401(k) Loan Calculator
Evaluate your 401(k) loan options with our easy-to-use calculator. Understand how borrowing from your retirement fund affects your future savings and plan your loan repayment accordingly.
Monthly Interest Rate
0.004167%
Total Number Of Payments
36.00
Monthly Payment
$299.71
How to Use This Calculator
- 1
Enter the Loan Amount
Input the amount you plan to borrow from your 401(k) balance. Most plans cap this at 50% of your vested balance or $50,000, whichever is less.
- 2
Set the Annual Interest Rate
Enter the interest rate on the 401(k) loan, which is typically prime rate plus 1%.
- 3
Choose the Loan Term
Enter the repayment period in years. Most 401(k) loans must be repaid within 5 years unless used for a primary home purchase.
- 4
Enter Payments Per Year
Input the number of payments per year (12 for monthly, 26 for bi-weekly, etc.).
- 5
Review Your Results
View the periodic interest rate, total number of payments, and the payment amount per period.
Example Calculation
An employee borrowing $15,000 from their 401(k) to consolidate high-interest credit card debt.
Loan Amount
$15,000
Annual Interest Rate
5.5%
Loan Term
5 years
Payments Per Year
12
Result
Monthly payment is $286.53. Total amount repaid is $17,191.80, meaning $2,191.80 in interest paid back to your own account.
Tips
Remember the Opportunity Cost
While you repay interest to yourself, the borrowed amount misses out on market returns. If your investments average 8% annually but your loan rate is 5.5%, you lose the 2.5% spread on the borrowed amount every year.
Plan for Job Changes
If you leave your job, the outstanding 401(k) loan balance typically must be repaid within 60 days or it is treated as a taxable distribution with a 10% early withdrawal penalty if you are under 59 and a half.
Avoid Double Taxation
401(k) loan repayments are made with after-tax dollars, but withdrawals in retirement are taxed again. This effectively means the interest portion of your repayments is taxed twice.
Compare Alternatives First
Before borrowing from your 401(k), compare rates on personal loans, HELOCs, or 0% balance transfer credit cards. These options do not jeopardize your retirement savings or carry the job-change repayment risk.
Frequently Asked Questions
How much can I borrow from my 401(k)?
You can typically borrow up to 50% of your vested 401(k) balance or $50,000, whichever is less. Some plans have a minimum loan amount of $1,000. Not all 401(k) plans allow loans, so check your plan documents.
What is the interest rate on a 401(k) loan?
The interest rate on a 401(k) loan is typically the prime rate plus 1%, which as of early 2025 is around 8.5%. Unlike other loans, the interest you pay goes back into your own 401(k) account rather than to a bank.
What happens if I default on a 401(k) loan?
If you fail to repay the loan according to the plan terms, the outstanding balance is treated as a distribution. You owe income tax on the full amount, and if you are under 59 and a half, you face an additional 10% early withdrawal penalty.
Can I take a 401(k) loan for a home purchase?
Yes. While most 401(k) loans must be repaid within 5 years, loans used for purchasing a primary residence can have repayment terms up to 15 or even 25 years depending on the plan.
Is a 401(k) loan better than a personal loan or credit card?
A 401(k) loan typically has a lower interest rate than credit cards or unsecured personal loans, and the interest goes back to your own account. However, the hidden cost is lost investment growth, double taxation on interest, and the risk of default if you leave your job.