401(k) Loan โ Borrow From Your Future
Calculate 401(k) loan payments and opportunity cost. Understand the true cost of borrowing from retirement.
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50% or $50K max Job loss = repayment due Opportunity cost matters Consider alternatives
Ready to run the numbers?
Why: 401(k) loans have risks: job loss triggers repayment, opportunity cost of forgone growth.
How: Enter balance, loan amount, rate, term, and expected return. See payment and opportunity cost.
Run the calculator when you are ready.
401(k) Loan Calculator
Payments โข Interest โข Opportunity cost
Sample Scenarios โ Click to Load
Loan Details
Loan Analysis
Account Details
Loan Terms
Opportunity Cost
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For educational and informational purposes only. Verify with a qualified professional.
๐ก Money Facts
Max of balance
Loan cap
Typical term
Job loss
๐ Key Takeaways
- โข Interest paid goes back to your accountโbut opportunity cost is the real hidden cost
- โข Default (e.g. leaving job) triggers taxes + 10% penalty on unpaid balance
- โข Max loan: 50% of balance or $50,000, whichever is less
- โข Consider alternatives first: HELOC, personal loan, emergency fund
๐ก Did You Know?
๐ How 401(k) Loans Work
Borrow from your 401(k). Repay with interestโinterest goes to your account. Monthly payment via amortization. Opportunity cost = what the borrowed amount would have earned if invested. Default = taxes + penalty.
Monthly Payment
PMT = Loan ร (r ร (1+r)^n) / ((1+r)^n โ 1)
Opportunity Cost
Forgone growth = Loan ร (1 + return)^years โ Loan โ Interest paid
๐ฏ Expert Tips
๐ก Interest to Self
Interest goes back to your account. But you lose market growth on borrowed amount.
๐ก Opportunity Cost
Real cost = forgone growth. If return > loan rate, you lose.
๐ก Default Risk
Leaving job = loan due. Cannot repay = taxable distribution + 10% penalty.
๐ก Alternatives
HELOC, personal loan, 0% credit card for short-term. Preserve retirement.
โ๏ธ Loan vs Withdrawal
| Factor | Loan | Withdrawal |
|---|---|---|
| Taxes | No (repay) | Yes |
| Penalty | No (if repay) | 10% if <59ยฝ |
| Repay | Yes | No |
| Default risk | Yes (if leave job) | N/A |
โ Frequently Asked Questions
What happens if I leave my job?
Loan typically due within 60โ90 days. Cannot repay = taxable distribution + 10% penalty if under 59ยฝ.
Does interest go to me?
Yes. Interest is paid back into your 401(k) account.
What is opportunity cost?
The growth you would have earned if the money stayed invested. Often the biggest real cost.
Can I get a loan for a home?
Yes. Primary home purchase can have up to 15-year term.
Is a 401(k) loan better than withdrawal?
Usually. Loan avoids taxes/penalty if repaid. Withdrawal = taxes + penalty.
What are alternatives?
HELOC, personal loan, 0% promo card, emergency fund. Compare rates and impact.
๐ 401(k) Loan by the Numbers
๐ Official Data Sources
โ ๏ธ Disclaimer: This calculator provides estimates. Check your plan documents for loan terms and limits.
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