RetirementCalculator.net

401(k) Loan Calculator

See the real cost of borrowing from your 401(k): the monthly payment, the interest, the retirement growth you give up, and how it compares to other ways to borrow.

Updated June 2026 with current IRS loan rules

$

You can borrow the lesser of $50,000 or half your vested balance.

$
6%
1%12%

Usually the prime rate plus 1%. You pay this interest back to your own account.

5 years
115
40
1870
65
5075
7%
0%12%

What the borrowed money would have earned if left invested.

Used only to estimate the tax if you leave your job before repaying.

Monthly payment

$0

Total Interest

$0

paid back to yourself

Total Repayment

$0

principal plus interest

Opportunity Cost

$0

If you leave your job

The double-taxation catch: you repay the loan with after-tax dollars from your paycheck, then pay income tax again when you withdraw that same money in retirement. The interest portion gets taxed twice.

View payment schedule
# Payment Principal Interest Balance

The borrowed dollars: invested vs repaid

If the loan amount stayed invested versus being pulled out and rebuilt by your repayments. The gap at retirement is the opportunity cost.

Projected values are estimates and are not guaranteed. Actual results will vary.

By Ryan England Last Updated:

The basics

How a 401(k) loan works

You borrow from yourself

The money comes out of your own account, and the interest you pay goes back into it, not to a bank. There is no credit check and no effect on your credit score.

Limits are set by the IRS

You can take the lesser of $50,000 or half your vested balance. Repayment runs up to 5 years, or 15 years for a primary-home purchase.

Repaid through payroll

Level payments are deducted from your paycheck at least quarterly. The schedule above shows how each payment splits between principal and interest.

The money leaves the market

While borrowed, your money is not invested. If the market rises during the loan, you miss that growth. That gap is the opportunity cost.

Job loss accelerates it

Leave your job and the balance is generally due by your tax deadline. Unpaid, it becomes a taxable distribution with a possible 10% penalty.

Taxed on the way out, twice

You repay with after-tax pay, then pay income tax again when you withdraw it in retirement. The interest portion is effectively taxed twice.

Myth vs math

"It's free money, I'm paying myself back"

A 401(k) loan is often called free borrowing because the interest goes back to your own account. That is partly true, and it is why a 401(k) loan can genuinely beat a credit card. But "free" overstates it.

The cost hides in two places. First, the borrowed money is out of the market, so it misses any growth while you repay, and the interest you pay yourself is usually lower than what the market would have returned. Second, you repay with after-tax dollars and then pay tax again when you withdraw that money in retirement, so the interest is taxed twice.

None of that makes a 401(k) loan a bad choice automatically. Replacing 22% credit card debt with a 6% loan to yourself can be a smart move. The point is to see the real number. Run your own figures above, then switch to "Should I borrow?" to line it up against the alternatives.

If you borrow anyway

How to limit the damage

Keep contributing

The biggest hidden cost is pausing your regular contributions to afford the loan payment. Keep saving at least enough to capture your full employer match.

Borrow the minimum

Take only what you need. A smaller loan means less money out of the market and a smaller balance hanging over you if your job situation changes.

Repay faster than required

A shorter term gets your money back into the market sooner. If your plan allows extra payments without penalty, use them.

Watch your job stability

The loan is riskiest if your job may end. If a layoff is possible, an outstanding balance could turn into a taxable distribution at the worst time.

Compare before you commit

A 0% balance-transfer card or a HELOC may cost less in some cases. Run the comparison and let the numbers, not the convenience, decide.

Have a job-loss plan

Know that if you separate, you can usually repay or roll over the balance by your tax deadline to avoid taxes and the penalty. Keep that cushion in mind.

Keep going

Related calculators

401(k) Calculator →

See how your 401(k) grows with contributions and employer match, and what a loan pause would cost that trajectory.

Roth IRA Calculator →

A Roth IRA lets you withdraw your own contributions penalty-free, an alternative to a loan worth weighing.

Retirement Calculator →

Full retirement projection with a readiness score, so you can see how a loan fits the bigger picture.

Retirement Income Calculator →

Once you stop working, see how long your savings last under different withdrawal strategies.

IRA Calculator →

Project a Traditional IRA and check whether your contribution stays deductible.

Inflation Calculator →

See how inflation erodes the value of a dollar over the years your money is out of the market.

Common questions

How much can I borrow from my 401(k)?
The IRS caps a 401(k) loan at the lesser of $50,000 or 50% of your vested account balance. So a $60,000 balance allows up to $30,000, while a $200,000 balance is still capped at $50,000. Your plan can set a lower limit or choose not to offer loans at all, so check your plan documents (IRS: retirement plan loan FAQs).
How long do I have to repay a 401(k) loan?
Standard 401(k) loans must be repaid within five years through level payments made at least quarterly, almost always via payroll deduction. There is one exception: a loan used to buy your primary residence can be repaid over a longer term, often up to 15 years. The calculator extends the maximum term to 15 years when you check the primary-home box.
Is a 401(k) loan a good idea?
It depends. A 401(k) loan has no credit check, a low rate, and the interest is paid back to your own account, so it can beat a credit card or personal loan on pure cost. The catches are real, though: the borrowed money is out of the market and misses potential growth, you repay with after-tax dollars that get taxed again at withdrawal, and if you leave your job the balance can come due fast. Use the calculator to weigh the opportunity cost against your alternatives before deciding.
What happens to my 401(k) loan if I leave my job?
If you leave or lose your job with a loan outstanding, the balance is generally due by the due date of your federal tax return (including extensions) for the year you left. If you do not repay or roll over the amount in time, it becomes a deemed distribution: it is taxed as ordinary income, plus a 10% early-withdrawal penalty if you are under 59 1/2. This is the single biggest risk of a 401(k) loan (IRS: considering a loan from your 401(k)).
Is the interest on a 401(k) loan tax deductible?
No. Unlike mortgage interest or a HELOC used for home improvements, interest on a 401(k) loan is never tax deductible, even when the loan is used to buy a home. And because you repay with after-tax dollars and pay tax again when you withdraw the money in retirement, the interest is effectively taxed twice.
Does a 401(k) loan affect my credit score?
No. A 401(k) loan does not require a credit check and is not reported to the credit bureaus, so it neither helps nor hurts your credit score. It also does not count against you when a lender calculates your debt-to-income ratio, which is one reason some borrowers prefer it before applying for a mortgage.
What is the opportunity cost of a 401(k) loan?
Opportunity cost is the retirement growth you give up by pulling money out of the market. While the borrowed amount is loaned to you, it is not invested, so it misses any market gains over that period. Even though your repayments rebuild the balance and you pay yourself interest, the interest rate is usually below what the market returns, and the money goes back in gradually rather than all at once. The calculator above shows this gap projected to your retirement age.