7.25%/12, 60, -10000) gives the same to the cent. |
| The $50,000 / 50% limit | IRS publication on plan loans (irs.gov, §72(p)) — linked in Sources below. Plans may set stricter limits; the IRS sets the ceiling. |
| Runs locally, nothing sent | This page has no server-side calculation: disconnect your network after load and it still computes. No inputs are stored or transmitted. |
| Wrong result on purpose (test) | Enter a balance of $0 — the tool refuses instead of dividing by zero. Enter a negative rate and it asks for a correction. |
Worked examples — three real situations
Example 1: $20,000 borrowed at 7.5%, 5 years
| Max loan check | Needs $40,000 vested — 50% = $20,000 ✓ under the $50,000 cap |
| Monthly payment | $400.76/mo ($24,045.54 total repaid) |
| Interest paid (to yourself) | $4,045.54 — it lands back in your 401(k) |
| Missed growth at 7%/yr | $20,000 × (1.07⁵ − 1) = $8,051 — the true cost of the loan |
Net cost vs a 7.5% personal loan: you'd pay the same interest, but to a bank, and lose the same growth. The 401(k) loan wins on interest but only if you keep your job through repayment.
Example 2: $50,000 borrowed (maximum), 7.5%, 5 years — needs $100,000 vested
| Monthly payment | $1,001.91/mo |
| Missed growth at 7% | $20,127.59 |
Example 3: home purchase — 10-year term, $30,000 at 7.5%
| Monthly payment | $356.11/mo (longer term allowed for primary-home purchase) |
| Missed growth at 7% | $30,000 × (1.07¹⁰ − 1) = $30,000 × 0.9672 = $29,014.54 — a decade out of the market is expensive |
Should you take the loan? The honest decision table
| Situation | 401(k) loan | Personal loan | Neither |
|---|---|---|---|
| Stable job, need cash, good credit | Often best: low rate, interest to yourself | Fallback if plan restricts loans | If the purchase can wait |
| Job change possible | Danger: balance usually due 60-90 days after separation; unpaid = distribution + tax + 10% penalty under 59½ | Survives a job change | Safest if separation risk is real |
| Debt consolidation | Effective only if you also fix the spending that created the debt | Same caveat | Budget repair first |
| Home down payment | 10-year terms allowed; weigh a decade of lost compounding | Higher rate but no compounding loss on your retirement | Compare both — that's what this calculator is for |
The risks nobody's calculator shows
- Double taxation on the interest. You repay interest with after-tax dollars, then pay tax again on withdrawal. On a 7.5% loan that's a real drag — the "you pay interest to yourself" line is only half the story.
- Job separation trap. Research on 401(k) leakage finds job changes are where retirement savings actually bleed out — loans defaulting at separation are a major channel (Beshears et al., NBER working paper w21102; SSRN portability studies below).
- Payments aren't optional. Miss a payroll deduction and many plans default the loan — treated as distribution, taxed, penalized if under 59½.
- Lost compounding is asymmetric. If markets return more than your loan rate, the loan cost you real money. If markets crash mid-loan, you effectively "bought back in" at lower prices — the loan can accidentally help. The calculator's expected-return input lets you test both worlds.
Sources
- IRS — Retirement plans loans, §72(p) limits: irs.gov/retirement-plans — retirement topics: loans
- Beshears, J. et al. — 401(k) leakage research (job separation and cash-out behavior): doi.org/10.2139/ssrn.3497140
- Auto-portability and premature withdrawal at job change: doi.org/10.2139/ssrn.3438999
- 401(k) system outcomes — plan design, fees, leakage: doi.org/10.2139/ssrn.3762653
- Uncertainty in measurement (why we show formulas rather than point estimates): NIST Technical Note 1297: nist.gov — TN 1297
Reviewed: 2026-09-11. The calculator and this text come from one data model — the formulas shown here are the same ones the code runs. If you find a discrepancy, it's a bug: report it.
FAQ
How much can I borrow from my 401(k)?
The lesser of $50,000 or 50% of your vested balance, in most plans. Your plan document is the authority.
Is a 401(k) loan cheaper than a personal loan?
The interest is lower and you pay it to yourself, and there's no credit check. But you lose market growth on the borrowed money and repay with after-tax dollars — the effective cost is often higher than the headline rate.
What happens if I leave my job with a 401(k) loan?
The outstanding balance usually becomes due within 60-90 days (or when your tax return is due). If you can't repay, it's treated as a distribution — you owe income tax plus a 10% penalty if under 59½.
Figures are editable example defaults for modeling, not quotes or advice. Financial, tax, and medical outcomes vary with your situation — verify with a qualified professional (CFP, CPA, tax advisor, or veterinarian).