401(k) Loan Calculator
Vested balance and terms to 401(k) loan math.
What it does
Borrowing from a 401(k) skips lenders but not math. The max is half the vested balance or $50,000, whichever is smaller; payments amortize over up to five years with interest flowing back inside. Three numbers frame the decision.
The tool above enforces the max, amortizes the request monthly, and totals interest repaid to yourself. Enter vested balance, request, rate, and whole years; requests above max stop instead of pretending.
IRS loan rules with Labor Department plan guidance set the 50-percent, $50,000, five-year frame most plans follow. Home-purchase exceptions and separation acceleration live in plan documents behind the same numbers.
Weigh absence cost hardest: money out misses matches and compounding that interest repaid rarely replaces. Borrow for true needs, repay automatically, and never trigger the separation trap unknowingly.
How to use
- Enter vested balance.
- Enter request within the max.
- Enter rate and whole years to 5.
- Read max, monthly, and interest.
- Compare with the true cost of absence.
- Confirm plan rules before signing.
Formula
- balance
- Vested 401(k) balance.
- request
- Amount requested within the max.
- rate
- Fixed loan rate percent.
Terms run 1 to 5 whole years at the stated fixed rate with monthly payments. Interest returns to the borrower's account rather than a lender. Separation usually accelerates the full balance.
Worked example
Example: $20,000 at 6.5 %, 5 yr
$20,000 loan at 6.5 % for 5 years from $120,000 vested.
- Vested balance $120,000, request $20,000 at 6.5 % for 5 years.
- Max: smaller of 50000 and 60000 = $50,000.00.
- Monthly: amortized $20,000 over 60 months = $391.32.
- Interest: 391.32 x 60 - 20000 = $3,479.38.
- Interest repays to your own account.
Reference table
| Vested | Max | Note |
|---|---|---|
| $20,000 | $10,000.00 | Half binds |
| $40,000 | $20,000.00 | Half binds |
| $100,000 | $50,000.00 | Cap binds |
| $200,000 | $50,000.00 | Cap binds |
Limits
- Federal frame only. Plans add their own minimums and fees.
- Home-purchase exceptions vary by plan.
- Separation rules bite hardest; confirm dates.
- Not tax or plan advice.
Common mistakes
- Borrowing the max by default.
- Ignoring missed matches and growth.
- Missing the separation acceleration.
- Confusing interest paid with interest earned.
- Skipping the plan document.
Try it yourself
Quick checks. Answers sit tucked under each question.
$15,000 at 5 % for 3 years from $40,000?
Max is min(50000, 20000) = $20,000.00. Monthly amortized $15,000 over 36 months at 5 % is $449.56 with $1,184.28 interest.
$50,000 at 7 % for 5 years from $200,000?
Max is the $50,000.00 cap. Monthly on $50,000 over 60 months at 7 % is $990.06 with $9,403.60 interest.
Questions
How much can I borrow?
The smaller of $50,000 and half the vested balance. A $120,000 balance allows $50,000; a $40,000 balance allows $20,000. Requests above max stop with an error here.
What terms apply?
Five years, amortized at least quarterly, with prime plus 1 or 2 typical. Home-purchase loans may stretch longer under some plans.
Who gets the interest?
To yourself, inside your account. That beats bank interest but not the missed market growth while money sits out.
What if I leave my job?
The balance comes due fast, usually within months, or it becomes a taxable distribution plus penalties under 59 and a half. Job-changers beware most.
What does borrowing cost really?
Missed matches during repayment, double taxation myths aside, and opportunity cost on withdrawn growth. Borrow for needs, not wants.
Do 403(b) plans match?
Spouses, plan loans against 403(b) and governmental 457(b) plans follow parallel rules with their own documents. Read the summary plan description first.