401(k) Loan Calculator
Your borrowing limit, payment, and the real cost of borrowing from yourself
Last updated: October 2026 · Loan limits under IRC section 72(p)
Your loan
Most you can borrow: $40,000
Often prime + 1%
If you leave your job
Borrowed money vs your repayments
The gap at the end of the term is the growth the loan costs you, assuming you keep making your normal contributions.
If you leave after 24 months you would still owe about $12,943. Unless you put that amount into an IRA or new plan by your tax-return due date, including extensions, it is taxed as income: about $2,847 at a 22% rate, plus a $1,294 early withdrawal penalty.
How a 401(k) loan works
A 401(k) loan is money you borrow from your own account. The plan sells investments to fund it, and your payroll deductions pay it back with interest into the same account. Because you are both borrower and lender, there is no credit check and no tax as long as you repay on schedule.
The limit. You can borrow the lesser of $50,000 or half your vested balance. A plan may allow up to $10,000 even if that is more than half. The $50,000 shrinks by the gap between your highest loan balance in the last 12 months and what you owe today, which stops people from repaying and re-borrowing to get around the cap.
The payment. The calculator uses the standard loan formula: the payment that pays off the loan in equal amounts over the term at the plan's rate. Payments must be at least quarterly. Most plans take them every paycheck.
The real cost. The interest is not a cost in the usual sense because it lands in your account. The cost is that the borrowed money stops earning the market return while it is out. The calculator compares two paths: the borrowed amount left invested, and your repayments invested as you make them. The gap at the end of the term is the growth you give up. Repayments also come from after-tax pay, and in a traditional 401(k) the interest part is taxed again when you withdraw it in retirement.
Worked example
You have $80,000 vested and borrow $20,000 at 8% for 5 years, paid every two weeks. Each payment is about $186.89 across 130 payments, and you pay yourself about $4,296 in interest. Left invested at 7%, the $20,000 would have grown to about $28,051. Your repayments, invested as you make them, grow to about $28,874. Because the loan rate here is higher than the return, the loan costs no growth at all, though you paid the extra out of your take-home pay. At a 4% loan rate the payment drops to about $169.86, and the account would end about $1,809 behind.
If you leave your job
Most plans require the balance to be repaid when you leave. The unpaid amount becomes a loan offset. Since 2018, you have until your federal tax return due date, including extensions, to roll the same amount into an IRA or a new employer plan and avoid tax on it. If you do not, it is taxed as ordinary income, and the 10% early withdrawal penalty applies unless you are 59 and a half or older, or you leave in or after the year you turn 55.
If you stop paying while still employed, the loan becomes a deemed distribution, which is taxable and cannot be rolled over. Plans can give you until the end of the next calendar quarter to catch up.
Compare a loan with a withdrawal in the 401(k) early withdrawal calculator, or see how the account grows over time in the 401(k) calculator.
Frequently asked questions
How much can I borrow from my 401(k)?
The law caps a plan loan at the lesser of $50,000 or half your vested balance. If half your vested balance is under $10,000, a plan may let you borrow up to $10,000. The $50,000 is reduced if you had a higher loan balance at any point in the past 12 months. Your plan can set lower limits or not offer loans at all.
How long do I have to repay a 401(k) loan?
Five years, in roughly equal payments at least every quarter. Most plans take payments straight from each paycheck. A loan used to buy your main home can have a longer term if the plan allows it, often 10 to 15 years.
What interest rate does a 401(k) loan charge?
The plan sets it, and it must be a reasonable market rate. Many plans use the prime rate plus 1%. The interest goes back into your own account rather than to a lender, but it is paid from after-tax pay.
What happens to my 401(k) loan if I leave my job?
Most plans call the loan due. Whatever you do not repay is subtracted from your account as a loan offset. You can avoid tax on it by putting the same amount into an IRA or new plan by the due date of your tax return for that year, including extensions. Otherwise it is taxed as income, plus the 10% penalty if you are under 55 in the year you leave.
Does a 401(k) loan hurt my credit score?
No. The plan does not check your credit to approve the loan, and the loan is not reported to the credit bureaus. A default is also not reported. It is treated as a taxable distribution instead.
Is it better to take a 401(k) loan or a withdrawal?
If you can keep up the payments, a loan is usually cheaper. A withdrawal before 59 and a half is taxed and usually penalized immediately and the money never goes back in. A loan has no tax cost if repaid, and the main cost is the growth the borrowed money misses while it is out of the market.